-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R5dRLkW6aYxpSiatHDvPFoxJRjzD3Jrgand9AoSFwNUSEzLckXhZvTPWMW4lgaBE Jcmp1ZuCjE8dd4VxPX/ZIg== 0000950144-97-010638.txt : 19971006 0000950144-97-010638.hdr.sgml : 19971006 ACCESSION NUMBER: 0000950144-97-010638 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19971003 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIED HOLDINGS INC CENTRAL INDEX KEY: 0000909950 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 580360550 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-37113 FILM NUMBER: 97690464 BUSINESS ADDRESS: STREET 1: 160 CLAIRMONT AVE STREET 2: STE 510 CITY: DECATUR STATE: GA ZIP: 30030 BUSINESS PHONE: 4043701100 MAIL ADDRESS: STREET 1: 160 CLAIREMONT AVENUE SUITE 510 CITY: DECATUR STATE: GA ZIP: 30030 S-4 1 ALLIED HOLDINGS INC 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 3, 1997. REGISTRATION NO. 333- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- ALLIED HOLDINGS, INC. * (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ---------------
Georgia 4213 58-0360550 (State or other jurisdiction of incorporation (PRIMARY STOCK AND INDUSTRIAL (I.R.S. Employer Identification No.) or organization) CLASSIFICATION CODE NUMBER)
160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 (404) 370-1100 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ---------------------------- DANIEL H. POPKY VICE PRESIDENT, FINANCE ALLIED HOLDINGS, INC. 160 CLAIREMONT AVENUE, SUITE 510 DECATUR, GEORGIA 30030 (404) 370-1100 (Name, address, including zip code, and telephone number, including area code, of agent for service) ---------------------------- Copy to: Thomas M. Duffy, Esq. Troutman Sanders LLP NationsBank Plaza, Suite 5200 600 Peachtree Street, N.E. Atlanta, Georgia 30308 (404) 885-3000 ---------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT. ---------------------------- If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [] ---------------------------- CALCULATION OF REGISTRATION FEE
================================================================================================================================== PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE AGGREGATE PRICE PER AGGREGATE OFFERING AMOUNT OF REGISTERED REGISTERED SHARE (1) PRICE (1) REGISTRATION FEE - ---------------------------------------------------------------------------------------------------------------------------------- 8 5/8% Series B Senior Notes due 2007 $150,000,000 100% $150,000,000 $45,454 - ---------------------------------------------------------------------------------------------------------------------------------- Senior Guarantees (2) - - - - ==================================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933. (2) The 8 5/8% Senior Notes due 2007 are guaranteed by the Guarantors on a senior basis. No separate consideration will be paid in respect of the guarantees. THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. THE TOTAL NUMBER OF PAGES IN THIS DOCUMENT IS ________________. 2 * TABLE OF ADDITIONAL REGISTRANTS
STATE OR OTHER JURISDICTION OF PRIMARY STANDARD INDUSTRY I.R.S. EMPLOYER NAME, ADDRESS AND TELEPHONE NUMBER INCORPORATION OR ORGANIZATION CLASSIFICATION CODE IDENTIFICATION NUMBER - -------------------------------------- ------------------------------ -------------------------- ---------------------- 1. Allied Automotive Group, Inc. Georgia 4213 58-2201081 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 2. Allied Industries Incorporated Georgia 4213 58-1850174 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 3. Haul Risk Management Services, Inc. Georgia 4213 58-2204629 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 4. Link Information Systems, Inc. Georgia 4213 58-2253768 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 5. Allied Southwoods, Inc. Georgia 4213 58-2328035 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 6. Axis Group, Inc. Georgia 4731 58-2204628 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 7. Allied Systems, Ltd. (L.P.) Georgia 4213 58-1710028 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 8. Allied, Inc. Texas 4213 75-0121472 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 9. Inter Mobile, Inc. Georgia 4789 58-1859127 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 10. Legion Transportation, Inc. Georgia 4213 59-3041067 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 11. Innovative Car Carriers, Inc. Delaware 4213 59-3041519 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 12. Automotive Transport Services, Inc. Georgia 4213 58-1835655 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 13. Auto Haulaway, Inc. Ontario, Canada 4213 52-1952252 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 14. Axis International, Inc. Georgia 4731 58-2339087 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 15. Axis Truck Leasing, Inc. Georgia 4731 58-2272795 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 16. Axis North America, Inc. Georgia 4731 58-2273308 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 17. Auto Haulaway Releasing Services (1981) Limited 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 Ontario, Canada 4213 100347467
3 18. Decatur Driver Exchange Company, Inc. Georgia 4213 58-2272793 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 19. Clairemont Driver Exchange Company, Georgia 4213 58-2273306 Inc. 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 20. Kar-Tainer International, Inc. Florida 4213 65-0252817 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 21. AH Acquisition Corp. Georgia 4213 58-2339469 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 22. Canadian Acquisition Corp. Georgia 4213 58-2339472 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 23. Axis National Incorporated Georgia 4731 58-2339474 160 Clairemont Avenue, Suite 510 Decatur, Georgia 30030 404/370-1100 24. RC Management Corp. Delaware 4731 65-071002 3600 N. W. 82nd Avenue Miami, Florida 33166 404/370-1100 25. Ryder Automotive Carrier Services, Inc. Florida 4213 58-1953041 1450 West Long Lake Road Troy, Michigan 48098 404/370-1100 26. Ryder Automotive Acquisition LLC Georgia 4213 Applied for 160 Clairemont Avenue, Suite 510 Atlanta, Georgia 30030 404/370-1100 27. MCL Ryder Transport, Inc. Canada 4213 321235-1 770 Stevenson Road South, Suite 4400 Toronto, Ontario M5H3Y4 404/370-1100 28. Ryder Automotive Operations, Inc. Florida 4213 58-1944786 3600 N. W. 82nd Avenue Miami, Florida 33166 404/370-1100 29. Ryder Freight Broker, Inc. Virginia 4731 59-2876864 10701 Middlebelt Road Romulus, Michigan 48174 404/370-1100 30. QAT, Inc. Florida 4213 59-2876863 300 East Long lake Road, Suite 280 Bloomfield Hills, Michigan 48304 404/370-1100 31. OSHCO, Inc. Florida 4213 38-2853268 10701 Middlebelt Road Romulus, Michigan 48174 404/370-1100 32. Terminal Service Co. Washington 4789 91-0847582 1450 West Long Lake Road Troy, Michigan 48098 404/370-1100 33. F.J. Boutell Driveaway Co., Inc. Michigan 4213 38-0365100 1450 West Long Lake Road Troy, Michigan 48098 404/370-1100 34. RMX, Inc. Delaware 4213 31-0961359 1450 West Long Lake Road 35. Transport Support, Inc. 1450 West Long Lake Road Delaware 4213 38-2349563
4 36. Commercial Carriers, Inc. Michigan 4213 38-0436930 1450 West Long Lake Road Troy, Michigan 48098 404/370-1100 37. B&C, Inc. Michigan 4213 38-1377932 1450 West Long Lake Road Troy, Michigan 48098 404/370-1100
5 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 OCTOBER 3, 1997 PROSPECTUS [ALLIED HOLDINGS, INC. LOGO] OFFER TO EXCHANGE ALL OUTSTANDING 8 5/8% SERIES A SENIOR NOTES DUE 2007 FOR 8 5/8% SERIES B SENIOR NOTES DUE 2007 OF ALLIED HOLDINGS, INC. Allied Holdings, Inc., a Georgia Corporation (the "Company"), and the Guarantors (as hereinafter defined) hereby offer, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letter of Transmittal (which together constitute the "Exchange Offer"), to exchange $1,000 principal amount of 8 5/8% Series B Senior Notes Due 2007 of the Company (the "New Notes"), for each $1,000 principal amount of 8 5/8% Series A Senior Notes Due 2007 of the Company (the "Old Notes"), of which an aggregate principal amount of $150,000,000 is outstanding. The form and terms of the New Notes are identical to the form and terms of the Old Notes except that (i) interest on the New Notes shall accrue from the most recent date to which interest has been paid on the Notes (as hereinafter defined) or, if no such interest has been paid, from the date of issuance of the Old Notes and (ii) the New Notes are being registered under the Securities Act of 1933, as amended (the "Securities Act"), and will not bear any legends restricting their transfer. The New Notes will evidence the same debt as the Old Notes and will be issued pursuant to, and entitled to the benefits of, the indenture governing the Old Notes. The Exchange Offer is being made in order to satisfy certain contractual obligations of the Company. See "The Exchange Offer" and "Description of Notes." The New Notes and the Old Notes are sometimes collectively referred to herein as the "Notes." Prior to October 1, 2002, the New Notes will be redeemable, at the option of the Company, in whole or in part, at the Make-Whole Price (as defined), plus accrued and unpaid interest and Liquidated Damages (as defined), if any, thereon to the redemption date. On and after October 1, 2002, the New Notes will be redeemable, at the option of the Company, in whole or in part, at the redemption prices set forth herein, plus accrued and unpaid interest and Liquidated Damages, if any, to the redemption date. In addition, at any time on or prior to October 1, 2000, the Company may redeem up to 35% of the New Notes at a redemption price equal to 108.625% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net proceeds of one or more sales of Equity Interests (as defined), other than Disqualified Stock (as defined), of the Company, provided that at least $97.5 million of New Notes remain outstanding immediately following each such redemption. In the event of a Change of Control (as defined), the Company will be required to make an offer to each holder of New Notes to repurchase all or any part of such holder's New Notes at a repurchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the repurchase date. See "Risk Factors -- Repurchase of Notes Upon Change of Control" and "Description of Notes." The New Notes will be general unsecured obligations of the Company, ranking pari passu in right of payment with all other present or future senior indebtedness of the Company, and senior in right of payment to all present or future subordinated indebtedness of the Company. The New Notes will be effectively subordinated, however, to all secured obligations of the Company, including the Company's borrowings under the New Credit Facility as defined herein, to the extent of the assets securing such obligations. As of June 30, 1997, after giving pro forma effect to the Offering (as defined herein) and the Acquisition (as defined herein), the New Notes would have 6 been effectively subordinated to approximately $41.8 million of secured borrowings of the Company, including borrowings under the New Credit Facility. In addition, the Company would have had $126.3 million of additional secured borrowings available under the New Credit Facility. The Indenture (as defined herein) will permit the Company to incur additional indebtedness, including additional secured indebtedness subject to certain conditions. See "Risk Factors - - Effective Subordination" and "Description of Notes - Certain Covenants - Incurrence of Indebtedness and Issuance of Preferred Stock." The New Notes will be jointly and severally guaranteed by all existing Domestic Restricted Subsidiaries (as defined herein) and certain other subsidiaries of the Company and by all Domestic Restricted Subsidiaries (as defined herein) of the Company created or acquired in the future. The net proceeds from the sale of the Old Notes (the "Original Offering" or the "Offering") were used to fund the Acquisition, to pay related fees and expenses, and to reduce borrowings. SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE NEW NOTES. The Company and the Guarantors will accept for exchange any and all Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on ___________, 1997, unless extended (as so extended, the "Expiration Date"). Tenders of Old Notes may be withdrawn at any time prior to the Expiration Date. The Exchange Offer is subject to certain customary conditions. See "The Exchange Offer." Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of those New Notes. The Letter of Transmittal accompanying this Prospectus (the "Letter of Transmittal") states that by so acknowledging and by delivering a prospectus a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed, for a period of one year after the date of this Prospectus, to make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." The Old Notes were eligible for trading in the National Association of Securities Dealers' Private Offering, Resales and Trading through Automated Linkages ("PORTAL") Market. The Company and the Guarantors do not intend to list the New Notes on any securities exchange or to seek approval for quotation through any automated quotation system. The Company and the Guarantors will pay all the expenses incident to the Exchange Offer. The Exchange Offer is not conditioned upon any minimum principal amount of Old Notes being tendered for exchange pursuant to the Exchange Offer. ------------------------ 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. ----------------------- The date of this Prospectus is , 1997 2 7 AVAILABLE INFORMATION The Company is subject to the information 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 Securities and Exchange Commission (the "Commission"). Such 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 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 Commission also maintains a web site (http://www.sec.gov) that contains reports, proxy and information statements regarding registrants, such as the Company, that file electronically with the Commission. The Company has filed with the Commission a Registration Statement on Form S-4 (together with all amendments and exhibits thereto, the "Registration Statement") under the Securities Act with respect to the securities 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. Copies of the Registration Statement and the exhibits thereto are on file at the office of the Commission and may be obtained from the Commission upon payment of prescribed rates or may be examined without charge at the public reference facilities of the Commission as prescribed above. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents or portions thereof 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, 1996, as amended on Form 10K/A on August 28, 1997; 2. The Company's quarterly Reports on Form 10-Q for the quarter ended March 31, 1997. As amended on Form 10-Q/A on August 28, 1997, and for the quarter ended June 30, 1997; and 3. The Company's Current Reports on Form 8-K filed May 1, 1997, June 3, 1997, July 22, 1997, August 13, 1997, August 29, 1997 and September 2, 1997. 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 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 this Offering Memorandum. The Company will provide without charge to each person 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 documents should be directed to Allied Holdings, Inc., 160 Clairemont Avenue, Suite 510, Decatur, Georgia 30030, Attention: Daniel H. Popky, telephone: 404/370-1100 3 8 PROSPECTUS SUMMARY The following summary information is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial data, contained in this Prospectus, including information and financial data incorporated herein by reference. The terms "Allied" and "Company" refer to Allied Holdings, Inc. and its subsidiaries (including the Guarantors), unless otherwise stated or indicated by the context and except in the section of this Prospectus entitled "Description of Notes." References herein to 1996 pro forma operating data are to the operating data of the Company for the year ended December 31, 1996 after giving pro forma effect to the Original Offering and the Acquisition as if they had occurred on January 1, 1996. See "Unaudited Pro Forma Financial Information." THE COMPANY The Company, as a result of its acquisition of Ryder Automotive Carrier Services, Inc. and RC Management Corp. (collectively "Ryder") from Ryder System, Inc. ("Ryder System") on September 30, 1997 (the "Acquisition), is the largest motor carrier of automobiles and light trucks in North America. The Company offers a full range of automotive delivery services including transporting new, used and off-lease vehicles to dealers from plants, rail ramps, ports and auctions, and providing vehicle rail-car loading and unloading services. The Company also provides logistics solutions and other services to the new and used vehicle distribution market and other segments of the automotive industry, including the rapidly growing used car superstore market. The Company and Ryder together hauled approximately 65% of the new vehicles sold in the United States and Canada in 1996 and had pro forma 1996 revenues nearly five times greater than the Company's closest competitor. For the year ended December 31, 1996, after giving pro forma effect to the Acquisition, revenues and EBITDA (as defined herein) of the Company would have been approximately $960.7 million and $98.9 million, respectively. The Company operates primarily in the short-haul segment of the automotive transportation industry with an average length of haul of less than 200 miles. The Company delivers new and used vehicles throughout the United States and Canada for all of the major domestic and foreign manufacturers of automobiles and light trucks and certain of the used car superstores. General Motors, Ford and Chrysler represent the Company's largest customers, accounting for approximately 35%, 26% and 14%, respectively, of 1996 pro forma revenues. The Company also provides services to all of the major foreign manufacturers, including Honda, Mazda, Nissan, Toyota, Isuzu, Volkswagen and Mitsubishi. The Company also provides logistics solutions that complement its new and used vehicle distribution services operations and is pursuing additional opportunities in the growing remarketed vehicle sector, which includes the delivery of used and previously leased vehicles and vehicles sold through the automotive auction process. For example, in early 1997 Ryder entered into agreements with AutoNation and DriversMart to provide transportation logistics services for the movement of vehicles to their reconditioning centers and stores, and in August 1997 the Company entered into a contract with Aucnet to provide transportation logistics services relating to the movement of vehicles sold through live interactive auctions and bulletin board sales on the Internet. The Company's executive offices are located at 160 Clairemont Avenue, Decatur, Georgia 30030, and its telephone number is (404) 370-1100. THE EXCHANGE OFFER The Exchange Offer applies to $150 million aggregate principal amount of the Old Notes. The form and terms of the New Notes are the same as the form and terms of the Old Notes except that (i) interest on the New Notes will accrue from the most recent date to which interest has been paid on the Notes or, if no such interest has been paid, from the date of issuance of the Old Notes, and (ii) the New Notes are being registered under the Securities Act and will not bear legends restricting their transfer. The New Notes will evidence the same debt as the 9 Old Notes and will be issued pursuant to, and entitled to the benefits of, the Indenture pursuant to which the Old Notes were issued. See "Description of Notes." The Old Notes and the New Notes are sometimes referred to collectively herein as the "Notes." The Exchange Offer..........................$1,000 principal amount of New Notes in exchange for each $1,000 principal amount of Old Notes. As of the date hereof, Old Notes representing $150 million aggregate principal amount are outstanding. The terms of the New Notes and the Old Notes are substantially identical. Based on an interpretation by the Commission's staff set forth in no-action letters issued to third parties unrelated to the Company and the Guarantors and subject to the two immediately following sentences, the Company and the Guarantors believe that New Notes issued pursuant to the Exchange Offer in exchange for Old Notes generally may be offered for resale, resold and otherwise transferred by any person receiving the New Notes, whether or not that person is the holder (other than any such holder or such other person that is an "affiliate" of the Company or any Guarantors within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that (i) the New Notes are acquired in the ordinary course of business of that holder or such other person, (ii) neither the holder nor such other person is engaging in or intends to engage in a distribution of the New Notes, and (iii) neither the holder nor such other person has an arrangement or understanding with any person to participate in the distribution of the New Notes. See "The Exchange Offer - Purpose and Effect." Notwithstanding the foregoing, any holder of Old Notes who is an "affiliate" of the Company or who intends to participate in the Exchange Offer for the purpose of distributing the New Notes or any broker-dealer who purchased the Old Notes from the Company for resale pursuant to Rule 144A or any other available exemption under the Securities Act, (a) will not be able to rely on the interpretations of the staff of the Division of Corporation Finance of the Commission set forth in the above-mentioned interpretive letters, (b) will not be permitted or entitled to tender such Old Notes in the Exchange Offer and (c) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or other transfer of such Old Notes unless such sale is made pursuant to an exemption from such requirements. In addition, each broker-dealer that receives New Notes for its own account in exchange for Old Notes, where those Old Notes were acquired by the broker-dealer as a result of its market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the New Notes. See "Plan of Distribution." Registration Rights Agreement...................................The Old Notes were sold by the Company on September 30, 1997, in a private placement. In connection with the sale, the Company entered into a Registration Rights Agreement with the purchasers (the "Registration Rights Agreement") providing for the Exchange Offer. See "The Exchange Offer - Purpose and Effect." Expiration Date.............................The Exchange Offer will expire at 5:00 p.m., New York City time, __________, 1997, or such later date and time to which it is extended.
2 10 Withdrawal..................................The tender of Old Notes pursuant to the Exchange Offer may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. Any Old Notes not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. Interest on the New Notes.......................................Interest on each New Note will accrue from the most recent date to which interest has been paid on the Notes or, if no interest has been paid, from __________, 1997. Conditions to the Exchange Offer.......................................The Exchange Offer is subject to certain customary conditions, certain of which may be waived by the Company. See "The Exchange Offer - Conditions to Exchange Offer." Procedures for Tendering Old Notes...................................Each holder of Old Notes wishing to accept the Exchange Offer must complete, sign and date the Letter of Transmittal, or a copy thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver the Letter of Transmittal, or the copy, together with the Old Notes and any other required documentation, to the Exchange Agent at the address set forth in the Letter of Transmittal. Persons holding Old Notes through the Depository Trust Company ("DTC") and wishing to accept the Exchange Offer must do so pursuant to the DTC's Automated Tender Offer Program, by which each tendering Participant will agree to be bound by the Letter of Transmittal. By executing or agreeing to be bound by the Letter of Transmittal, each holder will represent to the Company that, among other things, (i) the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such New Notes, whether or not such person is the holder of the Old Notes, (ii) neither the holder nor any such other person is engaging in or intends to engage in a distribution of such New Notes, (iii) neither the holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of such New Notes, and (iv) neither the holder nor any such other person is an "affiliate," as defined under Rule 405 promulgated under the Securities Act, of the Company. Pursuant to the Registration Rights Agreement, the Company and each of the Guarantors are required to use their reasonable best efforts to file a "shelf" registration statement for a continuous offering pursuant to Rule 415 under the Securities Act in respect of the Old Notes (and cause such shelf registration statement to be declared effective by the Commission and keep it continuously effective, supplemented and amended for prescribed periods) if (i) the Company is not required to file an Exchange Offer Registration Statement (as defined in the Registration Rights Agreement) or permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy, or (ii) any holder of Old Notes shall notify the Company prior to the 20th day following consummation of the Exchange Offer (A) that such holder is prohibited by law or Commission policy from participating in the Exchange Offer
3 11 or (B) that such holder may not resell the New Notes acquired by it in the Exchange Offer to the public without delivery of a prospectus and the prospectus contained in the Exchange Offer Registration Statement would not be appropriate or available for such resales by such holder. Acceptance of Old Notes and Delivery of New Notes.......................The Company will accept for exchange any and all Old Notes which are properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date. The New Notes issued pursuant to the Exchange Offer will be delivered promptly following the Expiration Date. See "The Exchange Offer - Terms of the Exchange Offer." Exchange Agent..............................The First National Bank of Chicago is serving as Exchange Agent in connection with the Exchange Offer. Federal Income Tax Considerations..............................The exchange pursuant to the Exchange Offer should not be a taxable event for federal income tax purposes. See "Certain Federal Income Tax Considerations." Effect of Note Tendering....................Old Notes that are not tendered or that are improperly tendered and therefor not accepted will, following the completion of the Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof. The Company will have no further obligation to provide for the registration under the Securities Act of such Old Notes. TERMS OF NEW NOTES Securities Offered..........................$150 million aggregate principal amount of 8 5/8% Series B Senior Notes due 2007. Maturity....................................October 1, 2007. Interest Payment Dates......................Interest on the New Notes will be payable semi-annually in arrears on April 1 and October 1 of each year, commencing April 1, 1998. Ranking.....................................The New Notes will be general unsecured obligations of the Company, ranking pari passu in right of payment with all other present or future senior indebtedness of the Company, and senior in right of payment to all present or future subordinated indebtedness of the Company. The New Notes will be effectively subordinated, however, to all secured obligations of the Company, including the Company's borrowings under the New Credit Facility, to the extent of the assets securing such obligations. As of June 30, 1997, after giving pro forma effect to the Offering and the Acquisition, the New Notes would have been effectively subordinated to approximately $41.8 million of secured borrowings of the Company. The Indenture will permit the Company to incur additional indebtedness, including additional secured indebtedness, subject to certain conditions. Guarantees..................................The New Notes will be jointly and severally guaranteed by all existing Domestic Restricted Subsidiaries and certain other Subsidiaries of the
4 12 Company and by all Domestic Restricted Subsidiaries of the Company created or acquired in the future (collectively, the "Guarantors"). See "Description of Notes - Subsidiary Guarantees." Optional Redemption.........................Prior to October 1, 2002, the New Notes will be redeemable at the option of the Company, in whole or in part, at the Make-Whole Price, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date. On and after October 1, 2002, the New Notes will be redeemable, at the option of the Company, in whole or in part, at the redemption prices set forth herein, plus accrued and unpaid interest and Liquidated Damages, if any, to the redemption date. In addition, at any time on or prior to October 1, 2000, the Company may redeem up to 35% of the New Notes at a redemption price equal to 108.625% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net proceeds of one or more sales of Equity Interests, other than Disqualified Stock, of the Company, provided that at least $97.5 million of New Notes remain outstanding immediately following each such redemption. Change of Control...........................Upon the occurrence of a Change of Control, the Company will be required to make an offer to repurchase all or any part of each holder's New Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of repurchase. See "Risk Factors - Repurchase of Notes Upon Change of Control" and "Description of Notes Repurchase at the Option of Holders - Change of Control." Certain Covenants...........................The indenture pursuant to which the New Notes will be issued (the "Indenture") contains certain covenants that, among other things, limit the ability of the Company and its Restricted Subsidiaries to incur additional Indebtedness (as defined herein), pay dividends or make other distributions, repurchase Equity Interests (as defined herein) or subordinated Indebtedness, create certain liens, enter into certain transactions with affiliates, sell assets or enter into certain mergers or consolidations. See "Description of Notes - Certain Covenants."
5 13 SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA The following table sets forth certain summary historical and pro forma consolidated financial and operating data of the Company for each of the three years in the period ended December 31, 1996 and for the six-month periods ended June 30, 1996 and 1997. The financial data is derived from the Company's audited and unaudited consolidated financial statements included elsewhere herein. The pro forma data gives effect to the Offering and the Acquisition as if they had occurred on (i) January 1, 1996 with respect to the statement of operations data, other financial data, pro forma ratios and operating data, and (ii) June 30, 1997 with respect to the balance sheet data. This table should be read in conjunction with "Selected Financial Data," "Unaudited Pro Forma Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements, including the notes thereto, of the Company and Ryder included elsewhere in this Prospectus.
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30, -------------------------------------------- ------------------------------- HISTORICAL HISTORICAL ------------------------------ ------------------- PRO FORMA PRO FORMA 1994(1) 1995 1996 1996 1996 1997 1997 -------- ------- --------- --------- -------- --------- ---------- (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Revenues ......................... $297,236 $381,464 $ 392,547 $960,661 $200,565 $208,969 $ 524,665 Operating expenses ............... 268,505 360,543 373,952 928,913 189,510 197,519 496,936 -------- -------- --------- -------- -------- -------- --------- Operating income ................. 28,731 20,921 18,595 31,748(2) 11,055 11,450 27,729 Interest expense ................. 5,462 11,260 10,720 23,288 5,396 5,408 11,570 Interest income .................. 312 707 603 1,216 303 357 1,448 Other income, net ................ -- -- -- 2,472 -- -- 752 Income tax provision ............. 9,393 4,222 3,557 6,474 2,504 2,688 8,262 -------- -------- --------- -------- ------ -------- -------- Income before extraordinary item.. $ 14,188 $ 6,146 $ 4,921 $ 5,674 3,458 $ 3,711 10,097 ======== ======== ========= ======== ======== ======== ======== OTHER FINANCIAL DATA: EBITDA(3) ........................ $ 45,045 $ 46,352 $ 45,020 $ 98,880(2) $ 23,986 $ 25,236 $ 62,011 Depreciation and amortization .... 16,314 25,431 26,425 64,660 12,931 13,786 33,530 Capital expenditures: New Rigs and modifications ..... 23,337 11,716 17,092 58,470 12,053 5,811 15,206 Maintenance and other .......... 7,208 6,494 8,880 12,724 2,323 1,0991 1,739 -------- -------- --------- -------- -------- --------- --------- Total .................... 30,545 18,210 25,972 71,194 14,376 6,910 16,945 PRO FORMA RATIOS: EBITDA to interest expense 4.2x(2) 5.4x Total debt to EBITDA 2.3x(2) 1.9x(4) OPERATING DATA: Rigs operated (at end of period).. 2,151 2,063 1,947 5,323 1,999 1,893 5,250 Vehicles delivered (in thousands). 3,254 4,515 4,738 10,767 2,450 2,503 5,749 Loads delivered (in thousands).... 385 540 572 1,348 295 307 713
AS OF JUNE 30, 1997 ------------------------ ACTUAL AS ADJUSTED (DOLLARS IN THOUSANDS) BALANCE SHEET DATA: Total assets.......................................................................$228,694 $540,000(5) Total debt......................................................................... 105,234 231,789 Stockholders' equity............................................................... 60,157 60,157(5)
(footnotes on following page) 6 14 (1) Includes the results of Auto Haulaway commencing with its acquisition by the Company on October 31, 1994. (2) Pro forma operating income and EBITDA for 1996 includes an $11.3 million restructuring charge at Ryder related to efforts to improve its profitability and focus on its core business of transporting vehicles and related services. See "Business -- Ryder." Excluding such charge, the pro forma ratios of EBITDA to interest expense and total debt to EBITDA would have been 4.7x and 2.1x, respectively. (3) Represents income before interest expense, interest income, income tax provision, depreciation and amortization and extraordinary item. EBITDA is presented because it provides useful information regarding a company's ability to service and/or incur debt. EBITDA should not be considered in isolation from or as a substitute for net income, cash flows from operating activities and other consolidated income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. (4) The ratio of total debt to EBITDA for the pro forma six months ended June 30, 1997 has been calculated as total debt as of June 30, 1997 divided by two times EBITDA for the six months ended June 30, 1997, in each case on a pro forma basis. (5) Excludes an after-tax charge of approximately $5.0 million that the Company intends to record to write down Company Rigs and terminal facilities that will be idled or closed as a result of the Acquisition. 7 15 RISK FACTORS Prospective purchasers of the New Notes offered hereby should carefully review the information set forth below, in addition to the other information contained in this Prospectus, in evaluating an investment in the New Notes offered hereby. SUBSTANTIAL LEVERAGE The Company has, and will continue to have consolidated indebtedness that is substantial in relation to its stockholders' equity. As of June 30, 1997, after giving pro forma effect to the offering of the Old Notes completed September 30, 1997 (the "Offering") and the Acquisition, the Company would have had total debt of approximately $231.8 million (excluding $155.2 million of trade payables and other accrued liabilities) and stockholders' equity of approximately $60.2 million. In addition, the Company would have had approximately $126.3 million of additional borrowings available under the New Credit Facility. The Company's leveraged financial position poses substantial consequences to holders of the New Notes, including the risks that (i) a substantial portion of the Company's cash flow from operations will be dedicated to the payment of interest on the New Notes, borrowings under the New Credit Facility and other indebtedness, (ii) the Company's leveraged position may impede its ability to obtain financing in the future for working capital, capital expenditures and general corporate purposes and (iii) the Company's highly leveraged financial position may make it more vulnerable to economic downturns and may limit its ability to withstand competitive pressures. If the Company is unable to generate sufficient cash flow from operations in the future to service its indebtedness and to meet its other commitments, the Company will be required to adopt one or more alternatives, such as refinancing or restructuring its indebtedness, selling material assets or operations, or seeking to raise additional debt or equity capital. There can be no assurance that any of these actions could be effected on satisfactory terms, that they would enable the Company to continue to satisfy its capital requirements or that they would be permitted by the terms of existing or future debt agreements, including the Indenture and the New Credit Facility. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources." ABILITY TO INTEGRATE ACQUISITION OF RYDER The full benefits of the business combination of the Company and Ryder requires the integration of each company's operational, administrative, finance and marketing organizations, the coordination of each company's operations and the implementation of appropriate operational, financial and management systems and controls in order to capture the efficiencies and the cost reductions that are expected to result from the Acquisition. This will require substantial attention from the Company's management team. The diversion of management attention, as well as any other difficulties which may be encountered in the transition and integration process, could have an adverse impact on the revenue and operating results of the Company. In addition, there can be no assurance that the Company will be successful in integrating the operations of Ryder, or that the anticipated benefits will be realized. DEPENDENCE ON AUTOMOTIVE INDUSTRY The automotive transportation industry is dependent upon the volume of automobiles and light trucks manufactured, imported and sold. The automotive industry is highly cyclical and demand for new automobiles and light trucks is directly affected by such factors as general economic conditions, consumer confidence, and the availability of affordable new car financing. As a result, the Company's results of operations will be adversely affected by cyclical downturns in the general economy or in the automotive industry and by consumer preferences in purchasing new automobiles and light trucks. DEPENDENCE ON MAJOR CUSTOMERS The Company's business is highly dependent upon General Motors, Ford and Chrysler, its largest customers. The Company derived approximately 35%, 26% and 14% of its 1996 pro forma revenues from General Motors, Ford and Chrysler, respectively. A significant reduction in General Motors', Ford's or Chrysler's production, the loss of General Motors, Ford or Chrysler as a customer, or a significant reduction in the services provided for any of these customers by the Company would have a materially adverse effect upon the Company. See "Business." 8 16 CONTRACTS WITH CUSTOMERS The Company operates under contracts with most of its customers with terms varying from 30 days to five years. The Company's contract with Ford expires in May 1999, its contract with Chrysler expires in June 2000, and it has an agreement in principle with General Motors to enter into a three-year contract. See "-- Dependence on Major Customers." The contracts between the Company and its customers generally establish rates for the transportation of vehicles based upon a fixed rate per vehicle transported and a variable rate for each mile a vehicle is transported. The contracts generally do not permit the Company to recover for increases in fuel prices, fuel taxes or labor costs, and any such increases are likely to have an adverse effect on the Company's results of operations, although some contracts provide for renegotiation to address certain material adverse changes. In addition, certain of the Company's contracts provide for annual rate reductions. While the Company may be able to derive savings through increased efficiencies with respect to vehicles transported for these customers, the savings may not offset the reductions, which would adversely affect the Company's results of operations. LIABILITY EXPOSURE The Company currently retains up to $650,000 of liability for each claim for workers' compensation and up to $500,000 of liability for automobile and general liability, including personal injury and property damage claims. In addition to the $500,000 per occurrence deductible for automobile liability, there is a $500,000 aggregate deductible for those claims which exceed the $500,000 per occurrence deductible. The Company also retains up to $250,000 of liability for each cargo damage claim in the United States. In Canada, the Company retains up to C$100,000 (approximately U.S. $72,000 at September 19, 1997) of liability for each claim for personal injury, property damage or cargo damage. Ryder's insurance contracts also provide for substantial deductibles or indemnifications. If the Company were to experience a material increase in the frequency or severity of accidents or workers' compensation claims or unfavorable developments in existing claims, the Company's operating results could be adversely affected. The Company formed Haul Insurance Limited in December 1995 as a captive insurance subsidiary to provide insurance coverage to the Company with respect to its deductibles for workers' compensation and commercial general liability in the United States and for automobile liability insurance in the United States and Canada. See "Business -- Risk Management and Insurance." ENVIRONMENTAL REGULATION The Company is subject to environmental laws and regulations that impose liability for the costs of cleaning up, and certain damages resulting from, sites of past spills, disposals or other releases of hazardous materials or petroleum products. Such liability could relate to spills, disposals or other releases of hazardous materials or petroleum products at property that the Company (i) currently owns or operates, (ii) formerly owned or operated, or (iii) used for the disposal of wastes. These environmental laws and regulations typically impose cleanup responsibility and liability without regard to whether the owner or operator knew or caused the presence of the contaminants, and the liability under the laws has been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of liabilities. Many of the Company's terminals contain, or have contained, underground storage tanks ("USTs") for storing fuel and other materials. While the Company believes that it is in material compliance with all environmental requirements, including requirements relating to the USTs, there can be no assurance that any failure to comply, or compliance in the future, with such environmental laws (including the potential imposition of liabilities associated with releases of hazardous substances or petroleum products from the properties currently or formerly owned or operated by the Company) will not have a material adverse effect on the Company's business, financial condition or results of operations. See "Business - -- Regulation." LABOR MATTERS Certain subsidiaries of the Company, along with five other motor carriers who, together with the Company, provide approximately 95% of the total new vehicle motor transportation services in the United States, are signatories to the Automobile National Master Agreement (the "Master Agreement") with the International Brotherhood of Teamsters (the "Teamsters"). As a result of being a party to the Master Agreement, the Company does not have exclusive control over labor concessions in bargaining with the Teamsters. In 1995, Ryder 9 17 experienced a 32-day Teamsters strike. In Canada, certain subsidiaries of the Company are signatories to four labor agreements, each covering certain of the Canadian provinces and territories. The contracts expire from May 31, 1998 to March 31, 2000. In addition, the Company is a party to agreements with other labor unions. There can be no assurance that renegotiation of labor contracts as they expire will not result in increased labor costs to the Company, which increases could be material, or that such contracts can be renegotiated without work stoppages. COMPETITION The automotive transportation industry is highly competitive. The Company currently competes with other motor carriers of varying sizes, as well as with railroads. The Company also competes with non-union motor carriers that may be able to provide comparable services at lower costs. The development of new methods for hauling vehicles could also lead to increased competition. See "Business -- Competition." EFFECTIVE SUBORDINATION The New Credit Facility, which provides the Company with available borrowings of up to $230.0 million, is secured by liens on substantially all of the assets of the Company. Under certain circumstances, certain other indebtedness of the Company may be secured by liens on assets of the Company. See "Description of Notes -- Certain Covenants -- Liens" and "Description of Other Indebtedness -- New Credit Facility." In the event of a liquidation or insolvency of the Company, or if any of its secured indebtedness is accelerated, the secured assets of the Company will be available to pay obligations on the New Notes only after borrowings under the New Credit Facility and any other secured indebtedness have been paid in full. Accordingly, there may not be sufficient assets remaining to pay amounts due on any or all of the New Notes then outstanding. In addition, the existence of the liens on the assets of the Company may impair the Company's ability to obtain additional financing in the future. The Company is a holding company that conducts substantially all of its operations through its subsidiaries. As a result, the Company is dependent on dividends or other distributions from its subsidiaries to meet the Company's debt service and other obligations, including its obligations under the New Notes, which may be restricted by applicable law. In addition, to the extent that any such subsidiary incurs indebtedness and becomes insolvent or is liquidated, creditors of such subsidiary would be entitled to payment from the proceeds of such subsidiary's assets before the Company and its creditors would derive any value from such subsidiary's assets. The New Notes will be guaranteed by all of the Company's present and future Domestic Restricted Subsidiaries. If a court were to invalidate or limit the guarantee of any such Restricted Subsidiary under fraudulent conveyance or other applicable legal principles, other creditors of such Restricted Subsidiary would to such extent have priority as to the assets of such Restricted Subsidiary over the claims of holders of the New Notes. See "-- Fraudulent Conveyance." REPURCHASE OF NOTES UPON CHANGE OF CONTROL The Indenture provides that, in the event of a Change of Control, the Company will be required to make an offer to each holder of New Notes to repurchase all or any part of such holder's New Notes at a repurchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the repurchase date. In addition, a Change of Control may result in a default under the New Credit Facility or other indebtedness of the Company. If a Change of Control were to occur, there can be no assurance that the Company would have the financial resources necessary to repay all such indebtedness and repurchase all New Notes tendered pursuant to such an offer. See "Description of New Notes -- Repurchase at the Option of Holders -- Change of Control." LACK OF PUBLIC MARKET The Company and the Guarantors do not intend to list the New Notes on any securities exchange. The Company has been advised by Bear, Stearns & Co. Inc., BT Alex. Brown Incorporated and NationsBanc Capital Markets, Inc. (collectively, the "Initial Purchasers") that the Initial Purchasers intend to make a market in the New Notes after the consummation of the Exchange Offer, as permitted by applicable laws and regulations; however, the Initial Purchasers are not obligated to do so, and any such market making activities may be discontinued at any time without notice. Therefore, there can be no assurance that an active market for the New Notes will develop. 10 18 CONSEQUENCES OF FAILURE TO EXCHANGE Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of Old Notes set forth in the legend thereon as a consequence of the issuance of the Old Notes pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not anticipate registering the Old Notes under the Securities Act. Holders of the Old Notes who do not tender their Old Notes in the Exchange Offer will continue to hold such Old Notes and their rights under such Old Notes will not be altered, except for any such rights under the Registration Rights Agreement, which by their terms generally terminate or cease to have further effectiveness as a result of the making of, and the acceptance for exchange of all validly tendered Old Notes pursuant to, the Exchange Offer. SEASONALITY The Company's revenues are seasonable, with the second and fourth quarters generally experiencing higher revenues than the first and third quarters. The volume of vehicles shipped during the second and fourth quarters is generally higher due to the introduction of new models which are shipped to dealers during those periods and the higher spring and early summer sales of automobiles and light trucks. During the first and third quarters, vehicle shipments typically decline due to lower sales volume during those periods and scheduled plant shut downs which primarily occur during the third quarter. See "Management's Discussion and Analysis of Financial Condition and Results of Operation -- Seasonality and Inflation." DEPENDENCE ON KEY PERSONNEL The success of the Company is dependent upon its senior management team, as well as its ability to attract and retain qualified personnel. There is competition for qualified personnel in the automotive transportation industry. There is no assurance that the Company will be able to retain its existing senior management or to attract additional qualified personnel. See "Management." EFFECTIVE CONTROL BY PRINCIPAL SHAREHOLDERS The Company's management beneficially owns an aggregate of 3,861,191 shares of the common stock of the Company, or 49.4% of the outstanding common stock. As a result, if management and members of their families choose to vote all of their shares in a similar manner, management likely would have sufficient voting power to elect the entire Board of Directors of the Company and to determine the outcome of matters submitted to shareholders. See "Management." FRAUDULENT CONVEYANCE Under applicable provisions of the United States Bankruptcy Code and comparable provisions of state fraudulent transfer or conveyance law, if the Company or any Guarantor, at the time it originally issued the Old Notes or its guarantee of the Old Notes, as the case may be, (a) incurred such obligation with intent to hinder, delay or defraud creditors, or (b) received less than reasonably equivalent value or fair consideration in connection with such incurrence and (i) was insolvent at the time of the incurrence, (ii) was rendered insolvent by reason of such incurrence (and the application of the proceeds thereof), (iii) was engaged or was about to engage in a business or transaction for which the assets remaining with the Company or such Guarantor constituted unreasonably small capital to carry on its business or (iv) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature, then, in each such case, a court of competent jurisdiction could avoid, in whole or in part, the Notes or such guarantee thereof, as the case may be, or, in the alternative, subordinate the Notes or such guarantee to existing and future indebtedness of the Company or such Guarantor, as the case may be. The measure of insolvency for purposes of the foregoing will vary depending upon the law applied in such case. Generally, however, the Company or a Guarantor would be considered insolvent if the sum of its debts, including contingent liabilities, was greater than all of its assets at fair valuation or if the present fair saleable value of its assets was less 11 19 than the amount that would be required to pay the probable liability on its existing debts, including contingent liabilities, as they become absolute and matured. The Company believes that, for purposes of the United States Bankruptcy Code and state fraudulent transfer or conveyance laws, (a) the Old Notes and the guarantees thereof were issued without the intent to hinder, delay or defraud creditors and for proper purposes and in good faith, (b) the Company and the Guarantors received reasonably equivalent value or fair consideration and (c) the Company and the Guarantors, after the initial issuance of the Old Notes and the application of the proceeds thereof, were solvent, had sufficient capital for carrying on their business and were (and are) able to pay their debts as they mature. There can be no assurance, however, that a court passing on such questions would agree with the Company's belief. THE EXCHANGE OFFER PURPOSE AND EFFECT The Old Notes were sold by the Company on September 30, 1997, in the Original Offering. In connection with that sale, the Company entered into the Registration Rights Agreement, which requires that the Company file the Registration Statement under the Securities Act with respect to the New Notes and, upon the effectiveness of the Registration Statement, offer to the holders of the Old Notes the opportunity to exchange their Old Notes for a like principal amount of New Notes, which will be issued without a restrictive legend and which generally may be reoffered and resold by the holder without registration under the Securities Act. The Registration Rights Agreement further provides that the Company and the Guarantors must use their reasonable best efforts to (i) cause the Registration Statement with respect to the Exchange Offer to be declared effective on or before December 30, 1997 and (ii) consummate the Exchange Offer on or before the 30th business day following the date the Registration Statement is declared effective. Except as provided below, upon the completion of the Exchange Offer, the Company's obligations with respect to the registration of the Old Notes and the New Notes will terminate. A copy of the Registration Rights Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus is a part and the summary herein of certain provisions thereof does not purport to be complete and is subject to, and is qualified in its entirety by reference thereto. As a result of the filing and the effectiveness of the Registration Statement, certain liquidated damages provided for in the Registration Rights Agreement will not become payable by the Company. Following the completion of the Exchange Offer (except as set forth in the paragraph immediately below), holders of Old Notes not tendered will not have any further registration rights and those Old Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for the Old Notes could be adversely affected upon completion of the Exchange Offer. In order to participate in the Exchange Offer, a holder must represent to the Company, among other things, that (i) the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving the New Notes, (ii) neither the holder nor any such other person is engaging in or intends to engage in a distribution of the New Notes, (iii) neither the holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of the New Notes and (iv) neither the holder nor any such other person is an "affiliate," as defined under Rule 405 promulgated under the Securities Act, of the Company. Pursuant to the Registration Rights Agreement, the Company is required to file a "shelf" registration statement for a continuous offering pursuant to Rule 415 under the Securities Act in respect of the Old Notes (and cause such shelf registration statement to be declared effective by the Commission and keep it continuously effective, supplemented and amended for prescribed periods) if (i) the Company is not required to file an Exchange Offer Registration Statement or permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy, or (ii) any holder of Old Notes shall notify the Company prior to the 20th day following consummation of the Exchange Offer (A) that such holder is prohibited by law or Commission policy from participating in the Exchange Offer or (B) that such holder may not resell the New Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement would not be appropriate or available for such resale by such holder. Other than as set forth in this paragraph, no holder will have the right to participate in the "shelf" registration statement nor otherwise to require that the Company register such holder's shares of Old Notes under the Securities Act. See "- Procedures for Tendering." 12 20 Based on an interpretation by the Commission's staff set forth in no-action letters issued to third parties unrelated to the Company and the Guarantors and subject to the two immediately following sentences, the Company and the Guarantors believe that New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by any person receiving the New Notes, whether or not that person is the holder (other than any such holder or such other person that is an "affiliate" of the Company or any Guarantors within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that (i) the New Notes are acquired in the ordinary course of business of that holder or such other person, (ii) neither the holder nor such other person is engaging in or intends to engage in a distribution of the New Notes, and (iii) neither the holder nor such other person has an arrangement or understanding with any person to participate in the distribution of the New Notes. Notwithstanding the foregoing, any holder of Old Notes who is an "affiliate" of the Company or who intends to participate in the Exchange Offer for the purpose of distributing the New Notes, or any broker-dealer who purchased the Old Notes from the Company for resale pursuant to Rule 144A or any other available exemption under the Securities Act, (a) will not be able to rely on the interpretations of the staff of the Division of Corporation Finance of the Commission set forth in the above-mentioned interpretive letters, (b) will not be permitted or entitled to tender such Old Notes in the Exchange Offer and (c) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or other transfer of such Old Notes unless such sale is made pursuant to an exemption from such requirements. In addition, each broker-dealer that receives New Notes for its own account in exchange for Old Notes, where those Old Notes were acquired by the broker-dealer as a result of its market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of these New Notes. See "Plan of Distribution." CONSEQUENCES OF FAILURE TO EXCHANGE Following the completion of the Exchange Offer (except as set forth in the second paragraph under "-- Purpose and Effect" above), holders of Old Notes not tendered will not have any further registration rights and those Old Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for a holder's Old Notes could be adversely affected upon completion of the Exchange Offer if the holder does not participate in the Exchange Offer. TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions set forth in this Prospectus and in the Letter of Transmittal, the Company will accept any and all Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date. The Company will issue $1,000 principal amount of New Notes in exchange for each $1,000 principal amount of outstanding Old Notes accepted in the Exchange Offer. Holders may tender some or all of their Old Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only in integral multiples of $1,000 in principal amount. The form and terms of the New Notes are substantially the same as the form and terms of the Old Notes except that the New Notes have been registered under the Securities Act and will not bear legends restricting their transfer. The New Notes will evidence the same debt as the Old Notes and will be issued pursuant to, and entitled to the benefits of, the Indenture pursuant to which the Old Notes were issued. As of September 30, 1997, Old Notes representing $150,000,000 aggregate principal amount were outstanding and there was one registered holder, a nominee of DTC. This Prospectus, together with the Letter of Transmittal, is being sent to such registered Holder and to others believed to have beneficial interests in the Old Notes. Holders of Old Notes do not have any appraisal or dissenters' rights under the Georgia Business Corporation Code or the Indenture in connection with the Exchange Offer. The Company intends to conduct the Exchange Offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder. The Company shall be deemed to have accepted validly tendered Old Notes when, as, and if the Company has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent 13 21 for the tendering holders for the purpose of receiving the New Notes from the Company. If any tendered Old Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, certificates for any such unaccepted Old Notes will be returned, without expense, to the tendering holder thereof as promptly as practicable after the Expiration Date. Holders who tender Old Notes in the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes pursuant to the Exchange Offer. The Company will pay all charges and expenses, other than certain applicable taxes, in connection with the Exchange Offer. See "The Exchange Offer - Fees and Expenses." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "Expiration Date" shall mean 5:00 p.m., New York City time, on ___________, 1997, unless the Company, in its sole discretion, extends the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date and time to which the Exchange Offer is extended. In order to extend the Exchange Offer, the Company will notify the Exchange Agent and each registered holder of any extension by oral or written notice prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. The Company reserves the right, in its sole discretion, (i) to delay accepting any Old Notes, to extend the Exchange Offer or, if any of the conditions set forth under "The Exchange Offer - - Certain Conditions to Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer, by giving oral or written notice of such delay, extension or termination to the Exchange Agent, or (ii) to amend the terms of the Exchange Offer in any manner. PROCEDURES FOR TENDERING Only a holder of Old Notes may tender the Old Notes in the Exchange Offer. Except as set forth under "The Exchange Offer - Book Entry Transfer," to tender in the Exchange Offer a holder must complete, sign, and date the Letter of Transmittal, or a copy thereof, have the signatures thereon guaranteed if required by the Letter of Transmittal, and deliver the Letter of Transmittal or copy to the Exchange Agent prior to the Expiration Date. In addition, either (i) certificates for such Old Notes must be received by the Exchange Agent along with the Letter of Transmittal, (ii) a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if that procedure is available, into the Exchange Agent's account at DTC (the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry transfer described below, must be received by the Exchange Agent prior to the Expiration Date, or (iii) the holder must comply with the guaranteed delivery procedures described below. To be tendered effectively, the Letter of Transmittal and other required documents must be received by the Exchange Agent at the address set forth under "The Exchange Offer - Exchange Agent" prior to the Expiration Date. The tender by a holder that is not withdrawn before the Expiration Date will constitute an agreement between that holder and the Company in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS. Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company, or other nominee and who wishes to tender should contact the registered holder promptly and instruct the registered holder to tender on the beneficial owner's behalf. If the beneficial owner wishes to tender on the owner's own behalf, the owner must, prior to completing and executing the Letter of Transmittal and delivering the owner's Old Notes, either make appropriate arrangements to register ownership of the Old Notes in the beneficial owner's name or obtain a properly completed bond power from the registered holder. The transfer of 14 22 registered ownership may take considerable time. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution (as defined below) unless Old Notes tendered pursuant thereto are tendered (i) by a registered holder who has not completed the box entitled "Special Registration Instruction" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. If signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, the guarantee must be by any eligible guarantor institution that is a member of or participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program, the Stock Exchange Medallion Program, or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution"). If the Letter of Transmittal is signed by a person other than the registered holder of any Old Notes listed therein, the Old Notes must be endorsed or accompanied by a properly completed bond power, signed by the registered holder as that registered holder's name appears on the Old Notes. If the Letter of Transmittal or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and evidence satisfactory to the Company of their authority to so act must be submitted with the Letter of Transmittal unless waived by the Company. All questions as to the validity, form, eligibility (including time of receipt), acceptance, and withdrawal of tendered Old Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Old Notes not properly tendered or any Old Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any defects, irregularities, or conditions of tender as to particular Old Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Company shall determine. Although the Company intends to notify holders of defects or irregularities with respect to tenders of Old Notes, neither the Company, the Exchange Agent, nor any other person shall incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. In addition, the Company reserves the right in its sole discretion to purchase or make offers for any Old Notes that remain outstanding after the Expiration Date or, as set forth under "-- Conditions to the Exchange Offer," to terminate the Exchange Offer and, to the extent permitted by applicable law, purchase Old Notes in the open market, in privately negotiated transactions, or otherwise. The terms of any such purchases or offers could differ from the terms of the Exchange Offer. By tendering, each holder will represent to the Company that, among other things, (i) the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such New Notes, whether or not such person is the registered holder, (ii) neither the holder nor any such other person is engaging in or intends to engage in a distribution of such New Notes, (iii) neither the holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of such New Notes, and (iv) neither the holder nor any such other person is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company. In all cases, issuance of New Notes for Old Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal (or, with respect to the DTC and its participants, electronic instructions in which the tendering holder acknowledges its receipt of and agreement to be bound by the Letter of Transmittal), and all other required documents. If any tendered Old Notes are not 15 23 accepted for any reason set forth in the terms and conditions of the Exchange Offer or if Old Notes are submitted for a greater principal amount than the holder desires to exchange, such unaccepted or non-exchanged Old Notes will be returned without expense to the tendering Holder thereof (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described below, such nonexchanged Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility) as promptly as practicable after the expiration or termination of the Exchange Offer. Each broker-dealer that receives New Notes for its own account in exchange for Old Notes, where the Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. See "Plan of Distribution." BOOK-ENTRY TRANSFER The Exchange Agent will make a request to establish an account with respect to the Old Notes at the Book-Entry Transfer Facility for purposes of the Exchange Offer within two business days after the date of this Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of Old Notes being tendered by causing the Book-Entry Transfer Facility to transfer such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Old Notes may be effected through book-entry transfer at the Book-Entry Transfer Facility, the Letter of Transmittal or copy thereof, with any required signature guarantees and any other required documents, must, in any case other than as set forth in the following paragraph, be transmitted to and received by the Exchange Agent at the address set forth under "The Exchange Offer - Exchange Agent" on or prior to the Expiration Date or the guaranteed delivery procedures described below must be complied with. DTC's Automated Tender Offer Program ("ATOP") is the only method of processing exchange offers through DTC. To accept the Exchange Offer through ATOP, participants in DTC must send electronic instructions to DTC through DTC's communication system in lieu of sending a signed, hard copy Letter of Transmittal. DTC is obligated to communicate those electronic instructions to the Exchange Agent. To tender Old Notes through ATOP, the electronic instructions sent to DTC and transmitted by DTC to the Exchange Agent must contain the character by which the participant acknowledges its receipt of and agrees to be bound by the Letter of Transmittal. GUARANTEED DELIVERY PROCEDURES If a registered holder of the Old Notes desires to tender such Old Notes and the Old Notes are not immediately available, or time will not permit such holder's Old Notes or other required documents to reach the Exchange Agent before the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if (i) the tender is made through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent received from such Eligible Institution a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form provided by the Company (by telegram, telex, facsimile transmission, mail or hand delivery), setting forth the name and address of the holder of Old Notes and the amount of Old Notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent, and (iii) the certificates for all physically tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery. WITHDRAWAL RIGHTS Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. 16 24 For a withdrawal of a tender of Old Notes to be effective, a written or, for DTC participants, electronic ATOP transmission notice of withdrawal must be received by the Exchange Agent at its address set forth on the back cover page of this Prospectus prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn (including the certificate number or numbers and principal amount of such Old Notes), (iii) be signed by the holder in the same manner as the original signature on the Letter of Transmittal by which such Old Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee register the transfer of such Old Notes into the name of the person withdrawing the tender, and (iv) specify the name in which any such Old Notes are to be registered, if different from that of the Depositor. All questions as to the validity, form, and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Old Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder as soon as practicable after withdrawal, rejection of tender, or termination of the Exchange Offer. Properly withdrawn Old Notes may be retendered by following one of the procedures under "The Exchange Offer -- Procedures for Tendering" at any time on or prior to the Expiration Date. CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provision of the Exchange Offer, the Company shall not be required to accept for exchange, or to issue New Notes in exchange for, any Old Notes and may terminate or amend the Exchange Offer if at any time before the acceptance of such Old Notes for exchange or the exchange of the New Notes for such Old Notes, the Company determines that the Exchange Offer violates applicable law, any applicable interpretation of the staff of the Commission or any order of any governmental agency or court of competent jurisdiction. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the Company in whole or in part at any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. In addition, the Company will not accept for exchange any Old Notes tendered, and no New Notes will be issued in exchange for any such Old Notes if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). In any such event the Company is required to use every reasonable effort to obtain the withdrawal of any stop order at the earliest possible time. EXCHANGE AGENT All executed Letters of Transmittal should be directed to the Exchange Agent. The First National Bank of Chicago has been appointed as Exchange Agent for the Exchange Offer. Questions, requests for assistance and requests for additional copies of this Prospectus or of the Letter of Transmittal should be directed to the Exchange Agent addressed as follows: 17 25 The First National Bank of Chicago By Registered or Certified Mail or By Hand or Overnight Delivery Service: The First National Bank of Chicago c/o First Chicago Trust Company of New York 14 Wall Street 8th Floor, Window 2 New York, New York 10005 By Facsimile Transmission (for Eligible Institutions only) Fax (212) 240-8939 (For Information by Telephone or Telephone Confirmation) (212) 240-8801 (Originals of all documents sent by facsimile should be sent promptly by registered or certified mail, by hand, or by overnight delivery service.) FEES AND EXPENSES The Company will not make any payments to brokers, dealers, or others soliciting acceptances of the Exchange Offer. The principal solicitation is being made by mail; however, additional solicitations may be made in person or by telephone by officers and employees of the Company. The estimated cash expenses to be incurred in connection with the Exchange Offer will be paid by the Company and are estimated in the aggregate to be $______, which includes fees and expenses of the Exchange Agent, accounting, legal, printing, and related fees and expenses. TRANSFER TAXES Holders who tender their Old Notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that holders who instruct the Company to register New Notes in the name of, or request that Old Notes not tendered or not accepted in the Exchange Offer be returned to, a person other than the registered tendering holder will be responsible for the payment of any applicable transfer tax thereon. 18 26 THE ACQUISITION On September 30, 1997, the Company acquired Ryder, North America's largest motor carrier of automobiles and light trucks, from Ryder System for $114.5 million in cash. Ryder offers a full range of automotive delivery services including transporting new, used and off-lease vehicles to dealers from plants, rail ramps, ports and auctions, and providing vehicle rail-car loading and unloading services. Ryder also provides logistics solutions and other services to the new and used vehicle distribution market and other segments of the automotive industry, including the growing used car superstore market. For the year ended December 31, 1996, Ryder generated revenues and EBITDA of $568.1 million and $41.2 million, respectively (in each case, adjusted to reflect only the businesses being acquired by the Company, before any pro forma adjustments). Ryder's EBITDA for 1996 includes an $11.3 million charge relating to a restructuring that was intended to improve Ryder's future operating performance. See "Unaudited Pro Forma Financial Information" and "Business -- Ryder." Ryder operated throughout the Continental United States and Canada through approximately 90 terminals and a fleet of approximately 3,400 Rigs, including approximately 600 owner-operated Rigs, and had approximately 4,800 employees. Similar to the Company, Ryder provided vehicle hauling services to all of the major domestic and foreign automotive manufacturers. General Motors represented Ryder's largest customer, accounting for approximately 49.9% of 1996 revenues. The Acquisition was consistent with the Company's growth strategy to increase its market share of the North American automotive carrier industry. The Acquisition also provided an opportunity for the Company to significantly accelerate its penetration with existing customers and gain entry to new customers. The Company believed that the Acquisition was attractive because: (i) the combination of Allied and Ryder creates the largest motor carrier in the automotive transportation industry, hauling approximately 65% of the new vehicles sold in the United States and Canada in 1996; (ii) significant cost savings and margin enhancement improvement opportunities are expected to be realized through consolidation of terminal operations and administrative functions, the integration of proprietary information systems, and the implementation of performance improvement programs; (iii) the Company will be able to provide additional services to its customers through increased capabilities, such as port processing and rail yard management; (iv) the Company's customer base will become more diversified; and (v) the Company will expand the geographic territories in which it does business from the southern and eastern United States and Canada to the entire Continental United States and Canada. The Company believes that the Acquisition will result in the following cost-savings upon the integration of the operations of Ryder with the Company, which is expected to begin during the fourth quarter of 1997 and be completed by the end of 1998. - Optimize Terminal Network. The Company plans to consolidate approximately 19 terminals, or approximately 14% of the combined companies' terminal locations, which are located in close proximity to one another. The consolidation of these terminals will reduce operating and terminal overhead costs through the elimination of lease or depreciation charges, the reduction in on-site personnel costs, and the reduction of other direct operating expenses. In addition, the Company believes that additional cost savings can be achieved by combining terminal administrative functions. - Improve Productivity. Over the past decade, the Company has implemented performance improvement programs at its terminal locations which have resulted in reduced operating costs. The Company intends to implement these programs at the Ryder locations. In addition, the Company believes it will be able to increase Rig utilization through the consolidation of terminal locations and through the increased backhaul potential that the Company believes will result from the Acquisition. These actions are expected to reduce the number of Rigs the Company is required to operate and result in reduced operating costs. - Integration of Proprietary Information Systems. The Company intends to integrate Ryder's information systems with its own proprietary information systems. This is expected to result in increased operating efficiencies and reduced administrative costs. 19 27 - Centralize Administrative Functions. The Company's administrative functions are centralized and performed at its corporate headquarters in Decatur, Georgia. The Company has adopted a detailed integration plan to combine most of Ryder's central office functions with the Company's in order to eliminate redundant functions and reduce costs. In addition, the Company believes that significant opportunities exist to further increase its revenues by offering a broader scope of services to existing and new customers. For example, Ryder began providing transportation logistics services to AutoNation in January 1997 and to DriversMart in March 1997 for the movement of vehicles to their reconditioning centers and stores and began providing port processing services to Volkswagen in August 1997. The Company also began providing transportation logistics services to Aucnet in August 1997 relating to the management of the movement of vehicles sold through live interactive auctions and bulletin board sales on the Internet. USE OF PROCEEDS The Company will not receive any cash proceeds or incur an additional indebtedness as a result of the issuance of the New Notes pursuant to the Exchange Offer. The net proceeds to the Company from the Offering were approximately $144,650,000 (after deducting discounts and commissions and estimated expenses of the Offering). Concurrently with the consummation of the Offering, the Company entered into the New Credit Facility. See "Description of Other Indebtedness -- New Credit Facility." The Company used the proceeds from the Offering to fund the Acquisition, to pay related fees and expenses and to reduce borrowings. See "The Acquisition." CAPITALIZATION The following table sets forth the capitalization of the Company at June 30, 1997 and as adjusted to give effect to the Acquisition and the Offering. This table should be read in conjunction with "Selected Financial Data," "Unaudited Pro Forma Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements, including the notes thereto, of the Company and Ryder included elsewhere in this Prospectus.
JUNE 30, 1997 ------------- ACTUAL AS ADJUSTED -------- ----------- (DOLLARS IN THOUSANDS) Long-term debt (including current maturities): Revolving credit facility(1) $ 59,737 $ 35,487 8 5/8% Senior Notes due 2007 -- 150,000 12% Senior Subordinated Notes due 2003 40,000 40,000 Other debt and capital lease obligations 5,497 6,302 -------- -------- Total debt 105,234 231,789 Stockholders' equity 60,157 60,157(2) -------- -------- Total capitalization $165,391 $291,946 ======== ========
- -------- (1) The Company entered into a new credit facility (the "New Credit Facility") on September 30, 1997 which provides for $230.0 million of total availability. The New Credit Facility was finalized concurrent with the consummation of the Original Offering. On a pro forma basis, the Company has approximately $35.5 million of borrowings, approximately $68.3 million of letters of credit outstanding and approximately $126.3 million of undrawn availability under the New Credit Facility. See "Description of Other Indebtedness -- New Credit Facility." (2) Excludes an after-tax charge of approximately $5.0 million that the Company intends to record as a result of the Acquisition to write down Company Rigs and terminal facilities that will be idled or closed. 20 28 SELECTED FINANCIAL DATA The selected financial data presented below as of and for each of the five years in the period ended December 31, 1996 are derived from the Company's Consolidated Financial Statements which have been audited by Arthur Andersen LLP, independent public accountants. The selected financial data presented below as of and for the six months ended June 30, 1996 and 1997 are derived from the Company's unaudited Consolidated Financial Statements, which in the opinion of management include all adjustments (consisting only of normal recurring accruals) necessary to fairly present the information set forth therein. The results for the six months ended June 30, 1997 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 1997. The selected financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements, including the notes thereto, included elsewhere in this Prospectus.
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, -------------------------------------------------------- ---------------------- 1992 1993 1994(1) 1995 1996 1996 1997 -------- --------- --------- --------- --------- --------- ---------- (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Revenues................................... $212,655 $ 241,981 $ 297,236 $ 381,464 $ 392,547 $ 200,565 $ 208,969 -------- --------- --------- --------- --------- --------- --------- Operating expenses: Salaries, wages and fringe benefits...... 116,901 134,054 157,979 195,952 204,838 105,315 109,634 Operating supplies and expenses.......... 40,154 44,090 51,532 62,179 62,880 31,526 32,563 Purchased transportation................. 2,002 3,223 9,486 32,084 34,533 17,666 19,170 Insurance and claims..................... 9,553 9,745 12,043 16,022 16,849 8,039 8,098 Operating taxes and licenses............. 10,084 12,223 14,301 16,564 16,122 8,381 8,190 Depreciation and amortization............ 8,878 11,683 16,314 25,431 26,425 12,931 13,786 Rent expense............................. 6,051 3,485 3,214 5,354 4,975 2,481 2,470 Communications and utilities............. 1,405 1,456 1,855 3,435 3,111 1,740 1,534 Other operating expenses................. 1,467 1,662 1,781 3,522 4,219 1,431 2,074 -------- --------- --------- --------- --------- --------- --------- Total operating expenses........... 196,495 221,621 268,505 360,543 373,952 189,510 197,519 -------- --------- --------- --------- --------- --------- --------- Operating income........................... 16,160 20,360 28,731 20,921 18,595 11,055 11,450 Minority interest in earnings of consolidated subsidiary.................. (1,034) (858) -- -- -- -- -- Interest expense........................... 6,963 6,042 5,462 11,260 10,720 5,396 5,408 Interest income............................ 61 313 312 707 603 303 357 Other expense, net......................... 169 49 -- -- -- -- -- -------- --------- --------- --------- --------- --------- --------- Income before income taxes, extraordinary item and cumulative effect of accounting change .................................... 8,055 13,724 23,581 10,368 8,478 5,962 6,399 Income tax provision(2).................... 3,249 4,183 9,393 4,222 3,557 2,504 2,688 -------- --------- --------- --------- --------- --------- --------- Income before extraordinary item and cumulative effect of accounting change..... $ 4,806 $ 9,541 $ 14,188 $ 6,146 $ 4,921 $ 3,458 $ 3,711 ======== ========= ========= ========= ========= ========= ========= OTHER DATA: EBITDA(3).................................. $ 25,038 $ 32,043 $ 45,045 $ 46,352 $ 45,020 $ 23,986 $ 25,236 Ratio of earnings to fixed charges(4)...... 2.0x 3.0x 4.6x 1.8x 1.7x 2.0x 2.0x Capital expenditures: New Rigs and modifications............... $ 11,680 $ 33,848 $ 23,337 $ 11,716 $ 17,092 $ 12,053 $ 5,811 Maintenance and other.................... 1,811 2,149 7,208 6,494 8,880 2,323 1,099 -------- --------- --------- --------- --------- --------- --------- Total.............................. $ 13,491 $ 35,997 $ 30,545 $ 18,210 $ 25,972 $ 14,376 $ 6,910 ======== ========= ========= ========= ========= ========= ========= BALANCE SHEET DATA (AT END OF PERIOD): Total assets............................... $ 89,722 $ 119,897 $ 218,806 $ 214,686 $ 211,083 $ 216,903 $ 228,694 Minority interest in consolidated subsidiary............................... 12,224 -- -- -- -- -- -- Total debt................................. 48,023 44,120 122,894 111,002 95,983 103,259 105,234 Stockholders' equity (deficit)............. (5,944) 35,759 45,835 53,022 56,709 55,563 60,157
- ---------- (1) Includes the results of Auto Haulaway commencing with its acquisition by the Company on October 31, 1994. (2) Prior to the Company's initial public offering in 1993, its predecessors were not subject to federal or most state income taxes. Accordingly, the Company's consolidated financial statements for the periods prior to the initial public offering include a pro forma provision for income taxes. (3) Represents income before interest expense, interest income, income tax provision, depreciation and amortization and extraordinary item. EBITDA is presented because it provides useful information regarding a company's ability to service and/or incur debt. EBITDA should not be considered in isolation from or as a substitute for net income, cash flows from operating activities and other consolidated income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. (4) For purposes of computing the ratio of earnings to fixed charges (a) earnings consist of income before income taxes, extraordinary item, cumulative effect of accounting change and minority interest in net income (loss) of 21 29 unconsolidated entities plus fixed charges, and (b) fixed charges consist of interest expense, amortization of debt expense and the portion (approximately one-third) of rental expense that management believes is representative of the interest component of rental expense. 22 30 UNAUDITED PRO FORMA FINANCIAL INFORMATION The following unaudited pro forma financial information has been derived from the historical financial statements of the Company and Ryder, and gives pro forma effect to the Acquisition and the Offering as if they had occurred as of January 1, 1996 with respect to the unaudited condensed pro forma statements of operations and as of June 30, 1997 with respect to the unaudited condensed pro forma balance sheet. The unaudited pro forma financial information does not purport to represent what the Company's results of operations actually would have been if each of such transactions had occurred as of the dates indicated or will be for any future periods. The unaudited pro forma financial information is based upon assumptions believed appropriate by management of the Company and does not reflect all potential cost savings or improvements in revenues that the Company believes could be realized as a result of the Acquisition. However, there can be no assurance that any of these anticipated savings can be achieved or that the effects of any such savings will not be offset by unexpected, unforeseen increases in other costs. The unaudited pro forma financial information should be read in conjunction with "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements, including the notes thereto, of the Company and Ryder included elsewhere in this Prospectus. The Acquisition was accounted for under the purchase method of accounting. The total purchase price for the Acquisition has been allocated to the assets and liabilities acquired based upon their relative fair values at the closing of the Acquisition, based upon valuation and other studies which are not yet complete. The allocation of the purchase price reflected herein is subject to revision when additional information from the valuations and studies become available. However, the Company does not expect that the effects of the final allocation will differ materially from those set forth herein. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 1997 (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
ACQUISITION ADJUSTED PRICE PRO FORMA RYDER(1) ADJUSTMENTS RYDER ALLIED ADJUSTMENTS COMBINED ------- ----------- --------- --------- ------------ ---------- REVENUES ................................. $ 315,156 $(2,663)(2) $ 315,696 $ 208,969 $ -- $ 524,665 3,203(3) --------- ------- --------- --------- ------- --------- OPERATING EXPENSES Depreciation and amortization .......... 19,818 (190)(2) 19,636 13,786 108(5) 33,530 8(3) Other operating expenses ............... 285,497 (2,637)(2) 286,013 183,733 (6,340)(6) 463,406 --------- ------- --------- --------- ------- --------- Total operating expenses 305,315 334 305,649 197,519 (6,232) 496,936 --------- ------- --------- --------- ------- --------- OPERATING INCOME ......................... 9,841 206 10,047 11,450 6,232 27,729 --------- ------- --------- --------- ------- --------- OTHER INCOME (EXPENSE) Interest expense ....................... (334) (1)(3) (335) (5,408) (5,827)(7) (11,570) Interest income ........................ 1,228 (137)(2) 1,091 357 -- 1,448 Other income (expense), net ............ 738 14(2) 752 -- -- 752 --------- ------- --------- --------- ------- --------- 1,632 (124) 1,508 (5,051) (6,089) (9,370) --------- ------- --------- --------- ------- --------- INCOME BEFORE INCOME TAXES .................................. 11,473 82 11,555 6,399 405 18,359 INCOME TAX PROVISION ..................... 3,818 724(4) 4,542 2,688 (1,032) 8,262 --------- ------- --------- --------- ------- --------- NET INCOME (LOSS) ........................ $ 7,655 $ (642) $ 7,013 $ 3,711 $ (627) $ 10,087 ========= ======= ========= ========= ======= ========= EARNINGS PER SHARE ....................... $ 0.48 $ 1.31 ========= ========= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 7,725 7,725 EBITDA(8)................................. $ 30,435 $ 25,236 $ 62,011 ========= ========= =========
See accompanying notes to unaudited pro forma financial information. 23 31 PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
OFFERING AND PURCHASE ACQUISITION ADJUSTED PRICE PRO FORMA RYDER(1) ADJUSTMENTS RYDER ALLIED ADJUSTMENTS COMBINED --------- ----------- --------- --------- ------------ ------------ REVENUES .................................... $ 583,292 $(15,178)(2) $ 568,114 $ 392,547 $ -- $ 960,661 --------- -------- --------- --------- ------- --------- OPERATING EXPENSES Depreciation and amortization ............. 38,838 (718)(2) 38,120 26,425 115(5) 64,660 Restructuring charge ...................... 18,328 (7,023)(2) 11,305 -- -- 11,305 Other operating expenses .................. 543,315 (25,216)(2) 518,099 347,527 (12,678)(6) 852,948 --------- ------- --------- --------- ------- --------- Total operating expenses .......... 600,481 (32,957) 567,524 373,952 (12,563) 928,913 --------- ------- --------- --------- ------- --------- OPERATING (LOSS) INCOME ..................... (17,189) 17,779 590 18,595 12,563 31,748 --------- ------- --------- --------- ------- --------- OTHER INCOME (EXPENSE) Interest expense .......................... (866) -- (866) (10,720) (11,702)(7) (23,288) Interest income ........................... 895 (282)(2) 613 603 -- 1,216 Other income (expense), net ............... 2,470 2(2) 2,472 -- -- 2,472 --------- ------- --------- --------- ------- --------- 2,499 (280) 2,219 (10,117) (11,702) (19,600) --------- ------- --------- --------- ------- --------- (LOSS) INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM ...................................... (14,690) 17,499 2,809 8,478 861 12,148 INCOME TAX (BENEFIT) PROVISION ................................. (1,256) 3,837(4) 2,581 3,557 336(4) 6,474 --------- ------- --------- --------- ------- --------- (LOSS) INCOME BEFORE EXTRAORDINARY ITEM ........................ $ (13,434) $13,662 $ 228 $ 4,921 $ 527 $ 5,674 ========= ======= ========= ========= ======= ========= EARNINGS PER SHARE .......................... $ 0.64 $ 0.73 ========= ========= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING ........................ 7,725 7,725 EBITDA(8) ................................... $ 41,182 $ 45,020 $ 98,880 ========= ========= =========
See accompanying notes to unaudited pro forma financial information. 24 32 PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED) AS OF JUNE 30, 1997 (IN THOUSANDS)
OFFERING AND ACQUISITION ADJUSTED PURCHASE PRICE PRO FORMA RYDER(9) ADJUSTMENTS RYDER ALLIED ADJUSTMENTS COMBINED ---------- ----------- -------- --------- -------------- ------------- ASSETS CURRENT ASSETS Cash and cash equivalents ................ $ 6,047 $ 170(10) $ 1,217 $ 4,409 $ -- $ 5,626 (5,000)(11) Short-term investments ................... -- -- -- 8,821 -- 8,821 Receivables, net of allowance for doubtful accounts ...................... 46,396 650(10) 47,046 28,325 -- 75,371 Deferred income taxes .................... 6,509 (293)(11) 11,608 -- -- 11,608 4,433(12) 959(13) Other current assets ..................... 17,552 (7,861)(11) 9,691 18,469 -- 28,160 --------- -------- --------- --------- ------- ----------- Total current assets .............. 76,504 (6,942) 69,562 60,024 -- 129,586 --------- -------- --------- --------- ------- ----------- PROPERTY AND EQUIPMENT, net ................ 161,299 46(10) 159,122 126,364 14,500(17) 299,986 (2,223)(11) OTHER ASSETS Goodwill, net ............................ 42,550 -- 42,550 33,800 14,055(18) 90,405 Other .................................... 10,862 (4,695)(11) 6,167 8,506 5,350(19) 20,023 --------- -------- --------- --------- ------- ----------- Total other assets ................ 53,412 (4,695) 48,717 42,306 19,405 110,428 --------- -------- --------- --------- ------- ----------- Total assets ...................... $ 291,215 $ 13,814) $ 277,401 $ 228,694 $33,905 $ 540,000 ========= ======== ========= ========= ======= =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt ..... $ -- $ -- $ -- $ 8,248 $ -- $ 8,248 Trade accounts payable ................... 21,246 710(10) 21,956 12,910 -- 34,866 Accrued liabilities ...................... 57,657 50(10) 69,845 37,433 13,082(20) 120,360 (3,329)(11) 12,909(14) 2,558(15) Total current liabilities ..................... 78,903 12,898 91,801 58,591 13,082 163,474 --------- -------- --------- --------- ------- ----------- LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current maturities ..... 805 -- 805 96,986 150,000(21) 223,541 (24,250)(22) DEFERRED INCOME TAXES ...................... 26,300 765(11) 9,274 8,700 5,655(23) 23,629 (17,791)(12) OTHER LONG-TERM LIABILITIES ................ 20,615 79(10) 65,665 4,260 (726)(24) 69,199 (1,419)(11) 46,390(14) STOCKHOLDERS' EQUITY ....................... 164,592 (54,736)(16) 109,856 60,157 (109,856)(24) 60,157(25) --------- -------- --------- --------- -------- ----------- Total liabilities and stockholders' equity ......................... $ 291,215 $(13,814) $ 277,401 $ 228,694 $ 33,905 $ 540,000 ========= ======== ========= ========= ======== ===========
See accompanying notes to unaudited pro forma financial information. 25 33 NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION (DOLLARS IN THOUSANDS) (1) Represents the historical results of operations of Ryder Automotive Carrier Services, Inc. ("RACS") for the period indicated. (2) Elimination of the operations of RACS not included in the Acquisition. (3) Addition of the operations of RC Management Corp. ("RCMC"), which was acquired as part of the Acquisition. RCMC began operations in January 1997. (4) Reflects the income tax effect of the adjustments. (5) Reflects the net effect of the change in goodwill amortization expense related to the Acquisition, as follows:
SIX MONTHS ENDED YEAR ENDED JUNE 30, 1997 DECEMBER 31, 1996 ------------- ----------------- (a) Increased goodwill amortization expense based upon the preliminary purchase price allocation of the Acquisition, using the straight-line method over a 40-year life................... $ 708 $ 1,415 (b) Elimination of goodwill amortization expense from Ryder's operations............................................. (600) (1,300) ------ -------- $ 108 $ 115 ====== ========
(6) Represents elimination of the following costs: (a)Salaries and wages, rent expenses and other operating expenses to be eliminated as a result of closing duplicate terminals and offices. (b)Management and other fees allocated to Ryder by Ryder System which will not be incurred by Ryder under the Company's ownership. (7) Reflects interest expense at 8 5/8%, elimination of interest expense on amounts under the revolving credit facility to be repaid with proceeds of the Original Offering, and amortization of deferred debt costs incurred in connection with the issuance of the Old Notes. (8) Represents income before interest expense, interest income, income tax provision and depreciation and amortization. EBITDA is presented because it provides useful information regarding a company's ability to service and/or incur debt. EBITDA should not be considered in isolation from or as a substitute for net income, cash flows from operating activities and other consolidated income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. (9) Represents the historical assets and liabilities of RACS as of June 30, 1997. (10) Addition of the assets and liabilities of RCMC, which was acquired as part of the Acquisition. (11) Elimination of the assets and liabilities of RACS not included in the Acquisition. (12) Deferred income tax assets and liabilities related to the assumption by Ryder of certain insurance liabilities from Ryder System as part of the Acquisition (see note 14). (13) Effect on deferred income taxes related to severance liability (see note 15). (14) Reflects the transfer to Ryder of certain insurance liabilities, including workers' compensation, post employment benefits other than pensions, and general liability, previously maintained on the books of Ryder System. (15) Severance liability related to termination of certain Ryder personnel in connection with the Acquisition. (16) Effect on stockholders' equity of pro forma adjustments to assets and liabilities as follows: (a) Insurance liabilities assumed from Ryder System, net of deferred taxes...... $ (37,075) (b) Severance liability assumed from Ryder System, net of deferred taxes........ (1,599) (c) Assets and liabilities of RACS not acquired................................. (16,089) (d) Assets and liabilities of RCMC acquired..................................... 27 ---------- Total effect on stockholders' equity.............................. $ (54,736) ==========
(17) Write-up of Ryder property and equipment to fair market value. 26 34 (18) Adjustment to goodwill reflects: (a) Addition of goodwill related to the Acquisition $ 56,605 (b) Elimination of goodwill recorded by Ryder (42,550) ----------- Total effect on goodwill................................. $ 14,055 ===========
(19) Estimated Offering expenses to be deferred and amortized over the life of the Notes. (20) Estimated additional liabilities incurred in connection with the Acquisition, including severance and Acquisition costs. (21) Reflects the issuance of the Old Notes. (22) Repayment of amounts outstanding under the revolving credit facility with a portion of the proceeds of the Original Offering. (23) Deferred income taxes, recorded at 39%, related to the write-up of Ryder property and equipment to fair market value. (24) Elimination of Ryder advances to affiliates and stockholders' equity. (25) Excludes an after-tax charge of approximately $5.0 million the Company intends to record as a result of the Acquisition to write down Company Rigs and terminal facilities that will be idled or closed. 27 35 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The Company provides automobile and light truck transportation and logistics services to automotive manufacturers and retailers. The Company's primary business is the transportation of new automobiles and light trucks principally from manufacturing plants and rail heads to dealerships in trip lengths generally under 200 miles. The Company receives revenues from the transportation of vehicles on a per unit basis. Revenue is comprised of a fixed rate per unit and a variable rate on a per mile transported basis to account for differences in the length of the haul. Accordingly, both the number of units transported, as well as the distance vehicles are transported, are the primary components of revenue. The Company's cost structure is highly variable with salaries, wages and fringe benefits comprising greater than 50% of total revenue. In October 1994, the Company acquired Auto Haulaway, the largest motor carrier of new automobiles and light trucks in Canada. Accordingly, since the acquisition of Auto Haulaway, the Company has derived approximately 30% of its revenues in Canada with the balance in the United States. The following table summarizes historic new vehicle production and sales in the United States and Canada, the primary drivers of the Company's revenues.
SIX MONTHS YEAR ENDED DECEMBER 31, ENDED JUNE 30, ------------------------------ ------------------ 1994 1995 1996 1996 1997 ---- ---- ---- ---- ---- (IN MILLIONS) NEW VEHICLE PRODUCTION United States................................................. 11.9 11.6 11.5 6.1 6.1 Percent increase (decrease) over prior year................... 12.6% (2.3)% (0.9)% -- 0.3% Canada........................................................ 2.3 2.4 2.4 1.3 1.4 Percent increase over prior year.............................. 2.8% 3.6% 0.0% -- 8.7% NEW VEHICLE SALES United States................................................. 15.0 14.7 15.1 7.8 7.6 Percent increase (decrease) over prior year 8.3% (2.2)% 2.5% -- (2.0)% Canada........................................................ 1.2 1.1 1.2 0.6 0.7 Percent increase (decrease) over prior year................... 5.3% (7.6)% 3.5% -- 16.2%
- ---------- Source: DRI/McGraw-Hill. Since 1996, the Company has made a significant commitment to developing its logistics business in response to its customers' needs for integrated automotive distribution services beyond the traditional movement of vehicles. Over the past two years, the Company has incurred significant start-up costs to develop its logistic business which is operated through a subsidiary, Axis Group, Inc. ("Axis"). Management believes these start-up costs are largely complete. During 1995, the Company's operations were impacted by the lower sales of automobiles and light trucks, particularly in Canada, and lower new vehicle production in the United States. While new vehicle sales improved in the United States and Canada in 1996, the Company's operations were negatively impacted by decreased new vehicle production in the United States and by an increase in fuel costs which impacted operating earnings by approximately $2.5 million, as well as by the start-up costs of Axis which totaled approximately $3.0 million in 1996. In the first half of 1997, the strength of the Canadian market offset both slight weakness in United States vehicle sales and approximately $2.4 million of continued start-up losses of Axis. Capital expenditures primarily consist of expenditures for the acquisition and maintenance of Rigs, as well as proprietary information systems. Capital expenditures for Rigs are utilized to maintain the Company's fleet and to minimize operating costs. Since 1994, the Company has spent approximately $52.2 million to purchase new 75-foot Rigs and to modify existing Rigs primarily to lengthen them to 75 feet, the maximum length allowed by most 28 36 governmental regulations, in order to increase fleet efficiency. The Company's proprietary information systems are designed to support the Company's operations by providing timely management information and sophisticated data exchange with the Company's customers. Since 1994, the Company has spent $5.4 million to enhance the capability of its proprietary information systems. The Company's information systems also facilitate the efficient integration of new operations into the Company's infrastructure, including those of Auto Haulaway and Ryder. The Company believes that the Acquisition will provide the Company with significant opportunities for cost reduction. The Company expects to achieve cost savings by: (i) eliminating duplicative administrative functions; (ii) integrating Ryder's operations into its proprietary information systems; and (iii) consolidating certain terminal locations. RESULTS OF OPERATIONS The following table sets forth the Company's results of operations as a percentage of revenues for the periods indicated:
YEAR ENDED SIX MONTHS ENDED DECEMBER 31, JUNE 30, ------------------------------- ------------------- 1994 1995 1996 1996 1997 ----- ----- ----- ----- ----- Revenues........................................... 100.0% 100.0% 100.0% 100.0% 100.0% Operating expenses: Salaries, wages and fringe benefits.............. 53.1 51.4 52.2 52.5 52.5 Operating supplies and expenses.................. 17.3 16.3 16.0 15.7 15.6 Purchased transportation......................... 3.2 8.4 8.8 8.8 9.2 Insurance and claims............................. 4.1 4.2 4.3 4.0 3.9 Operating taxes and licenses..................... 4.8 4.3 4.1 4.2 3.9 Depreciation and amortization.................... 5.5 6.7 6.7 6.5 6.6 Rent expense..................................... 1.1 1.4 1.3 1.2 1.2 Communications and utilities..................... 0.6 0.9 0.8 0.9 0.8 Other operating expenses......................... 0.6 0.9 1.1 0.7 0.8 ------- ------- ------- ------- ------- Total operating expenses................. 90.3 94.5 95.3 94.5 94.5 ------- ------- ------- ------- ------- Operating income................................... 9.7 5.5 4.7 5.5 5.5 ------- ------- ------- ------- ------- Other income(expense): Interest expense................................. (1.8) (3.0) (2.8) (2.7) (2.6) Interest income.................................. 0.1 0.2 0.2 0.2 0.2 ------- ------- ------- ------- ------- Total other income (expense)............. (1.7) (2.8) (2.6) (2.5) (2.4) ------- ------- ------- ------- ------- Income before income taxes and extraordinary item.. 8.0 2.7 2.1 3.0 3.1 Income tax provision............................... (3.2) (1.1) (0.9) (1.3) (1.3) ------- ------- ------- ------- ------- Income before extraordinary item................... 4.8% 1.6% 1.2% 1.7% 1.8% ======= ======= ======= ======= =======
Six months ended June 30, 1997 compared to six months ended June 30, 1996 Revenues were $209.0 million for the first six months of 1997 compared to $200.6 million for the first six months of 1996, an increase of $8.4 million, or 4.2%. The increase in revenues was primarily due to an increase in the number of vehicles the Company delivered together with an increase in the revenue generated per vehicle delivered. The Company delivered approximately 2% more vehicles during the first six months of 1997 than during the first six months of 1996. A 13% increase in vehicle deliveries in Canada due to increased Canadian new vehicle production and sales more than offset a 4% decline in vehicle deliveries in the United States. In addition, the revenue generated per vehicle delivered for the first six months of 1997 increased approximately 2% from the first six months of 1996 due to an increase in longer haul dealer deliveries. The operating ratio (operating expenses as a percentage of revenues) for the first six months of 1997 was 94.5%, the same as in the first six months of 1996. Additional operating income resulting from the increase in revenues was offset by continued start-up losses of Axis. The following is a discussion of significant changes in the Company's major expense categories: Salaries, wages and fringe benefits were 52.5% of revenues in both the first six months of 1997 and 1996. However, purchased transportation increased from 8.8% of revenues for the first six months of 1996 to 9.2% of revenues during the first six months of 1997 due to the increased use of owner-operators, together with an increase in the vehicles the Company had delivered by other carriers. 29 37 Operating taxes and licenses decreased from 4.2% of revenues during the first six months of 1996 to 3.9% of revenues during the first six months of 1997. The decrease was primarily due to a decline in the operating taxes and licenses the Company paid for its fleet of Rigs due to a decrease in the number of active Rigs the Company operated. 1996 Compared to 1995 Revenues were $392.6 million in 1996 compared to $381.5 million in 1995, an increase of $11.1 million, or 2.9%. The increase in revenues was primarily due to a 5% increase in the number of vehicles delivered, offset in part by a decrease in the revenue generated per vehicle delivered due to an increase in the percentage of shorter haul deliveries. The operating ratio for 1996 was 95.3%, compared to 94.5% in 1995. The increase was primarily due to planned startup costs for Axis, together with increased fuel costs and an increase in the percentage of light trucks hauled by the Company, which led to lower load averages and increased costs. The following is a discussion of the changes in the Company's major expense categories: Salaries, wages and fringe benefits increased from 51.4% of revenues in 1995 to 52.2% of revenues in 1996. This change as a percent of revenues was primarily due to the addition of payroll costs for Axis, increased costs resulting from strikes at General Motors during March and October 1996 and the severe winter weather during the first quarter of 1996. Operating supplies and expenses as a percentage of revenues decreased from 16.3% in 1995 to 16.0% in 1996, despite a rise in diesel fuel prices. This decrease is primarily due to an increase in the units delivered by owner- operators combined with the use of newer, more efficient equipment which has reduced the costs to operate the Company's Rigs and has increased fuel efficiency. Owner-operators are responsible for all costs to operate their Rigs and such costs are included in purchased transportation. In addition, the Company implemented productivity and efficiency programs that reduced operating expenses. Purchased transportation increased from 8.4% of revenues in 1995 to 8.8% in 1996. This is mainly due to an increase in the number of units hauled by owner-operators and by other carriers for the Company as part of an exchange program to improve the backhaul ratio. Interest expense for 1996 decreased to $10.7 million compared to $11.3 million in 1995. This decrease is primarily the result of reductions in long-term debt during the year due to debt repayments. The effective tax rate increased from approximately 41% of pre-tax income in 1995 to approximately 42% of pre-tax income in 1996. This increase was due to higher state taxes. 1995 Compared to 1994 Revenues were $381.5 million in 1995 compared to $297.2 million in 1994, an increase of $84.3 million, or 28.4%. The increase in revenues was primarily attributable to the acquisition of Auto Haulaway which was completed October 31, 1994. Auto Haulaway contributed $123.4 million of revenues in 1995. The additional revenues gained from the acquisition of Auto Haulaway were offset in part by decreased revenues from the Company's U.S. operations due to a decrease in vehicles delivered arising from a weaker U.S. auto market compared to 1994. The operating ratio for 1995 was 94.5%, compared to 90.3% in 1994. The increase was primarily due to decreases in vehicles delivered because of decreases in new vehicle production and sales. U.S. car and light truck sales for 1995 decreased approximately 2% from 1994 and Canada's car and light truck sales were approximately 8% below that of 1994. In addition, 1995 new vehicle production in Canada for Auto Haulaway's largest customer decreased approximately 22% from 1994, mainly due to model changeovers. New vehicle production in the U.S. and Canada during 1995 was impacted by numerous model changeovers as well as slower than expected ramp-up of 30 38 production after the model changeovers at two of the Company's primary customers. As a result of the decline in new vehicle production and sales, the number of vehicles delivered by Auto Haulaway during 1995 decreased 13% compared to 1994. Salaries, wages and fringe benefits decreased from 53.1% of revenues in 1994 to 51.4% of revenues in 1995. This decrease as a percentage of revenue was primarily because Auto Haulaway utilizes approximately 200 owner-operators. Owner-operators are either paid a percentage of the revenues they generate or receive normal driver pay plus a truck allowance, and amounts earned by the owner-operators are included as purchased transportation expense. Prior to the acquisition of Auto Haulaway, all of the Company's drivers were employees of the Company. Operating supplies and expenses as a percentage of revenues decreased from 17.3% in 1994 to 16.3% in 1995. This decrease is primarily attributable to the inclusion of a full year of Auto Haulaway's operating results as Auto Haulaway's owner-operators are responsible for all costs to operate their Rigs, so the operating supplies and expenses related to the vehicles delivered by the owner-operator are greatly reduced. Purchased transportation increased from 3.2% of revenues in 1994 to 8.4% in 1995. As discussed above, this increase is the result of Auto Haulaway utilizing owner-operators to deliver vehicles. Depreciation and amortization expense increased from 5.5% of revenues in 1994 to 6.7% of revenues in 1995 mainly due to the acquisition of additional Rigs together with the additional goodwill amortization resulting from the acquisition of Auto Haulaway. Interest expense for 1995 increased to $11.3 million compared to $5.5 million in 1994. This increase was due to the increase in long-term debt resulting from the acquisition of Auto Haulaway and due to a rise in interest rates. The effective tax rate increased from approximately 40% of pre-tax income in 1994 to approximately 41% of pre-tax income in 1995. This increase was due to higher effective tax rates in Canada. Liquidity and Capital Resources The Company's sources of liquidity are funds provided by operations and borrowings under the New Credit Facility. The Company's liquidity needs are for the acquisition and maintenance of Rigs and terminals, the payment of operating expenses and the payment of interest on and repayment of long-term debt. Net cash provided by operating activities totaled $30.1 million for 1995, $31.1 million for 1996, and $14.2 million for the six months ended June 30, 1997. The increase in cash flows from operations during 1996 was mainly due to changes in working capital. Net cash used in investing activities totaled $18.0 million for 1995, $24.5 million for 1996, and $21.0 million for the six months ended June 30, 1997. The increase during 1996 was primarily due to an increase in the number of new Rigs that were acquired, modifications of existing equipment, and renovations and additions to terminal and maintenance facilities. The increase in cash used in investing activities during the first six months of 1997 is due to the acquisition of Kar-Tainer for approximately $13.1 million. Net cash used in financing activities was $12.8 million for 1995 and $15.7 million during 1996, and $9.3 million was provided by financing activities for the six months ended June 30, 1997. These amounts include repayments of long-term debt of $12.0 million in 1995 and $57.7 million in 1996. The acquisition of Kar-Tainer for approximately $13.1 million in April 1997 was financed through borrowings of long-term debt. In February 1996, the Company issued $40.0 million principal amount of 12% senior subordinated notes due February 1, 2003 (the "Senior Subordinated Notes"), the proceeds of which were used to repay long-term debt. The Senior Subordinated Notes were issued to ease restrictions and provide increased flexibility under the Company's existing revolving credit facility. The Company entered into the New Credit Facility, concurrent with the closing of the Offering. The New Credit Facility allows the Company to borrow up to $230.0 million under a revolving line of credit and a five-year maturity. The Company has approximately $35.5 million of borrowings, approximately $68.3 million of letters of credit outstanding and approximately $126.3 million of undrawn availability under the New Credit Facility. See "Description of Other Indebtedness--New Credit Facility." 31 39 The Company had $59.7 million of borrowings outstanding under its revolving credit facility at June 30, 1997 bearing interest at a weighted average interest rate of 7.5%. The Company has entered into interest rate cap agreements to cap a portion of the outstanding borrowings under its existing revolving credit facility at June 30, 1997. Such interest rate cap agreements are required under the terms of its existing revolving credit facility. Seasonality and Inflation The Company generally experiences its highest revenues during the second and fourth quarters of each calendar year due to the shipment of new models and because the first and third quarters are impacted by manufacturing plant downtime. During the past three years, inflation has not significantly affected the Company's results of operations. The following table sets forth certain operating data of the Company by quarter for each of 1996 and 1995 (in millions):
YEAR ENDED DECEMBER 31, 1996 ---------------------------- FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER TOTAL ------- -------- -------- -------- -------- Revenues................................... $ 93.4 $ 107.2 $ 87.6 $ 104.4 $ 392.6 EBITDA(1).................................. 9.5 14.5 7.7 13.3 45.0 Operating income........................... 3.1 8.0 1.0 6.5 18.6 Income (loss) before extraordinary item.... 0.4 3.1 (0.9) 2.3 4.9 YEAR ENDED DECEMBER 31, 1995 ---------------------------- FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER TOTAL ------- -------- -------- -------- -------- Revenues................................... $101.1 $ 102.3 $ 82.2 $ 95.9 $ 381.5 EBITDA(1).................................. 12.5 13.9 7.1 12.9 46.4 Operating income........................... 6.3 7.6 0.6 6.4 20.9 Income (loss).............................. 2.1 2.9 (1.2) 2.4 6.2
- ---------- (1) Represents income before interest expense, interest income, income tax provision, depreciation and amortization and extraordinary item. 32 40 BUSINESS INDUSTRY OVERVIEW The new vehicle transportation business involves the transportation of new vehicles from manufacturing plants to new vehicle dealers. Vehicles are usually shipped by rail from the manufacturing plant to rail ramps throughout the United States where motor carriers, such as the Company, handle final delivery to dealers. Vehicles destined for dealers within a radius of approximately 250 miles from the plant are usually shipped by truck directly to the dealer. In each case, the rail or motor carrier generally is responsible for loading the vehicles on railcars or trailers and for any damages incurred while the vehicles are in the carrier's custody. Automobiles manufactured in Mexico and Canada are usually shipped into the United States by rail and delivered from rail ramps to dealers by truck. Automobiles manufactured in Europe and Asia for sale in the United States are transported into the United States by ship and are delivered directly to dealers from seaports by truck or shipped by rail to rail ramps and delivered by trucks to dealers. The current trend of automotive manufacturers is to reduce the number of suppliers with which they do business in an effort to reduce their manufacturing and inventory costs, as well as to improve the quality of their products. Manufacturers are increasingly demanding quality, service and cost efficiencies from the companies that transport their vehicles. For example, manufacturers require that their automotive carriers utilize sophisticated information systems to reduce the costs of the manufacturer through measures such as tracking the location of vehicles being transported, thereby improving inventory management. The remarketed vehicle transportation business involves the transportation of used and previously leased vehicles and vehicles sold through the automotive auction process. Vehicles are usually shipped from dealers or auctions to reconditioning centers or other used car dealers. There has recently been consolidation in the remarketed vehicle sector due to the rapid growth of the used car superstores, such as AutoNation and DriversMart, which has increased the volume of vehicles being delivered to the used car superstores and their reconditioning centers. THE COMPANY Prior to the Acquisition, the Company, founded in 1934, was the second largest motor carrier in North America specializing in the transportation of new and used automobiles and light trucks for all of the major domestic and foreign automotive manufacturers. As a result of the Acquisition, the Company is now the largest motor carrier of automobiles and light trucks in North America. The Company offers a full range of automotive delivery services including transporting new, used and off-lease vehicles to dealers from plants, rail ramps, ports and auctions, and providing vehicle rail-car loading and unloading services. The Company also provides logistics solutions and other services to the new and used vehicle distribution market and other segments of the automotive industry, including the rapidly growing used car superstore market. Allied and Ryder together hauled approximately 65% of the new vehicles sold in the United States and Canada in 1996 and had pro forma 1996 revenues nearly five times greater than the Company's closest competitor. For the year ended December 31, 1996, after giving pro forma effect to the Acquisition, revenues and EBITDA (as defined herein) of the Company would have been approximately $960.7 million and $98.9 million, respectively. The Company operates primarily in the short-haul segment of the automotive transportation industry with an average length of haul of less than 200 miles. The Company delivers new and used vehicles throughout the United States and Canada for all of the major domestic and foreign manufacturers of automobiles and light trucks and certain of the used car superstores. General Motors, Ford and Chrysler represent the Company's largest customers, accounting for approximately 35%, 26% and 14%, respectively, of 1996 pro forma revenues. The Company also provides services to all of the major foreign manufacturers, including Honda, Mazda, Nissan, Toyota, Isuzu, Volkswagen and Mitsubishi. The Company also provides logistics solutions that complement its new and used vehicle distribution services operations and is pursuing additional opportunities in the growing remarketed vehicle sector, which includes the delivery of used and previously leased vehicles and vehicles sold through the automotive auction process. For example, in early 1997 Ryder entered into agreements with AutoNation and DriversMart to provide transportation logistics services for the movement of vehicles to their reconditioning centers and stores, and in August 1997 Allied 33 41 entered into a contract with Aucnet to provide transportation logistics services relating to the movement of vehicles sold through live interactive auctions and bulletin board sales on the Internet. KEY STRENGTHS The Company's key strengths and distinguishing characteristics, which management believes have been enhanced as a result of the Acquisition, include the following: LEADING MARKET POSITION. The Company has become the largest motor carrier of automobiles and light trucks in North America as a result of the Acquisition. Allied and Ryder together hauled approximately 65% of the new vehicles sold in the United States and Canada in 1996 and had 1996 pro forma revenues nearly five times greater than the Company's closest competitor. The Company believes that its significant market position upon consummation of the Acquisition, combined with its specialized equipment and service, will strengthen the Company's position as a leader in the automotive transportation industry. LONG-TERM CUSTOMER RELATIONSHIPS. Over the past six decades, the Company has built a reputation as a reliable vehicle transporter and, as a result, has developed and maintained long-term relationships with its major customers. For example, the Company has been serving Ford since 1934 and Chrysler since 1979, while Ryder has been serving General Motors since 1914. These long-term relationships, combined with consistent quality service, have resulted in the Company and Ryder together hauling more than 50% of General Motors', Ford's and Chrysler's 1996 North American production. The Company believes that its long-term relationships, along with the integration of its information systems with those of its customers, provide the Company with a significant competitive advantage. PROPRIETARY INFORMATION SYSTEMS. The Company believes that its commitment to being a leader in developing proprietary information systems enables it to better serve its customers and reduce costs through improved efficiencies. For example, the Company maintains proprietary information systems that allow its customers to track the location of vehicles being transported by the Company, thereby improving inventory management and reducing costs associated with the delivery process. Additionally, through EDI capabilities, the Company communicates directly with manufacturers throughout the vehicle delivery process and electronically bills and collects from its customers, significantly decreasing cycle time. The Company believes that this is particularly important as the major manufacturers evaluate automotive carriers on the basis of such factors as the number of error-free exchanges of information, cycle time for receiving information, and the security of information systems. EMPHASIS ON PRODUCTIVITY IMPROVEMENTS. The Company continually seeks to enhance and improve performance and productivity through measures such as efficient management of its fleet of Rigs, the use of performance improvement programs for employees, and information systems development. Approximately 94% of the Company's Rigs are 75-foot models, the maximum length allowed by most governmental regulations, which enables the Company to haul a greater number of vehicles per load. Additionally, the Company has implemented a management strategy designed to increase the productivity of its employees through various programs which recognize employee performance, such as rewarding damage-free deliveries, employee efficiency and driver safety. During the first six months of 1997, the Company maintained a damage-free delivery rate of 99.6%. EXPERIENCED MANAGEMENT TEAM WITH SIGNIFICANT OWNERSHIP INTEREST. The Company's management team provides a depth and continuity of experience. The Company's senior management group averages over 20 years experience in the automotive transportation industry with certain officers having over 30 years experience with the Company. Additionally, the Company's management team owns an aggregate of approximately 49% of the outstanding common stock of the Company. Growth Strategy The Company's objective is to consistently meet its customers' needs by maintaining its position as a leading provider of high quality and cost effective automotive distribution services. The following are the primary elements of the Company's strategy to continue to enhance revenue growth and profitability: 34 42 INCREASE SHARE OF USED VEHICLE TRANSPORTATION MARKET. The Company believes it can generate additional revenue by continuing to pursue opportunities in the growing remarketed vehicle sector, which is undergoing significant consolidation. The remarketed vehicle sector includes the delivery of used and previously leased vehicles and vehicles sold through the automotive auction process. The Company has been aggressively pursuing business from the used car superstores, which represents one of the fastest growing sectors of the automotive industry, as well as off-lease companies and auto auctions. For example, the Company recently entered into a contract with Aucnet to provide transportation logistics services for the movement of vehicles sold through live interactive auctions and bulletin board sales on the Internet, and Ryder has recently entered into agreements with AutoNation and DriversMart to provide logistics services for the movement of vehicles to their reconditioning centers and stores. EXPAND SHARE OF NEW VEHICLE TRANSPORTATION MARKET. The Company believes it can capture a larger percentage of its major customers' North American production volume by building upon existing relationships and leveraging its reputation for providing high-quality service, value-added services and competitive pricing, while expanding the breadth of services offered to its customers. The Company also believes it can increase its business with existing customers by utilizing its expansive terminal locations and its sophisticated information systems to deliver vehicles more efficiently and cost effectively. REALIZE OPERATING EFFICIENCIES. The Company continually focuses on increasing operating efficiencies without compromising the quality or range of its services. Allied has identified the following areas which, as a result of the Acquisition, provide significant savings potential: - Optimize Terminal Network. The Company plans to consolidate approximately 19 terminals, or approximately 14% of the combined companies' terminal locations, which are located in close proximity to one another. The consolidation of these terminals will reduce operating and terminal overhead costs. In addition, the Company believes that additional cost savings can be achieved by combining terminal administrative functions. - Improve Productivity. Over the past decade, the Company has implemented performance improvement programs at its terminal locations which have resulted in reduced operating costs. The Company intends to implement these programs at the former Ryder locations. In addition, the Company believes it will be able to increase Rig utilization through the consolidation of terminal locations and through the increased backhaul potential that the Company believes will result from the Acquisition. These actions are expected to reduce the number of Rigs the Company is required to operate and result in reduced operating costs. - Integration of Proprietary Information Systems. The Company intends to integrate Ryder's information systems with its own proprietary information systems. This is expected to result in increased operating efficiencies and reduced administrative costs. - Centralize Administrative Functions. The Company's administrative functions are centralized and performed at its corporate headquarters in Decatur, Georgia. The Company intends to combine most of Ryder's central office functions with the Company's in order to eliminate redundant functions and reduce costs. CONTINUE TO INTRODUCE COMPLEMENTARY SERVICES. Over the past several years, the Company and Ryder have made a significant commitment to providing logistics solutions and other services to their existing customers and other segments of the automotive industry utilizing their proprietary information systems and extensive terminal networks. These services include identifying new and innovative distribution methods, providing solutions relating to improving the management of inventory of new and used vehicles, and providing distribution services relating to the used and remarketed vehicle market. For example, Ryder has entered into an agreement with Volkswagen to provide port processing and vehicle distribution services. The Company also believes that significant opportunities exist for it to provide automotive distribution services to its existing customers' foreign manufacturing plants through the formation of joint ventures with established local transportation carriers. PURSUE SELECTIVE ACQUISITIONS. The Company plans to pursue selective acquisitions within the automotive distribution services industry. Specifically, the Company believes that significant opportunities exist to acquire entities which would enable the Company to provide additional logistics services to the domestic and international 35 43 operations of its existing customer base and other global automotive manufacturers. As the largest motor carrier of automobiles and light trucks in North America, the Company believes that acquisitions will enable it to leverage its existing infrastructure and thereby increase profit opportunities. In October 1994 the Company acquired Auto Haulaway, the largest transporter of automobiles and light trucks in Canada, for $65.0 million. Allied has successfully integrated Auto Haulaway's information systems and administrative functions into those of the Company resulting in significant cost savings. In addition, the Company acquired Kar-Tainer in April 1997 for $13.1 million to provide the capability to transport finished and partially completed vehicles and parts in intermodal containers domestically and internationally and is currently integrating Kar-Tainer's systems and operations with those of the Company. RYDER Prior to the Acquisition, Ryder, founded in 1914, was North America's largest motor carrier of new and used automobiles and light trucks offering a full range of automotive delivery services including transporting new, used and off-lease vehicles to dealers from plants, railramps, ports and auctions, and providing vehicle rail-car loading and unloading services. Ryder also provided logistics solutions and other services to the new and used vehicle distribution market and other segments of the automotive industry, including the growing used car superstore market. As of June 30, 1997, Ryder operated approximately 90 terminal locations throughout the United States and Canada with a fleet of approximately 3,400 Rigs, including approximately 600 owner-operated Rigs. Ryder provided automotive distribution services to all of the major domestic and foreign manufacturers. General Motors represented Ryder's largest customer, accounting for approximately 49.9% of 1996 revenues. Ryder had also been aggressively pursuing opportunities that complemented its core automotive distribution services. For example, Ryder recently entered into agreements with AutoNation to provide transportation logistics services for the movement of vehicles to their reconditioning centers and stores and with Volkswagen to provide port processing services. During 1996, Ryder undertook a restructuring of its operations in an effort to improve its profitability and to focus on its core business of transporting cars and light trucks and related services. The primary components of the restructuring were (i) to reduce employee headcount through an early retirement program, (ii) to consolidate administrative functions and (iii) to divest non-core operations. For example, in February 1997 Ryder sold Blazer Truck Lines, Inc., a provider of inbound logistics services to the automotive industry. Additionally, during 1995 and 1996, a number of factors, including certain special charges and credits, a Teamsters strike at Ryder during 1995, strikes at certain General Motors' manufacturing plants during 1996, and increased diesel fuel costs during 1996, limit the comparability of Ryder's operating performance during this period. Specifically, 1996 operating results were adversely impacted by a restructuring charge of approximately $18.3 million ($11.3 million of which is attributable to the businesses being acquired by the Company), the impact of strikes at certain General Motors manufacturing plants, which management estimates to be approximately $5.5 million, and the impact of higher diesel fuel costs, estimated to be approximately $3.2 million. These charges were offset in part by asset sale gains which totaled $4.1 million. In 1995, Ryder's financial results were positively impacted by reduced insurance costs totaling $2.5 million, an operating tax settlement of $9.9 million and asset sale gains of $10.7 million, offset by the impact of a 32-day Teamsters strike. Ryder's results of operations for the six months ended June 30, 1997 have improved significantly with revenues and EBITDA increasing 6% and 35%, respectively, over the prior comparable period. The increase in revenues resulted primarily from a 5% increase in vehicle deliveries. In addition, the Company believes that Ryder's 1997 results have benefited from the restructuring initiatives implemented during 1996. The following table sets forth certain historical financial information of Ryder for the periods indicated. These results include entities not being acquired by Allied, as well as the charges and credits discussed above. Accordingly, such amounts are not necessarily representative of future operating results. See "Unaudited Pro Forma Financial Information" and Consolidated Financial Statements of Ryder included elsewhere in this Prospectus. 36 44
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------- ---------------------- 1994 1995 1996 1996 1997 --------- --------- -------- --------- --------- (DOLLARS IN THOUSANDS) Revenues.................................... $ 645,402 $ 594,446 $583,292 $ 297,945 $ 315,156 Operating Income (Loss)..................... 49,850 36,238 (17,189) 622 9,841 EBITDA...................................... 87,422 81,442 24,119 22,499 30,397 Capital Expenditures New Rigs and modifications................ 39,793 60,628 41,378 18,511 9,395 Maintenance and other..................... 3,996 3,935 3,844 1,909 640 --------- --------- -------- --------- --------- Total............................. 43,789 64,563 45,222 20,420 10,035
For the year ended December 31, 1996, the businesses acquired by the Company generated revenues and EBITDA of $568.1 million and $41.2 million, respectively. EBITDA includes an $11.3 million charge relating to a restructuring that was intended to improve Ryder's future operating performance. Such businesses generated revenues and EBITDA of $315.7 million and $30.4 million, respectively, for the six months ended June 30, 1997. See "Unaudited Pro Forma Financial Information." SERVICES As a result of the Acquisition, the Company is the largest motor carrier in North America specializing in the transportation of new and used automobiles and light trucks for all the major domestic and foreign automotive manufacturers. Allied and Ryder together participated in the transportation of approximately 65% of the new vehicles sold in the United States and Canada in 1996, including more than 50% of the North American production of General Motors, Ford and Chrysler. The Company believes it can capture a larger percentage of its major customers' North American production by building upon its relationships with manufacturers and leveraging its reputation for high quality services, competitive pricing and value-added services. The Company also believes that it can expand the types of services provided to its existing customers by utilizing its sophisticated technology in order to deliver vehicles and provide other services more efficiently and cost effectively than its competitors. The Company also provides automotive transportation services in the growing remarketed vehicle sector, which includes the delivery of used and previously leased vehicles and vehicles sold through the automotive auction process. The Company has been aggressively pursuing business from the used car superstores. Ryder recently entered into an agreement with AutoNation to provide logistics services for the movement of vehicles to its reconditioning centers and stores and Allied recently entered into a contract with Aucnet to provide transportation logistics services relating to the movement of vehicles sold through live interactive auctions and bulletin board sales on the Internet. Additionally, Ryder entered into an agreement with Volkswagen to provide port processing and vehicle distribution services. The Company has made a significant commitment to providing complementary services to its existing customers and to new customers. The Company is aggressively pursuing opportunities to provide logistics solutions to customers in the automotive industry and seeks to leverage its proprietary information systems and extensive terminal network in order to efficiently provide such services. These services include identifying new and innovative distribution methods for customers, providing solutions relating to improving the management of inventory of new and used vehicles, and providing reconditioning services relating to the used and remarketed vehicle market. The Company further believes that significant opportunities exist for it to provide automotive hauling and other related services to its existing customers' foreign manufacturing plants through the formation of joint ventures with established local transportation carriers. For example, through its Kar-Tainer subsidiary, the Company transports finished and partially completed vehicles and parts in intermodal containers both domestically and internationally. CUSTOMER RELATIONSHIPS The following table sets forth the percentage of 1996 revenues derived from each major customer: 37 45
MANUFACTURER ALLIED RYDER PRO FORMA --------------- --------- --------- ---------- General Motors............................... 11.1% 49.9% 34.8% Ford......................................... 53.3 6.9 26.0 Chrysler..................................... 17.9 10.5 13.7 Mazda........................................ 2.5 1.9 2.2 Nissan....................................... 1.8 5.6 4.1 Honda........................................ 2.6 6.3 4.9 Toyota....................................... 2.3 6.4 4.8 Others....................................... 8.5 12.5 9.5 -------- -------- ------- Total.............................. 100.0% 100.0% 100.0% ======== ======== =======
The Company has contracts with most of its customers. The Company's contracts with its customers establish rates for the transportation of vehicles based upon a fixed rate per vehicle transported and a variable rate for each mile a vehicle is transported. While the contracts generally do not permit the Company to recover for increases in fuel prices, fuel taxes or labor cost, certain of the Company's contracts provide for renegotiation in the event material adverse changes occur. Allied has an agreement with Ford expiring in May 1999 which provides that Allied is the primary carrier for 24 locations in the United States and all Canadian locations and a contract with Chrysler expiring in June 2000, which provides that Allied is the primary carrier for 26 locations throughout the United States and Canada. Ryder operates under a month-to-month contract with Ford in the United States and Canada and under various contracts with Chrysler in the United States with terms varying from month-to-month to those which expire in February 2001. The Company has an agreement in principal with General Motors to enter into a three-year contract upon consummation of the Acquisition. PROPRIETARY MANAGEMENT INFORMATION SYSTEMS The Company has made a long-term commitment to utilizing technology to serve its customers. The Company's advanced management information system is a centralized, fully integrated information system utilizing a mainframe computer together with client servers. The system is based on a company-wide information database, which allows the Company to quickly respond to customer information requests without having to combine data files from several sources. Updates with respect to vehicle load, dispatch and delivery are immediately available from all Company locations for reporting to customers and for better control and tracking of customer vehicle inventories. Through EDI, the Company communicates directly with manufacturers in the process of delivering vehicles and electronically bills and collects from manufacturers. The Company also utilizes EDI to communicate with inspection companies, railroads, port processors and other carriers. The Company also utilizes its system to allow it to operate more efficiently. For example, the Company's information systems automatically design an optimal load for each Rig, taking into account factors such as the capacity of the Rig, the size of the vehicles, the route, the drop points, fuel taxes, applicable weight and height restrictions and the formula for paying drivers. The system also determines the most economical and efficient load sequence and drop sequence for the vehicles to be transported. MANAGEMENT STRATEGY The Company has adopted a performance management strategy which it believes contributes to quality, enhanced efficiency, safety and profitability in its operations. The Company's management strategy and culture is designed to enhance employee performance through careful selection and continuous training of new employees, with individual performance goals established for each employee and performance measured regularly through the Company's management information system. The Company believes that its performance management strategy is unique with respect to the role that employees play in the form of participation in this process. The Company has developed and implemented various programs to incentivize and reward increased employee productivity. The various programs developed by the Company reward damage-free delivery by drivers, driver efficiency and driver safety. The Company believes that these programs have improved customer and employee satisfaction and driver related productivity in areas such as damage-free deliveries, as evidenced by the fact that the Company maintained a damage-free delivery rate of 99.6% for the first six months of 1997. During 1997, the Company adopted an economic value added ("EVA") based performance measurement and incentive compensation system. EVA is the measure used by the Company to determine incentive compensation for senior management. EVA also provides management with a measure to gauge financial performance, allocate capital to appropriate projects, assist in providing valuations in regard to proposed acquisitions, and evaluate daily 38 46 operating decisions. The Company believes that the EVA based performance measurement and incentive compensation system promotes the creation of economic value and increase shareholder value by aligning the interests of senior management with that of the Company's shareholders. SAFETY The Company's safety department is responsible for training and supervising personnel to keep safety awareness at its highest level and to minimize injuries and related lost time. The department rewards drivers who have satisfied safety performance goals established by the Company. The Company utilizes various forms of safety equipment, such as cap liners to protect against head injuries, which have reduced the number and severity of accident-related injuries to its drivers. Management believes that the Company's safety programs have resulted in significant cost savings since they have been implemented. For example, lost time injuries decreased from 526 in 1990 to 453 in 1996, notwithstanding a 65% increase in the number of employees during this period. RISK MANAGEMENT AND INSURANCE The Company's risk management department is responsible for defining risks and securing appropriate insurance programs and coverages at cost effective rates. The Company internally administers all claims for auto and general liability and for workers compensation claims in Alabama, Florida, Georgia, Missouri, North Carolina, South Carolina, Tennessee and Virginia. Liability claims are subject to periodic audits by the Company's commercial insurance carriers. The Company currently retains up to $650,000 of liability for each claim for workers' compensation and up to $500,000 of liability for automobile and general liability, including personal injury and property damage claims. In addition to the $500,000 per occurrence deductible for automobile liability, there is a $500,000 aggregate deductible for those claims which exceed the $500,000 per occurrence deductible. The Company also retains up to $250,000 of liability for each cargo damage claim in the United States. In Canada, the Company retains up to C$100,000 (approximately U.S. $72,000 at September 30, 1997) of liability for each claim for personal injury, property damage or cargo damage. Ryder's insurance contracts also provide for substantial deductibles or indemnifications. If the Company were to experience a material increase in the frequency or severity of accidents or workers' compensation claims or unfavorable developments in existing claims, the Company's operating results could be adversely affected. The Company formed Haul Insurance Limited in December 1995 as a captive insurance subsidiary to provide insurance coverage to the Company with respect to its deductibles for workers' compensation and commercial general liability in the United States and for automobile liability insurance in the United States and Canada. EQUIPMENT, MAINTENANCE AND FUEL As a result of the Acquisition, the Company operates approximately 5,300 Rigs with an average age of 6.9 years. Approximately 73% of such Rigs are 75-foot models. The Company has historically invested heavily in both new equipment and equipment upgrades, which have served to increase efficiency and extend the useful life of Rigs. Currently, new 75-foot Rigs cost between $120,000 and $140,000. Over the past 10 years, changes in governmental regulations have gradually permitted the lengthening of Rigs from 55 to 75 feet. This has increased load factors and improved operating efficiency by permitting the Company to haul more vehicles with fewer Rigs and employees. The Company has worked closely with manufacturers to develop specialized equipment to meet the specific needs of manufacturers. The Company's Rigs are maintained at 65 shops by approximately 300 maintenance personnel, including supervisors. Rigs are scheduled for regular preventive maintenance inspections. Each shop is equipped to handle repairs resulting from inspection or driver write up, including repairs to electrical systems, air conditioners, suspension, hydraulic systems, cooling systems, and minor engine repairs. Major engine overhaul and engine replacement can be handled at larger terminal facilities, while smaller terminals rely on outside vendors. The trend has been to use engine suppliers' outlets for engine repairs due to the long-term warranties obtained by the Company. All of Allied's terminals in the United States have access to a central parts warehouse through the management information system. The system calculates maximum and minimum parts inventory quantities based upon usage and 39 47 automatically reorders parts. The Company intends to implement its management information system at Ryder terminals during 1998. Minor modifications of equipment are performed at all terminal locations. Major modifications involving change in length, configuration or load capacity are performed by the trailer manufacturers. In order to reduce fuel costs, the Company purchases approximately 56% of its fuel in bulk. Fuel is purchased by drivers on the road from a few major suppliers that offer discounts and central billing. COMPETITION The transportation of vehicles in the long-haul segment of the automotive industry is primarily controlled by rail carriers. In the 1970s and 1980s, following deregulation of the trucking industry by the Interstate Commerce Commission and as importers obtained a more significant share of United States automobile sales, new motor carriers, some without union contracts, began to compete for automobile traffic. In some instances, these new carriers were created, or their creation facilitated, by importer interests. Since the mid-1980s, nearly all transportation has been pursuant to contracts entered into by negotiation or competitive bid. The competition for these contracts has been from both rail carriers and union and non-union motor carriers. As a result, many negotiations and bids have resulted in contracts that do not allow for recovery of increased costs of labor or fuel over the contract term and that provide for rate reductions of varying magnitudes. Two other recent developments are now beginning to have an impact on competition. The first is the rise in the use of third-party logistics companies by automotive manufacturers. This is expected to convert further traffic to competitive bidding and ease entry for less well capitalized, less sophisticated haulers as the logistics companies provide the information systems and integrate, more comprehensively, the full distribution function. The second is the fundamental changes automotive manufacturers are making to their vehicle distribution systems in order to expedite the delivery of finished vehicles to dealers. Certain manufacturers are creating vehicle mixing centers where rail traffic from numerous manufacturing plants is re-mixed for delivery to the dealer. These mixing centers offer the opportunity for longer haul business to be obtained through competitive bidding. In addition, manufacturers are creating new rail ramps in order to place vehicles in more central locations closer to the market but off the dealer lots. These new rail ramps may reduce the average length of haul for motor carriers of automobiles. In metropolitan areas, competition for traffic from the new rail ramps to the dealers may increase as local delivery carriers and equipment and driver leasing companies may become new competitors for the traffic. In addition, some parties may attempt to utilize drive-away operators or dealer pick-ups to deliver vehicles. Major motor carriers specializing in the delivery of new vehicles that are competitors of the Company include Leaseway, Jack Cooper, Cassens, Hadley and E & L, all of which are privately held companies. EMPLOYEES AND OWNER OPERATORS As a result of the Acquisition, the Company has approximately 8,300 employees, including approximately 5,400 drivers. All drivers and shop and yard personnel are represented by various labor unions. The majority of the Company's employees are covered by the Master Agreement with the Teamsters which expires on May 31, 1999. The compensation and benefits paid by the Company to union employees are established by union contracts. The Company also utilizes approximately 800 owner-operators, with approximately 200 driving exclusively for Auto Haulaway in Canada and approximately 600 driving exclusively for Ryder in the United States. The owner-operators are either paid a percentage of the revenues they generate or receive normal driver pay plus a truck allowance. TERMINALS AND OTHER PROPERTIES The Company's executive offices are located in Decatur, Georgia, a suburb of Atlanta. The Company leases approximately 96,000 square feet of space for its executive offices, which is sufficient to permit the Company to conduct its operations. The Company will operate 121 terminals after the Acquisition, which are located at or near manufacturing plants, ports and railway terminals, 26 of which are owned and 95 of which are leased. 40 48 REGULATION The Company is regulated in the United States by the United States Department of Transportation ("DOT") and various state agencies, and in Canada by the National Transportation Agency of Canada and various provincial transport boards. Truck and trailer length, height, width, maximum weight capacity and other specifications are regulated federally in the United States, as well as by individual states and provinces. Interstate motor carrier operations are subject to safety requirements prescribed by the DOT. The DOT also regulates certain safety features incorporated in the design of Rigs. The motor carrier transportation industry is also subject to regulatory and legislative changes which can affect the economics of the industry by requiring changes in operating policies or influencing the demand for, and the costs of providing, services to shippers. In addition, the Company's terminal operations are subject to environmental laws and regulations enforced by federal, state, provincial and local agencies, including those related to the treatment, storage and disposal of wastes, and those related to the storage and handling of fuel and lubricants. The Company maintains regular ongoing testing programs for their USTs located at most of their terminals for compliance with environmental laws and regulations. Management believes that the Company's USTs are in compliance with current environmental standards and that the Company will not be required to incur substantial costs to bring the USTs into compliance with higher standards which take effect in 1998. LEGAL PROCEEDINGS The Company is routinely a party to litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of vehicles. The Company does not believe that any of such pending litigation, if adversely determined, would have a material adverse effect on the Company. MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth certain information regarding the Company's directors and executive officers:
NAME AGE TITLE - ---- --- ----- Robert J. Rutland......................................... 56 Chairman of the Board of Directors and Chief Executive Officer Guy W. Rutland, III....................................... 60 Chairman Emeritus and Director A. Mitchell Poole, Jr..................................... 50 President, Chief Operating Officer and Director Bernard O. De Wulf........................................ 48 Vice Chairman, Executive Vice President and Director Berner F. Wilson, Jr...................................... 58 Vice Chairman, Secretary and Director Guy W. Rutland, IV........................................ 33 Vice President and Director Joseph W. Collier......................................... 55 President of Allied Automotive Group and Director Douglas R. Cartin......................................... 43 President of Axis Douglas A. Lauer.......................................... 33 President of Link Information Systems, Inc. Daniel H. Popky........................................... 33 Vice President, Finance Robert R. Woodson......................................... 65 Director David G. Bannister........................................ 42 Director
Robert Rutland has been Chairman and Chief Executive Officer of the Company since December 1995. Mr. Rutland served as President and Chief Executive Officer of the Company from 1986 to December 1995. Prior to October 1993, Mr. Rutland was Chief Executive Officer of each of the Company's subsidiaries. Guy Rutland, III was elected Chairman Emeritus in December 1995. Mr. Rutland served as Chairman of the Board of the Company from 1986 to December 1995. Prior to October 1993, Mr. Rutland was Chairman or Vice Chairman of each of the Company's subsidiaries. Mr. Poole has been President and Chief Operating Officer of the Company since December 1995. Prior to December 1995, Mr. Poole served as Executive Vice President and Chief Financial Officer of the Company. Mr. 41 49 Poole joined Allied Systems, Ltd. in 1988 as Senior Vice President and Chief Financial Officer. He was appointed President of Allied Industries Incorporated in December 1990 and continues to serve in such capacity. Prior to joining the Company in 1988, Mr. Poole was an audit partner with Arthur Andersen LLP, independent public accountants. Mr. De Wulf has been Vice Chairman and an Executive Vice President of the Company since October 1993. Prior to such time, Mr. De Wulf was Vice Chairman of each of the Company's subsidiaries. Mr. Wilson has been Vice President of the Company since October 1993 and Vice Chairman of the Board of Directors and Secretary since December 1995. Prior to October 1993, Mr. Wilson was an officer or Vice Chairman of several of the Company's subsidiaries. Mr. Wilson joined the Company in 1974 and has held various finance, administration, and operations positions. Guy Rutland, IV has been Vice President of the Company since October 1993 and Vice President of the Reengineering Core Team of Allied Automotive Group, Inc. since November 1996. From January 1996 to November 1996, Mr. Rutland was Assistant Vice President of the Central and Southeast Region of Operations for Allied Systems, Ltd. From March 1995 to January 1996, Mr. Rutland was Assistant Vice President of the Central Division of Operations for Allied Systems, Ltd. From June 1994 to March 1995, Mr. Rutland was Assistant Vice President of the Eastern Division of Operations for Allied Systems, Ltd. From 1993 to June 1994, Mr. Rutland was assigned to special projects with an assignment in the Company's Industrial Relations/Labor Department and, from 1988 to 1993, Mr. Rutland was Director of Performance Management. Mr. Collier was appointed as a director of the Company and has been the President of Allied Automotive Group, Inc. since December 1995. Mr. Collier had been Executive Vice President of Marketing and Sales and Senior Vice President of Allied Systems, Ltd. since 1991. Mr. Collier joined the Company in 1979. Mr. Cartin has been President of Axis Group since October 1995. From April 1995 to October 1995, Mr. Cartin was Vice President of Allied Industries. Mr. Cartin has 20 years of international senior management level expertise in providing third-party integrated supply chain logistics solutions. Prior to joining the Company, he held a number of positions over a 13-year period at National Freight Consortium. Mr. Lauer has been President of Link Information Systems, Inc. since July 1996. From January 1996 to July 1996, Mr. Lauer was Vice President and Chief Information Officer of Allied Industries. Mr. Lauer has 11 years of information technology experience. Prior to joining the Company, he was Director, Information Systems at Exel Logistics. Mr. Popky has been Vice President, Finance of the Company since December 1995. From January 1995 to December 1995, Mr. Popky was Vice President and Controller and, from October 1994 to January 1995, he was Assistant Vice President and Controller for the Company. Prior to joining the Company, Mr. Popky held various positions with Arthur Andersen LLP for nine years. Mr. Woodson has been a director of the Company since December 1993. Mr. Woodson retired as the Chairman of John H. Harland Company in April 1997 and remains as a member of its Board of Directors. Mr. Woodson was the President and Chief Executive Officer of John H. Harland Company prior to October 1995 and also serves as a director of Haverty Furniture Companies, Inc. Mr. Bannister has been a director of the Company since December 1993. Mr. Bannister is a Managing Director in the Transportation Group of Alex. Brown & Sons Incorporated and has been employed by that firm in various capacities since 1983. SECURITY OWNERSHIP OF DIRECTORS AND CERTAIN EXECUTIVE OFFICERS The following table sets forth certain information about beneficial ownership of the common stock of the Company (the "Common Stock") as of June 30, 1997 by (i) each director and the five most highly compensated executive officers of the Company, and (ii) all directors and executive officers of the Company as a group. Unless 42 50 otherwise indicated, the beneficial owners of the Common Stock listed below have sole voting and investment power with respect to all shares shown as beneficially owned by them.
NUMBER OF SHARES PERCENTAGE OF SHARES BENEFICIAL OWNERS BENEFICIALLY OWNED OUTSTANDING - ----------------- ------------------ ---------------- Robert J. Rutland(1)....................................................... 1,256,469 16.1 Guy W. Rutland, III(2)..................................................... 842,551 10.8 Guy W. Rutland, IV(3)...................................................... 687,311 8.8 Bernard O. De Wulf(4)...................................................... 572,750 7.3 A. Mitchell Poole, Jr(5)................................................... 226,200 2.9 Berner F. Wilson, Jr....................................................... 225,710 2.9 Joseph W. Collier (6)...................................................... 11,000 * David G. Bannister......................................................... 3,000 * Robert R. Woodson.......................................................... 4,000 * All executive officers and directors as a group(7) (12 persons)........... 3,861,191 49.4
- ---------- * Less than 1% not applicable (1) Includes 18,099 shares owned by his wife to which he disclaims beneficial ownership and 25,000 shares owned by him under the Restricted Stock Plan which are subject to transfer restrictions. (2) Includes 18,099 shares owned by his wife and 67,800 shares owned by a private foundation of which Mr. Rutland is a trustee to which he disclaims beneficial ownership. (3) All shares held in a general partnership of which he is a partner. (4) Includes 165,000 shares held in trust for the benefit of his wife and family members and 2,750 shares held in a limited partnership to which he disclaims beneficial ownership. (5) Includes 20,000 shares owned by him under the Restricted Stock Plan which are subject to transfer restrictions. (6) Includes 10,000 shares owned by him under the Restricted Stock Plan which are subject to transfer restrictions. Does not include options to acquire 61,000 shares. (7) Includes 30,000 shares issued under the Restricted Stock Plan which are subject to transfer restrictions. Does not include options to acquire 28,800 shares. SECURITY OWNERSHIP OF OTHERS The following table sets forth certain information about beneficial ownership of each person known to the Company to own more than 5% of the outstanding Common Stock as of September 1, 1997 other than directors of the Company.
Name and Address of Number of Shares Percentage of Shares Beneficial Owner Beneficially Owned Outstanding ---------------- ------------------ ----------- Brinson Partners, Inc.(1) 585,112 7.5 209 South LaSalle Chicago, Illinois 60604 Private Capital Management, Inc.(2) 1,044,818 13.4 3003 Tamiami Trail N. Naples, Florida 33940
(1) According to a Schedule 13G dated February 10, 1997, filed on behalf of Brinson Partners, Inc. and a subsidiary and its parent companies, each of which may also be deemed a beneficial owner of the shares held by Brinson Partners, Inc. by virtue of their corporate relationships. (2) According to a Schedule 13G dated March 10, 1997, filed on behalf of Private Capital Management, Inc. and its affiliates, each of which may also be deemed a beneficial owner of the shares held by Private Capital Management, Inc. by virtue of their relationships. 43 51 EXECUTIVE COMPENSATION COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee of the Board, which was formed in December 1993, reviews, administers and monitors the Company's executive compensation plans, policies and programs. EXECUTIVE COMPENSATION COMPONENTS The executive compensation philosophy of the Company is to link compensation with enhancement of shareholder value. The Company's executive compensation is based on three principal components, each of which is intended to support the overall compensation philosophy. The three principal components are: Base Salary. Base salary amounts for each of the named executive officers are specified in their employment agreements. During January 1996, the Compensation Committee approved amendments to the employment agreements with the named executive officers to increase the base salary and to extend the expiration of the agreements through January 2001. In January 1997, the Compensation Committee approved amendments to Messrs. Wilson and Colliers' employment agreements to increase the base salary. Incentive Compensation. In 1996, the Compensation Committee approved the payment of incentive compensation for the Company's executive officers who are not parties to employment agreements which provide for bonus compensation. Incentive compensation for Messrs. Robert Rutland, Poole and Collier for 1996 was paid in accordance with formulas specified in their employment agreements. In January 1997, the Compensation Committee approved amendments to the employment agreements with the named executive officers to allow them to participate in the Allied Holdings, Inc. EVA Based Incentive Plan ("Incentive Plan"). Beginning in 1997, incentive compensation for the named executive officers will be paid in accordance with the Incentive Plan. Economic Value Added ("EVA") and the Incentive Plan are discussed in detail below. Stock Compensation. Executive officers are eligible to receive annual grants of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, performance units and performance shares under the Company's Long-Term Incentive Plan. In December 1996, the Compensation Committee approved restricted stock awards to Messrs. Robert Rutland, Poole and Collier. The Long-Term Incentive Plan is discussed elsewhere in this proxy. EVA AND THE INCENTIVE PLAN The primary objective of the Company in regard to executive compensation is to link compensation with shareholder value. To that end, the Company has adopted a more formalized approach to measuring value creation through the EVA framework. The Company together with Stern Stewart & Co., the financial advisory firm that pioneered the EVA framework, undertook a five-month project during 1996 to create and install an EVA based performance measurement and incentive compensation system. The proprietary EVA financial measure can be defined as net operating profits after tax ("NOPAT"), less a capital charge for the average operating capital employed. NOPAT is a measure of operating results which differs from normal accounting profit due to the adjustment for certain non-economic charges. The Company and Stern Stewart believe that EVA more accurately measures shareholder value created than traditional performance measures such as return on assets, earnings per share and return on equity. EVA provides a framework that enables management to make decisions that will build long-term value for the Company and its shareholders rather than focus on short-term results. In 1997, EVA will be the measure used to determine incentive compensation for senior management. CEO COMPENSATION The Compensation Committee believes that Robert J. Rutland's compensation as Chief Executive 44 52 Officer appropriately relates to short and long term performance. Mr. Rutland's compensation in 1996 was $427,000 as provided by his employment agreement. Additionally, Mr. Rutland was paid a bonus in an amount equal to $121,620 for 1996 which was calculated in accordance with a formula set forth in his employment agreement. The Compensation Committee believes that the employment agreement provides for appropriate compensation to Mr. Rutland based upon the measures described above for determining executive officer compensation. The Compensation Committee considers the compensation received by Mr. Rutland to be comparable to chief executive officers of other leading companies engaged in transportation. David G. Bannister Robert R. Woodson SUMMARY COMPENSATION TABLE Remuneration paid in 1996, 1995 and 1994 to executive officers is set forth on the following table:
Annual Compensation Long Term Compensation ------------------- --------------------- Securities Restricted Underlying Name and Principal Stock Options/SAR All Other Position Year Salary Bonus Awards(1) Awards (#) Compensation(2) -------- ---- ------ ----- --------- ---------- ------------ Robert J. Rutland 1996 $427,000 $121,620 200,000 -- $13,667 Chairman and Chief 1995 424,493 143,180 -- -- 14,380 Executive Officer 1994 409,000 284,140 -- -- 14,703 Bernard O. De Wulf 1996 320,000 75,000 -- -- 3,917 Vice Chairman and 1995 318,370 100,000 -- -- 5,217 Executive Vice 1994 306,750 150,000 -- -- 3,488 President A. Mitchell Poole, Jr. 1996 290,000 121,620 160,000 -- 991 President and Chief 1995 265,302 143,180 -- -- 910 Operating Officer 1994 256,752 256,752 -- -- 886 Berner F. Wilson, Jr. 1996 175,000 75,000 -- -- 1,565 Vice Chairman and 1995 159,179 100,000 -- -- 2,450 Secretary 1994 153,370 150,000 -- -- 1,413 Joseph W. Collier 1996 175,000 60,816 80,000 -- -- President - Allied 1995 131,485 100,000 -- 50,000 -- Automotive Group, Inc. 1994 114,437 150,000 -- -- --
(1) Represents dollar value of awards granted in 1996 based on the closing market price on December 31, 1996. Under the Restricted Stock Plan, restrictions lapse over a five year period, 20% per year, commencing on the first anniversary of the date of grant. (2) Unless otherwise noted, all amount in this column are insurance premiums paid on behalf of the named executive officers. OPTION EXERCISE AND VALUES FOR LAST FISCAL YEAR 45 53 The following table sets forth as to each of the named executive officers information with respect to option exercises during 1996 and the status of their options on December 31, 1996 (i) the number of shares of Common Stock underlying options exercised during 1996, (ii) the aggregate dollar value realized upon the exercise of such options, (iii) the total number of exercisable and non-exercisable stock options held on December 31, 1996 and (iv) the aggregate dollar value of in-the-money exercisable options on December 31, 1996. 46 54 AGGREGATED OPTION EXERCISE DURING LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of Shares Value Number of Unexercised Value of Unexercised Acquired Realized Options at Fiscal Year End In-the-Money Upon Upon -------------------------- Options at Fiscal of Option Exercise Year End(1) --------- -------- ----------- Name Exercisable Unexercisable Exercisable Unexercisable ---- ----------- ------------- ----------- ------------- Robert J. Rutland -- -- -- -- -- -- Bernard O. De Wulf -- -- -- -- -- -- A. Mitchell Poole, Jr. -- -- -- -- -- -- Berner F. Wilson, Jr. -- -- -- -- -- -- Joseph W. Collier -- -- 10,500 50,500 -- --
(1) In accordance with the SEC's rules, values are calculated by subtracting the exercise price from the fair market value of the underlying Common Stock. For purposes of this table, fair market value is deemed to be $7.50, the average of the high and low Common Stock price reported on the NASDAQ National Market on December 31, 1996. EMPLOYMENT AND SEVERANCE AGREEMENTS Messrs. Robert Rutland, De Wulf, Poole, Wilson and Collier have entered into employment agreements with the Company. These agreements, which are substantially similar, are for five year terms ending in January 2001 and provide for compensation to the officers in the form of annual base salaries in the amount of $427,000 for Robert Rutland, $320,000 for Mr. De Wulf, $290,000 for Mr. Poole, $175,000 for Mr. Wilson, and $175,000 for Mr. Collier in 1996, plus percentage annual increases based upon the Consumer Price Index and other factors. In January 1997, the employment agreements with Messrs. Wilson and Collier were amended to increase the annual base pay for 1997 to $200,000. The employment agreements also provide that in the event of (i) an officer's termination of employment by the Company other than for cause, (ii) termination by the officer for reasons such as a material change by the Company in the officer's duties and responsibilities or as a result of a merger or consolidation of the Company, or (iii) the death or disability of the officer, the officer shall receive severance benefits from the Company. These severance benefits include a cash payment in an amount equal to two times the annual base salary plus the average of the previous two years' bonus payments for the applicable officer. The Company is also required to provide to the officer group medical and hospitalization benefits and related benefits for a period of one year. LONG-TERM INCENTIVE PLAN The Company has adopted a Long-Term Incentive Plan (the "LTI Plan") pursuant to which an aggregate of 650,000 shares of Common Stock could be issued. The LTI Plan authorizes the Company to grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, performance units and performance shares to eligible employees as determined by the LTI Plan. The LTI Plan was adopted and approved by the Board of Directors and shareholders in July 1993. The Compensation Committee elects those employees to whom awards are granted under the LTI Plan and determines the number of performance units, performance shares, shares of restricted stock, and stock appreciation rights granted pursuant to each award and prescribes the terms and conditions of each such award. 47 55 Nonqualified Stock Option Plan During 1996 the Company granted options to purchase 34,000 shares of the Company's Common Stock at a price per share of $9.00. The options are granted pursuant to the non-qualified stock option provisions set forth in the LTI Plan and are not intended to qualify as incentive stock options within the meaning of the Internal Revenue Code of 1986, as amended. A maximum of 300,000 shares may be issued as non-qualified options under the provisions of the LTI Plan. Options granted become exercisable after one year in 20% or 33a% increments per year and expire ten years from the date of the grant. There were 41,867 options exercisable at December 31, 1996. Restricted Stock Plan Effective December 19, 1996 the Company adopted the Allied Holdings, Inc. Restricted Stock Plan ("Restricted Stock Plan") pursuant to authority granted by the LTI Plan. The awards granted under the Restricted Stock Plan vest over five years, 20% per year commencing on the first anniversary of the date of grant. Effective December 19, 1996 the Company awarded an aggregate of 85,000 shares, with a value of $680,000 as of the date of grant. STOCK APPRECIATION RIGHTS PLAN The Board of Directors of the Company adopted the Allied Holdings, Inc. Stock Appreciation Rights Plan effective January 1, 1997 (the "SAR Plan"). The purpose of the SAR Plan is to provide deferred compensation to certain management employees of the Company. Such deferred compensation shall be based upon the award of stock appreciation rights units, the value of which are related to the appreciation in fair market value of the Common Stock. All payments under the SAR Plan will be in cash. The Compensation Committee shall determine the applicable terms for each award under the SAR Plan. There has been no grants under the SAR Plan as of the date of this proxy. EVA BASED INCENTIVE PLAN The Board of Directors of the Company adopted the Incentive Plan effective January 1, 1997. The Incentive Plan's objectives are to focus on (i)creating shareholder value and reward participants significantly when achieved, and (ii) sustaining, continuous performance improvement. The Incentive Plan is administered by the Compensation Committee. Under the Incentive Plan, incentive compensation will be directly linked to changes in EVA. EVA will be measured for each of the Company's major operating units and will reward participants for increases in EVA and penalize such employees for any decreases in EVA. Management employees designated as participants by the Chairman and President of the Company and approved by the Compensation Committee are eligible to participate in the Incentive Plan. Target bonus amounts will be determined for each participant by the Chairman and President and approved by the Compensation Committee. A Participant's target bonus will either be based solely on the performance of the Company on a consolidated basis or on the performance of a subsidiary or a business unit and the Company. For example, a target bonus might be based seventy-five percent (75%) on a business unit or a subsidiary and twenty-five percent (25%) on the Company's consolidated results. Annually, an actual bonus will be declared for each Participant based on the comparison of the change in EVA to the expected change in EVA. If the change in EVA is exactly equal to the expected change in EVA, the actual bonus will equal the target bonus. The actual bonus for any calendar year will be higher than the target bonus if the change in EVA is higher than the expected change in EVA and lower if the change in EVA is lower than the expected change in EVA. Such adjustment shall be established by the Compensation Committee in its sole discretion. The actual bonus declared for each Participant with respect to any calendar year will be allocated to the Participants' bonus bank, within 30 days after the amount of the actual bonus for such year is determined. If, after 48 56 the allocation with respect to any calendar year, the balance in the Participants' bonus bank is less than or equal to the Participants' target bonus for such year, the entire amount in the bonus bank will be paid as soon as practicable but in no event later than 15 days following such allocation. If the balance in the bonus bank is greater than the target bonus, the Participant will be paid the target bonus plus one-third of the remainder of the bonus bank balance. Amounts remaining in the bonus bank will be carried forward to future years. Negative bonuses may be declared if the change in EVA for any calendar year is significantly below the expected change in EVA for such year and negative bonuses declared will be subtracted from the bonus bank. Ninety-five percent (95%)of the portion of the actual bonus payable to a Participant with respect to any calendar year will be paid to the Participants in cash and five percent (5%) will be paid in the form of stock appreciation rights, pursuant to the SAR Plan. 49 57 RETIREMENT PLANS The Company maintains a tax qualified benefit pension plan (the "Retirement Plan"). The table set forth below illustrates the total combined estimated annual benefits payable under the Retirement Plan to eligible salaried employees for years of service assuming normal retirement at age 65. Allied Defined Benefit Pension Plan Years of Service ----------------
Remuneration 10 15 20 25 30 35 ------------ -- -- -- -- -- -- 100,000 20,000 30,000 40,000 50,000 50,000 50,000 125,000 25,000 37,500 50,000 62,500 62,500 62,500 150,000 30,000 45,000 60,000 75,000 75,000 75,000 175,000 32,000 48,000 64,000 80,000 80,000 80,000 200,000 32,000 48,000 64,000 80,000 80,000 80,000 225,000 32,000 48,000 64,000 80,000 80,000 80,000 250,000 32,000 48,000 64,000 80,000 80,000 80,000 275,000 32,000 48,000 64,000 80,000 80,000 80,000 300,000 32,000 48,000 64,000 80,000 80,000 80,000
The Retirement Plan uses average compensation, as defined by the Retirement Plan, paid to an employee by the plan sponsor during a plan year for computing benefits. Compensation includes bonuses and any amount contributed by a plan sponsor on behalf of an employee pursuant to a salary reduction agreement which is not includable in the gross income of the employee under Internal Revenue Code (AIRC@) Section 125, 402(a)(8), or 402(h). However, compensation in excess of the IRC Section 401(a)(17) limit shall not be included. The limit for 1996 was $150,000 and for 1997 is $160,000. The compensation covered by the Retirement Plan for Messrs, Robert Rutland, De Wulf, Poole, Wilson, and Collier is $160,000. The estimated years of credited service for each of the current executives as of December 31, 1996 is as follows:
Years of Credited Service Name as of December 31, 1996 ---- ----------------------- Robert J. Rutland 32.7 Berner F. Wilson 22.0 Joseph W. Collier 17.0 Bernard O. De Wulf 13.0 A. Mitchell Poole, Jr. 8.7
The benefits shown in the Pension Plan Table are payable in the form of a straight life annuity commencing at age 65. There is no reduction for social security benefits or other offset amounts. CERTAIN TRANSACTIONS The Company leases the space in the building in which its headquarters is located from DELOS, a general partnership of which Messrs. Rutland, III, Robert Rutland, and Wilson are beneficially the sole general partners. 50 58 The aggregate rents paid by the Company to DELOS in 1996 were $1,030,139. During January 1997, the Company extended the lease with DELOS to expire December 31, 2007. The Company provided loans to DELOS in the aggregate amount of $573,419 which bear interest at the rate of 6% per annum. The outstanding balance of principal and accrued interest thereon regarding the loans is due and payable on November 30, 1998. The Company paid Capital Management Services, Inc., a company controlled by Messrs. Rutland, III and Robert Rutland's brother-in-law, $40,000 in 1995 and $80,000 in 1996 to manage a construction project. David G. Bannister, a director and member of the Compensation Committee of the Company, is a Managing Director of BT Alex. Brown Incorporated. DESCRIPTION OF OTHER INDEBTEDNESS The following is a summary of important terms of certain indebtedness of the Company. NEW CREDIT FACILITY The New Credit Facility allows the Company to borrow, under a revolving line of credit, and issue letters of credit, up to the lesser of $230.0 million or a borrowing base amount that is determined based on a defined percentage of the Company's accounts receivable and equipment. At June 30, 1997, after giving pro forma effect to the Offering and the Acquisition, the Company would have undrawn availability of approximately $126.3 million. Annual commitment fees will be due on the undrawn portion of the commitment. The New Credit Facility will mature in 2002. The interest rate for the New Credit Facility is, at the Company's option, either (i) the bank's Base Rate, as defined, or (ii) the bank's Eurodollar rate, as defined, as determined at the date of each borrowing, plus an applicable margin. The Company has the right to repay the outstanding debt under the New Credit Facility, in whole or in part, without penalty or premium, subject to a limitation that prepayment of Eurodollar rate loans will be subject to a breakage penalty if prepaid other than on the last day of the applicable interest period. The Company is subject to mandatory prepayment with a defined percentage of net proceeds from certain asset sales, new debt offerings and new equity offerings. The revolving line of credit allows the Company to repay and reborrow so long as there is no event of default. The New Credit Facility gives the Company the ability to reduce the commitment amount and the Company periodically reviews its borrowing needs. Borrowings under the New Credit Facility are secured by a first priority security interest on assets of the Company and certain of its subsidiaries, other than real estate but including a pledge of stock of certain subsidiaries. In addition, certain subsidiaries of the Company have jointly and severally guaranteed the obligations of the Company under the New Credit Facility. The New Credit Facility sets forth a number of affirmative, negative, and financial covenants binding on the Company. The negative covenants will limit the ability of the Company to, among other things, incur debt, incur liens, make investments, make dividend or other distributions, or enter into any merger or other consolidation transaction. The financial covenants include the maintenance of a minimum consolidated tangible net worth, compliance with a leverage ratio and a coverage ratio, and limitations on capital expenditures. The New Credit Facility contains standard events of default including failure to make payments on a timely basis, breach of covenants, breach of any representation or warranty, and defaults on other indebtedness. SENIOR SUBORDINATED NOTES In February 1996, the Company issued the Senior Subordinated Notes through a private placement. Proceeds from the Senior Subordinated Notes were used to reduce borrowings under the Company's existing credit facility. Interest on the Senior Subordinated Notes is payable semi-annually at a rate of 12% per year on February 1 and August 1 of each year. The Senior Subordinated Notes are prepayable at any time at 100% of the principal amount thereof, plus a make-whole amount (the "SSN Make-Whole Amount"), as determined by discounting the remaining interest payments through maturity at a rate equal to the yield on the date of redemption of the class of United States Treasury securities corresponding to the weighted average life to maturity of the principal amount being repaid plus 51 59 100 basis points (the "Reinvestment Rate"). The SSN Make-Whole Amount will be zero if the Reinvestment Rate exceeds 12%. The indenture pursuant to which the Senior Subordinated Notes were issued contains covenants requiring the Company to maintain or place limitations on, among other things: (i) minimum consolidated net worth, (ii) additional indebtedness, (iii) fixed charge coverage ratio, (iv) liens, (v) restricted payments, (vi) asset sales, (vii) mergers and consolidations, and (viii) transactions with affiliates. The payment of principal, the SSN Make-Whole Amount, if any, and interest on the Senior Subordinated Notes is subordinated to all senior indebtedness of the Company, including the Notes. Upon a distribution to creditors of the Company in a bankruptcy, reorganization, liquidation or dissolution of the Company, the holders of all senior indebtedness will be entitled to receive payment in full before the holders of the Senior Subordinated Notes would be entitled to receive any distributions. DESCRIPTION OF NOTES GENERAL The New Notes will be issued pursuant to the Indenture among the Company, the Guarantors and The First National Bank of Chicago, as trustee (the "Trustee"). The terms of the New Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act"). The New Notes are subject to all such terms, and Holders of New Notes are referred to the Indenture and the Trust Indenture Act for a statement thereof. The following summary of the material provisions of the Indenture does not purport to be complete and is qualified in its entirety by reference to the Indenture, including the definitions therein of certain terms used below. Copies of the proposed form of Indenture will be made available to prospective investors as set forth under "Available Information." The definitions of certain terms used in the following summary are set forth below under "Certain Definitions." For purposes of this "Description of Notes," the term "Company" refers only to Allied Holdings, Inc. and not to any of its Subsidiaries. The New Notes will be general unsecured obligations of the Company, ranking pari passu in right of payment with all present and future senior indebtedness of the Company, and senior in right of payment to all present and future subordinated indebtedness of the Company. However, the New Notes will be effectively junior to all present and future secured indebtedness of the Company to the extent of the assets securing such indebtedness. As of June 30, 1997, after giving pro forma effect to the Offering and the Acquisition, the New Notes would have been effectively junior to $41.8 million of secured indebtedness, including borrowings under the New Credit Facility. In addition, the Company would have had $126.3 million of additional secured borrowings available under the New Credit Facility. The Indenture permits the Company to incur additional indebtedness in the future, subject to certain restrictions. See "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock." As of the Closing Date, all of the Company's Subsidiaries will be Restricted Subsidiaries, other than Haul Insurance Limited, which will be an Unrestricted Subsidiary. Under certain circumstances, the Company will be able to designate other current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the restrictive covenants set forth in the Indenture. The Company's payment obligations under the New Notes will be guaranteed by all of the Company's present and future Domestic Restricted Subsidiaries and existing Canadian Subsidiaries (other than AH Industries, Inc.). See "-Subsidiary Guarantees." PRINCIPAL, MATURITY AND INTEREST The New Notes (sometimes referred to as the "Notes") will be limited in aggregate principal amount to $150.0 million and will mature on October 1, 2007. Interest on the Notes will accrue at the rate of 8 5/8% per annum and will be payable semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 1998, to Holders of record on the immediately preceding March 15 and September 15. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal of and premium, interest and Liquidated Damages, if any, on the Notes will be payable at the office or agency of the Company maintained for such purpose or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the 52 60 Holders of the Notes at their respective addresses set forth in the register of Holders of Notes; provided that all payments of principal, premium, interest and Liquidated Damages with respect to Notes the Holders of which have given wire transfer instructions to the Company will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Until otherwise designated by the Company, the Company's office or agency will be the office of the Trustee maintained for such purpose. The Notes will be issued in denominations of $1,000 and integral multiples thereof. SUBSIDIARY GUARANTEES The Company's payment obligations under the Notes will be guaranteed by all of the Company's Domestic Restricted Subsidiaries and Canadian Subsidiaries (other than AH Industries, Inc.) existing on the Closing Date. Certain of such Canadian Subsidiaries will indirectly guarantee the Company's payment obligations under the Notes by guaranteeing their parent companies' obligations under direct Guarantees. The Indenture will provide that (i) if the Company or any of its Restricted Subsidiaries shall acquire or create another Domestic Restricted Subsidiary after the Closing Date, or any Unrestricted Subsidiary shall cease to be an Unrestricted Subsidiary and shall become a Domestic Restricted Subsidiary, then such Subsidiary shall execute a Guarantee of the notes and deliver an opinion of counsel, in accordance with the terms of the Indenture and (ii) in the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, or in the case the Company designates a Guarantor to be an Unrestricted Subsidiary in accordance with the Indenture, then such Guarantor will be released and relieved of any obligations under its Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture. See "-- Redemption or Repurchase at Option of Holders -- Asset Sales." Separate financial statements of the Guarantors have not been provided within this Prospectus as (i) the Guarantors are jointly and severally liable for the Company's obligations under the Notes, (ii) the Unrestricted Subsidiaries are inconsequential to the consolidated operations of the Company and its subsidiaries, and (iii) the net assets and earnings of the Guarantors are substantially equivalent to the net assets and earnings of the consolidated entity as reflected in the consolidated financial statements of the Company included in this Prospectus. OPTIONAL REDEMPTION Prior to October 1, 2002, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the Make-Whole Price, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date. On and after October 1, 2002, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on of the years indicated below:
YEAR PERCENTAGE ---- ---------- 2002............................................. 104.3125% 2003............................................. 102.8750% 2004............................................. 101.4375% 2005 and thereafter.............................. 100.0000%
Notwithstanding the foregoing, at any time on or prior to October 1, 2000, the Company may redeem up to 35% of the Notes at a redemption price equal to 108.625% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net proceeds of one or more sales of Equity Interests (other than Disqualified Stock) of the Company, provided that (i) at least $97.5 million of Notes remain outstanding immediately following each such redemption and (ii) such redemption shall occur within 90 days of the date of the consummation of such sale. SELECTION AND NOTICE If less than all of the Notes are to be redeemed at any time, selection of Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be 53 61 issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption. MANDATORY REDEMPTION Except as set forth below under "-- Repurchase at the Option of Holders," the Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. REPURCHASE AT THE OPTION OF HOLDERS Change of Control Upon the occurrence of a Change of Control, the Company will be obligated to make an offer (a "Change of Control Offer") to each Holder of Notes to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes at an offer price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase (the "Change of Control Payment"). Within 30 days following a Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. On the Change of Control Payment Date, the Company will, to the extent lawful, (i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Change of Control provisions described above will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction. The Company will not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. The occurrence of a Change of Control could constitute a default under the New Credit Facility or under future agreements governing indebtedness of the Company, which could permit the lenders under the New Credit Facility or the holders of such indebtedness, as the case may be, to declare all such indebtedness to be due and payable. There can be no assurance that, upon a Change of Control, the Company would have sufficient resources to repurchase all Notes tendered in a Change of Control Offer and to repay all indebtedness that may be declared due and payable. The Company's failure to purchase tendered Notes following a Change of Control would constitute an Event of Default under the Indenture which could, in turn, constitute as default under the New Credit Facility or under future agreements governing indebtedness of the Company. Asset Sales 54 62 The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents; provided that the amount of (a) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or such Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability and (b) any securities, notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are immediately converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) shall be deemed to be cash for purposes of this provision. Within 365 days of the receipt of any Net Proceeds from an Asset Sale, the Company, at its option, may apply such Net Proceeds to the acquisition of a controlling interest in another business, the making of a capital expenditure or the acquisition of other assets (other than assets that would be classified as current assets in accordance with GAAP), in each case, in the same or a similar line of business as the Company and its Restricted Subsidiaries, or in any business reasonably complementary, related or incidental thereto, as determined in good faith by the Board of Directors. Pending the final application of any such Net Proceeds, the Company may temporarily reduce borrowings under the New Credit Facility or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be required to make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of an Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. CERTAIN COVENANTS Restricted Payments The Indenture provides that neither the Company nor any of its Restricted Subsidiaries will, directly or indirectly, (i) declare or pay any dividend or make any other payment or distribution on account of the Company's Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company) or to any direct or indirect holders of the Company's Equity Interests in their capacity as such (other than dividends or distributions (a) payable in Equity Interests (other than Disqualified Stock) of the Company or (b) to the Company or any Guarantor); (ii) purchase, redeem or otherwise acquire or retire for value (including without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company (other than any such Equity Interests owned by the Company or any Guarantor); (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Company or any Guarantor that is subordinated to the Notes or any Guarantee thereof, except a payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; 55 63 (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in the first paragraph of the covenant described below under caption "Incurrence of Indebtedness and Issuance of Preferred Stock;" and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Closing Date (excluding Restricted Payments permitted by clause (ii) through (vii) of the next succeeding paragraph), is less than the sum of (1) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from October 1, 1997 to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (2) 100% of the aggregate net proceeds received by the Company from the issue or sale since the Closing Date of Equity Interests of the Company (other than Disqualified Stock), plus (3) the amount by which Indebtedness of the Company and its Restricted Subsidiaries is reduced on the balance sheet of the Company upon the conversion or exchange (other than by a Restricted Subsidiary of the Company) subsequent to the Closing Date of any such Indebtedness for Equity Interests (other than Disqualified Stock) of the Company, plus (4) to the extent that any Restricted Investment that was made after the Closing Date is sold for cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment, plus (5) in the event that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary, the lesser of (A) an amount equal to the fair value (as determined by the Board of Directors) of the Company's Investments in such Restricted Subsidiary and (B) the amount of Restricted Investments previously made by the Company and its Restricted Subsidiaries in such Unrestricted Subsidiary. The foregoing provisions will not prohibit (i) the payment of any dividend within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of the Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company or any Restricted Subsidiary in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c)(2) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any member of the Company's (or any of its Restricted Subsidiaries') management or board of directors pursuant to any management equity subscription agreement, stock option agreement or other similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $500,000 in any twelve-month period and no Default or Event of Default shall have occurred and be continuing immediately after such transaction; (v) the repurchase or other acquisition of subordinated Indebtedness in anticipation of satisfying a sinking fund or principal payment obligation, in each case due within one year of the date of repurchase or other acquisition, provided that the date such sinking fund or principal payment obligation becomes due is prior to the final maturity date of the Notes; (vi) repurchases of Equity Interests that may be deemed to occur upon the exercise of options, warrants or other rights to acquire Capital Stock of the Company to the extent that such Equity Interests represent a portion of the exercise price of such options, warrants or other rights; and (vii) additional Restricted Payments in an amount not to exceed $5.0 million. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined in good faith by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee. Not later than 30 days following the end of any fiscal quarter in which any Restricted Payments were made, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payments were permitted and setting forth the basis upon which the calculations required by the covenant "Restricted Payments" were computed. 56 64 The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the greatest of (i) the net book value of such Investments at the time of such designation, (ii) the fair market value of such Investments at the time of such designation and (iii) the original fair market value of such Investments at the time they were made. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the definition of an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock," the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under the covenant described under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. Incurrence of Indebtedness and Issuance of Preferred Stock The Indenture provides that neither the Company nor any of its Restricted Subsidiaries will, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company's Restricted Subsidiaries will not issue any shares of preferred stock (other than to the Company or a Wholly Owned Restricted Subsidiary of the Company); provided, however, that the Company and the Guarantors may incur Indebtedness (including Acquired Debt) if the Consolidated Interest Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such four-quarter period. The provisions of the first paragraph of this covenant will not apply to the incurrence of any of the following (collectively, "Permitted Debt"): (i) the incurrence by the Company and the Guarantors of Indebtedness under (a) the New Credit Facility and (b) Capital Lease Obligations and purchase money financing in respect of property, plant and equipment, provided that the aggregate amount of Indebtedness incurred pursuant to this clause (i) shall not exceed at any time outstanding the greater of (1) $230.0 million and (2) the sum of (A) 80% of the consolidated accounts receivable of the Company as shown on the Company's most recent balance sheet, plus (B) 60% of the consolidated inventory of the Company as shown on the Company's most recent balance sheet, plus (C) 50% of the consolidated property, plant and equipment, net of depreciation, of the Company as shown on the Company's most recent balance sheet; (ii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes, the Guarantees thereof and the Indenture; (iii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; 57 65 (iv) the incurrence by the Company and the Guarantors of additional Indebtedness in an aggregate amount not to exceed $10.0 million at any time outstanding; (v) the incurrence by the Company and the Guarantors of Indebtedness in connection with the acquisition of assets or a new Restricted Subsidiary; provided that such Indebtedness was incurred by the prior owner of such assets or such Restricted Subsidiary prior to such acquisition by the Company and the Guarantors and was not incurred in connection with, or in contemplation of, such acquisition by the Company and the Guarantors; and provided further that the aggregate amount of Indebtedness incurred pursuant to this clause (vi) does not exceed $5.0 million; at any time outstanding; (vi) the incurrence by the Company and its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness that was permitted to be incurred by the first paragraph, or by clauses (ii) through (ix) of the second paragraph of the covenant; (vii) the incurrence of Indebtedness between or among the Company and its Restricted Subsidiaries; provided, however, that any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary, and any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be; (viii) the incurrence by the Company and its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging (a) interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding or (b) foreign currency risk; (ix) the incurrence of Indebtedness by a Restricted Subsidiary of the Company that is not a Guarantor in an aggregate amount not to exceed the sum of (a) 80% of the accounts receivable of such Subsidiary as shown on such Subsidiary's most recent balance sheet, plus (b) 60% of the inventory of such Subsidiary as shown on such Subsidiary's most recent balance sheet, plus (c) 50% of the property, plant and equipment, net of depreciation, of such Subsidiary as shown on such Subsidiary's most recent balance sheet; (x) the guarantee by the Company or any Guarantor of Indebtedness that was permitted to be incurred by another provision of this covenant; and (xi) Indebtedness of a Receivables Subsidiary that is not recourse to the Company or any of its Restricted Subsidiaries (other than Standard Securitization Undertakings) incurred in connection with a Qualified Receivables Transaction. For purposes of determining the amount of any Indebtedness of any Person under this covenant, (a) there shall be no double counting of direct obligations, Guarantees and reimbursement obligations for letter of credit; (b) the principal amount of any Indebtedness of such Person arising by reason of such Person having granted or assumed a Lien on its property to secure Indebtedness of another Person shall be the lower of the fair market value of such property and the principal amount of such Indebtedness outstanding (or committed to be advanced) at the time of determination; (c) the amount of any Indebtedness of such Person arising by reason of such Person having Guaranteed Indebtedness of another Person where the amount of such Guarantee is limited to an amount less than the principal amount of the Indebtedness so Guaranteed shall be such amount as so limited; (d) Indebtedness shall not include a non-recourse pledge by the Company or any of its Restricted Subsidiaries of Investments in any Person that is not a Restricted Subsidiary of the Company to secure the Indebtedness of such Person; and (e) Indebtedness of the Company and its Restricted Subsidiaries shall not include Indebtedness of a Restricted Subsidiary whose assets consist solely of partnership or similar interests in another person that is not a Restricted Subsidiary of the Company, where the obligations with respect to such Indebtedness arise as a matter of law from the obligations of such other Person. 58 66 For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (x) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this covenant and such item of Indebtedness will be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph hereof. Accrual of interest, the accretion of accredit value and the payment of interest in the form of additional Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. Liens The Indenture provides that neither the Company nor any of its Restricted Subsidiaries will, directly or indirectly, create, incur, assume or suffer to exist any Lien securing Indebtedness or trade payables on any asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom, except Permitted Liens, unless the Notes are equally and ratably secured with the obligations so secured until such time as such obligations are no longer secured by a Lien. Dividend and Other Payment Restrictions Affecting Subsidiaries The Indenture provides that neither the Company nor any of its Restricted Subsidiaries will, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the Closing Date, (b) the New Credit Facility as in effect as of the Closing Date, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are no more restrictive with respect to such dividend and other payment restrictions than those contained in the New Credit Facility as in effect on the Closing Date, (c) the Notes, any Guarantee thereof and the Indenture, (d) applicable law, (e) any instrument governing Indebtedness or Equity Interests of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the Equity Interests, properties or assets of any Person, other than the Person, or the Equity Interests, property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred, (f) by reason of customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (g) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (h) customary restrictions in asset or stock sale agreements limiting transfer of such assets or stock pending the closing of such sale, (i) customary non-assignment provisions in contracts entered into in the ordinary course of business, (j) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive than those contained in the agreements governing the Indebtedness being refinanced, or (k) any Purchase Money Note, or other Indebtedness or contractual requirements incurred with respect to a Qualified Receivables Transaction relating to a Receivables Subsidiary. Merger, Consolidation, or Sale of Assets The Indenture provides that neither the Company nor any Guarantor will consolidate or merge with or into (whether or not the Company or such Guarantor, as the case may be, is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another Person unless (i) the Company or such Guarantor, as the case may be, is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company or such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of 59 67 Columbia; (ii) the Person formed by or surviving any such consolidation or merger (if other than the Company or a Guarantor) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company or such Guarantor, as the case may be, under the Notes or such Guarantor's Guarantee thereof and the Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company or such Guarantor with or into another Guarantor or a Wholly Owned Restricted Subsidiary of the Company, or a merger of a Guarantor with or into another Person in connection with a Permitted Investment in such Person, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (A) will have Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction and (B) will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock." Transactions with Affiliates The Indenture provides that neither the Company nor any of its Restricted Subsidiaries will make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or such Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $3.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (b) except in the case of the provision of services in the ordinary course of business to, or the receipt of services in the ordinary course of business from, any Person who is an Affiliate of the Company solely by reason of an Investment in such Person by the Company or its Subsidiaries, with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. The foregoing provisions will not prohibit (i) any employment agreement or other compensation plan or arrangement in the ordinary course of business and either consistent with past practice or approved by a majority of the disinterested members of the Board of Directors; (ii) transactions between or among the Company and/or its Restricted Subsidiaries; (iii) any Permitted Investment or any Restricted Payment that is permitted by the provisions of the Indenture described above under the caption "Restricted Payments;" (iv) sales of Equity Interests (other than Disqualified Stock) to Affiliates of the Company; (v) transactions with Haul Insurance Limited, provided that no less than once each calendar year, the Company delivers to the Trustee a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such transactions are in the ordinary course of business and consistent with past practices and prudent insurance underwriting standards; (vi) transactions in existence on the Closing Date, and any modifications thereof or extensions thereto the terms of which are not materially more adverse to the Company than those in existence on the Closing Date, including, in each case, all future payments pursuant thereto; and (vii) sales of accounts receivable and other related assets customarily transferred in an asset securitization transaction involving accounts receivable to a Receivables Subsidiary in a Qualified Receivables Transaction. Payments for Consent The Indenture provides that neither the Company nor any of its Restricted Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that 60 68 consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Reports The Indenture provides that, whether or not required by the rules and regulations of the Commission, so long as any Notes are outstanding, the Company will furnish to the Holders of Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial information and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Company and its Restricted Subsidiaries will agree that, for so long as any Notes remain outstanding, they will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Act. EVENTS OF DEFAULT AND REMEDIES The Indenture provides that each of the following constitutes an Event of Default: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Notes; (ii) default in payment when due of the principal of or premium, if any, on the Notes; (iii) failure by the Company or any of its Restricted Subsidiaries to comply with the provisions described under the caption "Change of Control;" (iv) failure by the Company or any of its Restricted Subsidiaries to comply with the provisions described under the captions "Asset Sales," "Restricted Payments," "Incurrence of Indebtedness and Issuance of Preferred Stock" or "Merger, Consolidation or Sale of Assets," which default continues for 60 days; (v) failure by the Company or any of its Restricted Subsidiaries for 60 days after written notice by the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes to comply with any of its other agreements in the Indenture or the Notes; (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists or is created after the Closing Date, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5.0 million or more; (vii) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $5.0 million and either (a) any creditor commences enforcement proceedings upon any such judgment or (b) such judgments are not paid, discharged or stayed for a period of 60 days; (viii) except as permitted by the Indenture, any Guarantee of the Notes shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Guarantee of the Notes; and (ix) certain events of bankruptcy or insolvency with respect to the Company or any of its Restricted Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, any Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would 61 69 constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATORS AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or such Guarantor under the Notes, any Guarantee thereof, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Notes ("Legal Defeasance") except for (i) the rights of Holders of outstanding Notes to receive payments in respect of the principal of and premium, interest and Liquidated Damages, if any, on the Notes when such payments are due from the trust referred to below, (ii) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of and premium, interest and Liquidated Damages, if any, on the outstanding Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Closing Date, there has been a change in 62 70 the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an opinion of counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (vii) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (viii) the Company shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. TRANSFER AND EXCHANGE A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. The registered Holder of a Note will be treated as the owner of it for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the Indenture, the Notes and the Guarantees thereof may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing default or compliance with any provision of the Indenture, the Notes or the Guarantees thereof may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for Notes). Without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (i) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than provisions relating to the covenants described above under the caption "Repurchase at the Option of Holders"); (iii) reduce the rate of or change the time for payment of interest on any Note; (iv) waive a Default or Event of Default in the payment of principal of or premium, interest or Liquidated Damages, if any, on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration); (v) make any Note payable in money other than that stated in the Notes; (vi) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, interest or Liquidated Damages, if any, on the Notes; (vii) waive a redemption payment with respect to any Note (other than a payment required by one of the covenants 63 71 described above under the caption "Repurchase at the Option of Holders"); (ix) release any Guarantor from its Guarantee of the Notes; or (ix) make any change in the foregoing amendment and waiver provisions. Notwithstanding the foregoing, without the consent of any Holder of Notes, the Company and the Trustee may amend or supplement the Indenture, the Notes or any Guarantee thereof to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's or any Guarantor's obligations to Holders of Notes in the case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The Holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. REGISTRATION RIGHTS; LIQUIDATED DAMAGES The Company, the Guarantors and the Initial Purchasers entered into a Registration Rights Agreement on September 30, 1997. Pursuant to the Registration Rights Agreement, the Company and the Guarantors agreed to file with the Commission the Registration Statement of which this Prospectus is a part. If (i) the Company is not required to file the Registration Statement or permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy or (ii) any Holder of Transfer Restricted Securities notifies the Company prior to the 20th day following consummation of the Exchange Offer that (a) it is prohibited by law or Commission policy from participating in the Exchange Offer or (b) that it may not resell the New Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Registration Statement is not appropriate or available for such resales or (c) that it is a broker-dealer and owns Notes acquired directly from the Company or an affiliate of the Company, the Company and the Guarantors will file with the Commission a Shelf Registration Statement to cover resales of the Notes by the Holders thereof who satisfy certain conditions relating to the provision of information in connection with the Shelf Registration Statement. The Company and the Guarantors will use their best efforts to cause the applicable registration statement to be declared effective as promptly as possible by the Commission. For purposes of the foregoing, "Transfer Restricted Securities" means each Note until (i) the date on which such Old Note has been exchanged by a person other than a broker-dealer for a New Note in the Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange Offer of an Old Note for a New Note, the date on which such New Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Registration Statement, (iii) the date on which such Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Note is distributed to the public pursuant to Rule 144 under the Act. The Registration Rights Agreement also (i) required the Company and the Guarantors to file the Registration Statement with the Commission on or prior to 30 days after the Closing Date, (ii) required the Company and the Guarantors to use their best efforts to have the Registration Statement declared effective by the Commission on or prior to 90 days after the Closing Date, (iii) unless the Exchange Offer would not be permitted by applicable law or 64 72 Commission policy, required the Company and the Guarantors to commence the Exchange Offer and use their best efforts to issue, on or prior to 30 business days after the date on which the Registration Statement was declared effective by the Commission, New Notes in exchange for all Old Notes tendered prior thereto in the Exchange Offer and (iv) if obligated to file the Shelf Registration Statement, requires the Company and the Guarantors to use their best efforts to file the Shelf Registration Statement with the Commission on or prior to 30 days after such filing obligation arises and to cause the Shelf Registration to be declared effective by the Commission on or prior to 90 days after such obligation arises. If (a) the Company and the Guarantors fail to file any of the Registration Statements required by the Registration Rights Agreement on or before the date specified for such filing, (b) any of such Registration Statements is not declared effective by the Commission on or prior to the date specified for such effectiveness (the "Effectiveness Target Date"), (c) the Company and the Guarantors fail to consummate the Exchange Offer within 30 business days of the Effectiveness Target Date with respect to the Registration Statement or (d) the Shelf Registration Statement or the Registration Statement is declared effective but thereafter ceases to be effective or usable in connection with resales of Transfer Restricted Securities during the periods specified in the Registration Rights Agreement (each such event referred to in clauses (a) through (d) above a "Registration Default"), then the Company will pay Liquidated Damages to each Holder of Notes, with respect to the first 90-day period immediately following the occurrence of the first Registration Default, in an amount equal to $.05 per week per $1,000 principal amount of Notes held by such Holder. The amount of the Liquidated Damages will increase by an additional $.05 per week per $1,000 principal amount of Notes with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal amount of Notes. All accrued Liquidated Damages will be paid by the Company on each Damages Payment Date to the Global Note Holder by wire transfer of immediately available funds or by federal funds check and to Holders of Certificated Securities by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified. Following the cure of all Registration Defaults, the accrual of Liquidated Damages will cease. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback), excluding sales of services and ancillary products in the ordinary course of business consistent with past practices (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture described above under the caption "Change of Control" and/or the provisions described above under the caption "Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset Sale covenant), and (ii) the issue or sale by the Company or any of its Subsidiaries of Equity Interests of any of the Company's Subsidiaries (other than directors' qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary of the Company), in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $1.0 million or (b) for net proceeds in excess of $1.0 million. Notwithstanding the foregoing, the following will be deemed not to be Asset Sales: (i) a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary or 65 73 by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary; (ii) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary; (iii) a Permitted Investment or Restricted Payment that is permitted by the covenant described above under the caption "Restricted Payments; (iv) the exchange of Rigs or terminals for other assets that are usable in the business of the Company and its Restricted Subsidiaries to the extent that the assets received by the Company and its Restricted Subsidiaries have a fair market value at least equal to the fair market value of the Rigs and terminals exchanged by the Company, in each case as determined in good faith by the Board of Directors; (v) a disposition of Cash Equivalents solely for cash or other Cash Equivalents; (vi) a sale-leaseback transaction involving Rigs or real estate within one year of the acquisition of such Rigs or real estate; and (vii) the sale of accounts receivables and related assets customarily transferred in an asset securitization transaction involving accounts receivable to a Receivables Subsidiary or by a Receivables Subsidiary in connection with a Qualified Receivables Transaction. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than six months from the date of acquisition, (iii) certificates of deposit and Eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any lender party to the New Credit Facility or with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Keefe Bank Watch Rating of AB or better, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above and (v) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within six months after the date of acquisition. "Change of Control" means, with respect to the Company or any successor Person permitted under the covenant "Merger, Consideration, or Sale of Assets," the occurrences of any of the following: (a) the adoption of a plan relating to the liquidation or dissolution of the Company; (b) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" or "group" (as such terms are used in Section 13(d)(3) of the Exchange Act), other than the Principals, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and rule 13d-5 under the Exchange Act), directly or indirectly, of (i) more than 35% of the voting power of the outstanding voting stock of the Company or (ii) more of the voting power of the outstanding voting stock of the Company than that beneficially owned by the Principals; or (c) the first day on which more than a majority of the members of the Board of Directors are not continuing Directors. "Closing Date" means the date of the closing of the sale of the Old Notes. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus, to the extent deducted in computing such Consolidated Net Income, (i) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale, (ii) provision for taxes based on income or profits, (iii) Consolidated Interest Expense, (iv) depreciation and amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and (v) nonrecurring charges relating to the Acquisition, to the extent that such charges are set forth in "Unaudited Pro Forma Financial Information," including the notes thereto, in each case on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization of, a Person shall be added to Consolidated Net 66 74 Income to compute Consolidated Cash Flow only to the extent (and in the same proportion) that the Net Income of such Person was included in calculating Consolidated Net Income. "Consolidated Interest Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees, redeems or repays any Indebtedness (other than revolving credit borrowings) subsequent to the commencement of the period for which the Consolidated Interest Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Consolidated Interest Coverage Ratio is made (the "Calculation Date"), then the Consolidated Interest Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee, redemption or repayment of Indebtedness as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, and other transactions consummated by the Company or any of its Restricted Subsidiaries with respect to which pro forma effect may be given pursuant to Article 11 of Regulation S-X under the Securities Act, in each case during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iv) of the proviso set forth in the definition of Consolidated Net Income, (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded and (iii) the Consolidated Interest Expense attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Consolidated Interest Expense will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "Consolidated Interest Expense" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period and (iii) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon), in each case, on a consolidated basis and in accordance with GAAP. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) if the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting is a gain, the Net Income of such Person shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof, (ii) if the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting is a loss, the Net Income of such Person shall be excluded except to the extent that (a) the Company or any of its Restricted Subsidiaries funds such loss by means of the provision of additional capital to such Person or (b) the aggregate losses of such Person excluded pursuant to this clause (ii) exceed the aggregate gains of such Person excluded pursuant to clause (i), (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded and (v) solely for purposes of calculating Consolidated Interest Expense for purposes of the covenant described under the caption "Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock", the Net Income of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Restricted Subsidiaries. "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (a) the consolidated equity of the common stockholders of such Person and its consolidated Restricted Subsidiaries as of such date, plus 67 75 (b) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Stock) that by its terms is not entitled to the payment of dividends unless such dividends may be declared and paid only out of net earnings in respect of the year of such declaration and payment, but only to the extent of any cash received by such Person upon issuance of such preferred stock, less (i) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within 12 months after the acquisition of such business) subsequent to the Closing Date in the book value of any asset owned by such Person or a consolidated Restricted Subsidiary of such Person, (ii) all investments as of such date in unconsolidated Subsidiaries and in Persons that are not Restricted Subsidiaries and (iii) all unamortized debt discount and expense and unamortized deferred charges as of such date, in each case determined in accordance with GAAP. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the Closing Date or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof (or of any security into which it is convertible or for which it is exchangeable) have the right to require the issuer to repurchase such Capital Stock (or such security into which it is convertible or for which it is exchangeable) upon the occurrence of an Asset Sale or a Change of Control shall not constitute Disqualified Stock if such Capital Stock (and all such securities into which it is convertible or for which it is exchangeable) provides that the issuer thereof will not repurchase or redeem any such Capital Stock (or any such security into which it is convertible or for which it is exchangeable) pursuant to such provisions prior to compliance by the Company with the provisions of the Indenture described under the caption "Repurchase at the Option of Holders," "Change of Control" or "Asset Sales," as the case may be. "Domestic Restricted Subsidiary" means a Restricted Subsidiary that is not formed, incorporated or organized in a jurisdiction outside of the United States. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Existing Indebtedness" means Indebtedness (other than Indebtedness under the New Credit Facility) in existence on the Closing Date, until such Indebtedness is repaid. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Guarantors" means all Domestic Restricted Subsidiaries and Canadian Subsidiaries of the Company existing on the Closing Date (other than AH Industries, Inc.), and all Subsidiaries of the Company created or acquired by the Company after the Closing Date that becomes a Guarantor as set forth under "Subsidiary Guarantees." 68 76 "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) currency exchange or interest rate swap, cap or collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange or interest rates. "Indebtedness" means, with respect to any Person, (i) any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, (ii) all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) and (iii) to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP, excluding, however, trade accounts receivable and bank deposits made in the ordinary course of business. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption "Restricted Payments." "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any option or other agreement to sell or give a Lien). "Limited-Recourse Debt" means Indebtedness (a) as to which neither the Company nor any of its Restricted Subsidiaries (i) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or is otherwise directly or indirectly liable (as a guarantor or otherwise) or (ii) constitutes the lender, except, in the case of clauses (i) and (ii), to the extent permitted by the covenants described under the captions "Restricted Payments" and "Incurrence of Indebtedness and Issuance of Preferred Stock, (b) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity and (c) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries, except to the extent of any Indebtedness incurred by the Company or any of its Restricted Subsidiaries in accordance with clause (a)(i) above. "Make-Whole Amount" means, with respect to any Note, an amount equal to the excess, if any, of (a) the present value of the remaining principal, premium and interest payments that would be payable with respect to such Note if such Note were redeemed on October 1, 2002, computed using a discount rate equal to the Treasury Rate plus 75 basis points, over (b) the outstanding principal amount of such Note. "Make-Whole Average Life" means, with respect to any date of redemption of Notes, the number of years (calculated to the nearest one-twelfth) from such redemption date to October 1, 2002. "Make-Whole Price" means, with respect to any Note, the greater of (a) the sum of the principal amount of and Make-Whole Amount with respect to such Note, and (b) the redemption price of such Note on October 1, 2002. 69 77 "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (i) the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, (ii) taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) amounts applied to the repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale and (iv) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "New Credit Facility" means that certain credit agreement, dated the date of the Indenture, by and among the Company and BankBoston, N.A., as administrative agent, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Permitted Investments" means (i) any Investment in the Company or in a Restricted Subsidiary of the Company; (ii) any Investment in Cash Equivalents; (iii) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (a) such Person becomes a Restricted Subsidiary of the Company or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (iv) any Restricted Investment made as a result of the receipt of non-cash consideration from (a) an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption "Repurchase at the Option of Holders." "Asset Sales" or (b) a disposition of assets that does not constitute an Asset Sale; (v) any Investments received solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (vi) loans or advances to owner-operators and employees of the Company or its Restricted Subsidiaries made in the ordinary course of business; (vii) Investments in an amount not to exceed $5.0 million in Haul Insurance Limited to the extent required by applicable laws or regulations or pursuant to any directive or request (whether or not having the force of law) of any governmental authority having jurisdiction over Haul Insurance Limited; (viii) Investments received in connection with the settlement of any ordinary course obligations owed to the Company or any of its Restricted Subsidiaries; (ix) other Investments in businesses related to the businesses operated by the Company and its Restricted Subsidiaries in an aggregate amount not to exceed $30.0 million, provided that the aggregate amount of such Investments shall not exceed $15.0 million in any calendar year; and (x) investments by the Company or a Restricted Subsidiary of the Company in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person or assets in connection with a Qualified Receivables Transaction; provided that any Investment in any such Person is in the form of a Purchase Money Note, an equity interest or interests in accounts receivable generated by the Company or a Subsidiary of the Company and transferred to any Person in connection with a Qualified Receivables Transaction or any such Person owning such accounts receivable. "Permitted Liens" means (i) Liens in favor of the Company or any of its Restricted Subsidiaries; (ii) Liens securing Obligations incurred pursuant to clause (i) of the second paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock;" (iii) Liens on property or Equity Interests of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets or Equity Interests other than those of the Person merged into or consolidated with the 70 78 Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (v) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (vi) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (v) of the second paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock" covering only the assets acquired with such Indebtedness; (vii) Liens existing on the Closing Date; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefore; (ix) Liens securing the Notes or any Guarantee thereof; (x) Liens securing Permitted Refinancing Indebtedness to the extent that the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded was permitted to be secured by a Lien; (xi) Liens on Investments of the Company or any of its Restricted Subsidiaries in any Person that is not a Restricted Subsidiary of the Company to secure the Indebtedness of such Person; (xii) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $2.0 million at any one time outstanding and that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary and (xiii) Liens on assets of a Receivables Subsidiary securing Indebtedness incurred in connection with a Qualified Receivables Transaction, provided that such Indebtedness was incurred in connection with such Qualified Receivables Transaction. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries; provided that: (i) the principal amount (or accredit value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accredit value, if applicable), plus premium and accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary that is an obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Principals" means the directors and executive officers of the Company on the Closing Date, as set forth above under "Management," their respective spouses and lineal descendants, and any Affiliate of any of the foregoing. "Purchase Money Note" means a promissory note evidencing a line of credit, which may be irrevocable, from, or evidencing other Indebtedness owed to, the Company or any Subsidiary of the Company in connection with a Qualified Receivables Transaction, which note shall be repaid from cash available to the maker of such note, other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors in respect of interest, principal and other amounts owing to such investors and amounts paid in connection with the purchase of newly generated receivables. "Qualified Receivables Transaction" means any transaction or series of transactions that may be entered into by the Company or any Subsidiary of the Company pursuant to which the Company or any Subsidiary of the Company may sell, convey or otherwise transfer to (i) a Receivables Subsidiary (in the case of a transfer by the Company or any Subsidiary of the Company) and (ii) any other person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any Subsidiary of the Company, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in 71 79 respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable. "Receivables Subsidiary" means a Wholly Owned Subsidiary of the Company (other than a Guarantor), which engages in no activities other than in connection with the financing of accounts receivable and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary (i) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (a) is guaranteed by the Company or any other Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness)) pursuant to Standard Securitization Undertakings, (b) is recourse to or obligates the Company or any other Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings or (c) subjects any property or asset of the Company or any other Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (ii) with which neither the Company nor any other Subsidiary of the Company has any material contract, agreement, arrangement or understanding (except in connection with a Purchase Money Note or Qualified Receivables Transaction) other than on terms no less favorable to the Company or such other Subsidiary of the Company than those that might be obtained at the time from persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing accounts receivable, and (iii) to which neither the Company nor any other Subsidiary of the Company has any obligation to maintain or preserve such entity's financial condition or cause such entity to achieve certain levels of operating results. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers' Certificate certifying, to the best of such officer's knowledge and belief after consulting with counsel, that such designation complied with the foregoing conditions. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Significant Subsidiary" means any Restricted Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the date hereof. "Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any Subsidiary of the Company which are reasonably customary in an accounts receivable transaction. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "Treasury Rate" means, at any time of computation, the yield to maturity at such time (as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519), which has become publicly available at least two business days prior to the date of the redemption notice or, if such Statistical Release is no longer published, any publicly available source of similar market data) of United States Treasury securities with a constant maturity most nearly equal to the Make-Whole Average Life; provided, however, that if the Make-Whole Average Life is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is 72 80 given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the Make-Whole Average Life is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "Unrestricted Subsidiary" means any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary (a) has no Indebtedness other than Limited-Recourse Debt, (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding comply with the covenant set forth under "Affiliate Transactions" and (c) except to the extent permitted by the covenant set forth under "Restricted Payments," is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (i) to subscribe for additional Equity Interests or (ii) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following discussion is a summary of certain federal income tax considerations relevant to the exchange of Old Notes for New Notes, but does not purport to be a complete analysis of all potential tax effects. The discussion is based upon the Internal Revenue Code of 1986, as amended, Treasury regulations, Internal Revenue Service rulings and pronouncements, and judicial decisions now in effect, all of which are subject to change at any time by legislative, judicial or administrative action. Any such changes may be applied retroactively in a manner that could adversely affect a holder of the New Notes. The description does not consider the effect of any applicable foreign, state, local or other tax laws or estate or gift tax considerations. EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS. EXCHANGE OF OLD NOTES FOR NEW NOTES The exchange of Old Notes for New Notes pursuant to the Exchange Offer should not constitute a significant modification of the terms of the Old Notes and, therefore such exchange should not constitute an exchange for federal income tax purposes. Accordingly, such exchange should have no federal income tax consequences to holders of Old Notes. CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-UNITED STATES HOLDERS 73 81 The following is a general discussion of certain United States federal income and estate tax consequences of the acquisition, ownership and disposition of Notes by an initial beneficial owner of Notes that, for United States federal income tax purposes, is not a "United States person" (a "Non-United States Holder"). This discussion is based upon the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), administrative pronouncements, judicial decisions and existing and proposed Treasury Regulations, changes to any of which subsequent to the date hereof may adversely affect the tax consequences described herein, possibly on a retroactive basis. This summary is addressed to holders who hold Notes as capital assets within the meaning of Section 1221 of the Code. For purposes of this discussion, a "United States person" means a citizen or resident of the United States, a corporation, partnership or other entity created or organized in the United States or under the laws of the United States or of any political subdivision thereof, an estate, or, for taxable years beginning on or before December 31, 1996, in general, any trust, whose income is includible in gross income for United States federal income tax purposes regardless of its source or for the taxable years beginning after December 31, 1996, a trust, if a U. S. court is able to exercise primary supervision over the administration of the trust and one or more U. S. persons have the authority to control all substantial decisions of the trust. The tax treatment of the holders of the Notes may vary depending upon their particular situations. U. S. persons acquiring the Notes are subject to different rules than those discussed below. In addition, certain other holders (including insurance companies, tax exempt organizations, financial institutions and broker-dealers) may be subject to special rules not discussed below. Prospective investors are urged to consult their tax advisors regarding the United States federal tax consequences of acquiring, holding and disposing of Notes, as well as any tax consequences that may arise under the laws of any foreign, state, local or other taxing jurisdiction. INTEREST Interest paid by the Company to a Non-United States Holder will not be subject to United States federal income or withholding tax if such interest is not effectively connected with the conduct of a trade or business within the United States by such Non-United States Holder and such Non-United States Holder (i) does not directly or indirectly own 10% or more of the total combined voting power of all classes of stock of the Company; (ii) is not a controlled foreign corporation that is a "related person" of the Company (within the meaning of the Code), and (iii) certifies, under penalties of perjury, that such holder is not a United States person and provides such holder's name and address. GAIN ON DISPOSITION A Non-United States Holder will generally not be subject to United States federal income tax on gain recognized on a sale, redemption or other disposition of a Note unless (i) the gain is effectively connected with the conduct of a trade or business within the United States by the Non-United States Holder or (ii) in the case of a Non-United States Holder who is a nonresident alien individual and holds the Note as a capital asset, such holder is present in the United States for 183 or more days in the taxable year and certain other requirements are met. FEDERAL ESTATE TAXES If interest on the Notes is exempt from withholding of United States federal income tax under the rules described above, the Notes will not be included in the estate of a deceased individual Non-United States Holder for United States federal estate tax purposes. INFORMATION REPORTING AND BACKUP WITHHOLDING The Company will, where required, report to the holders of Notes and the Internal Revenue Service the amount of any interest paid on the Notes in each calendar year and the amounts of tax withheld, if any, with respect to such payments. In the case of payments of interest to Non-United States Holders, temporary Treasury Regulations provide that the 31% backup withholding of United States federal income tax and certain information reporting will not apply to such payments with respect to which either the requisite certification has been received or an exemption has otherwise been established; provided that neither the Company nor its payment agent has actual knowledge that the holder is a United States person or that the conditions of any other exemption are not in fact satisfied. The 74 82 requisite certification is made by providing Internal Revenue Service Form W-8, Certificate of Foreign Status, to the Company (or a substitute form provided by the Company or its agent). Under temporary Treasury regulations, information reporting and backup withholding requirements may apply to the gross proceeds paid to a Non-United States Holder on the disposition of the Notes, unless the holder provides similar certification. A Non-United States holder is advised and encouraged to consult its own tax advisor as to the consequences of disposing of the Notes. Recently, the United States Treasury Department issued proposed regulations regarding the withholding and information reporting rules discussed above. In general, the proposed Treasury Regulations do not alter the substantive withholding and information reporting. If finalized in their current form, the proposed regulations would generally be effective for payments made after December 31, 1997, subject to certain transition rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the Non-United States Holder's United States federal income tax liability, provided that the required information is furnished to the Internal Revenue Service. PLAN OF DISTRIBUTION Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of one year after the date of this Prospectus, they will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. The Company will not receive any proceeds from any sale of New Notes by broker-dealers. New Notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such New Notes. Any broker-dealer that resells New Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such New Notes may be deemed to be an "underwriter" within the meaning of the Securities Act, and any profit on any such resale of New Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of one year after the date of this Prospectus, the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the holders of the Notes) other than commissions or concessions of any brokers or dealers and will indemnify holders of the Old Notes (including any broker-dealers) against certain liabilities, including certain liabilities under the Securities Act. LEGAL MATTERS The validity of the issuance of the New Notes offered hereby will be passed upon for the Company by Troutman Sanders LLP, Atlanta, Georgia. 75 83 EXPERTS The historical Consolidated Financial Statements of Allied Holdings, Inc. and Subsidiaries as of December 31, 1995 and 1996, and for each of the three years in the period ended December 31, 1996, included in this Prospectus, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. The historical Consolidated Financial Statements of Ryder Automotive Carrier Services, Inc. and Subsidiaries as of December 31, 1995 and 1996, and for each of the three years in the period ended December 31, 1996, included in this Prospectus, have been audited by KPMG Peat Marwick LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. 76 84 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- ALLIED HOLDINGS, INC. AND SUBSIDIARIES Report of Independent Public Accountants.................... F-2 Consolidated Balance Sheets at December 31, 1995 and 1996 and June 30, 1997 (Unaudited)............................. F-3 Consolidated Statements of Operations for the Years Ended December 31, 1994, 1995, and 1996 and the Six Months Ended June 30, 1996 and 1997 (Unaudited)........................ F-4 Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1994, 1995, and 1996 and the Six Months Ended June 30, 1997 (Unaudited)............ F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and 1996 and the Six Months Ended June 30, 1996 and 1997 (Unaudited)........................ F-6 Notes to Consolidated Financial Statements.................. F-7 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES Independent Auditors' Report................................ F-23 Consolidated Balance Sheets at December 31, 1995 and 1996 and June 30, 1997 (Unaudited)............................. F-24 Consolidated Statements of Operations for the Years Ended December 31, 1994, 1995, and 1996 and the Six Months Ended June 30, 1996 and 1997 (Unaudited)........................ F-25 Consolidated Statements of Shareholder's Equity for the Years Ended December 31, 1994, 1995, and 1996 and the Six Months Ended June 30, 1997 (Unaudited).................... F-26 Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995, and 1996 and the Six Months Ended June 30, 1996 and 1997 (Unaudited)........................ F-27 Notes to Consolidated Financial Statements.................. F-28
F-1 85 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders of Allied Holdings, Inc.: We have audited the accompanying consolidated balance sheets of ALLIED HOLDINGS, INC. (a Georgia corporation) AND SUBSIDIARIES as of December 31, 1995 and 1996 and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Allied Holdings, Inc. and subsidiaries as of December 31, 1995 and 1996 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Atlanta, Georgia February 4, 1997 (except with respect to the matters discussed in Note 13, as to which the date is September 30, 1997) F-2 86 ALLIED HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND 1996 AND JUNE 30, 1997 (UNAUDITED) (IN THOUSANDS)
DECEMBER 31, ------------------- JUNE 30, 1995 1996 1997 -------- -------- ----------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents................................. $ 11,147 $ 1,973 $ 4,409 Short-term investments.................................... 0 8,520 8,821 Receivables, net of allowance for doubtful accounts of $689, $564, and $564 at December 31, 1995 and 1996 and June 30, 1997, respectively............................ 22,690 22,673 28,325 Inventories............................................... 4,184 4,096 4,215 Prepayments and other current assets...................... 12,400 11,940 14,254 -------- -------- -------- Total current assets.............................. 50,421 49,202 60,024 -------- -------- -------- PROPERTY AND EQUIPMENT, net................................. 134,873 132,552 126,364 -------- -------- -------- OTHER ASSETS: Goodwill, net............................................. 23,568 22,081 33,800 Notes receivable due from related parties................. 573 573 573 Other..................................................... 5,251 6,675 7,933 -------- -------- -------- Total other assets................................ 29,392 29,329 42,306 -------- -------- -------- Total assets...................................... $214,686 $211,083 $228,694 ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt...................... $ 4,368 $ 2,275 $ 8,248 Trade accounts payable.................................... 11,320 15,872 12,910 Accrued liabilities....................................... 27,569 30,347 37,433 -------- -------- -------- Total current liabilities......................... 43,257 48,494 58,591 -------- -------- -------- LONG-TERM DEBT, less current maturities..................... 106,634 93,708 96,986 -------- -------- -------- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS................. 3,698 3,621 3,557 -------- -------- -------- DEFERRED INCOME TAXES....................................... 5,561 7,487 8,700 -------- -------- -------- OTHER LONG-TERM LIABILITIES................................. 2,514 1,064 703 -------- -------- -------- COMMITMENTS AND CONTINGENCIES (Notes 5, 7, 8 and 13) STOCKHOLDERS' EQUITY: Common stock, no par value; 20,000 shares authorized, 7,725, 7,810 and 7,810 shares outstanding at December 31, 1995 and 1996 and June 30, 1997, respectively...... 0 0 0 Additional paid-in capital................................ 42,977 43,657 43,657 Retained earnings......................................... 10,489 14,475 18,186 Foreign currency translation adjustment, net of tax....... (444) (743) (1,074) Unearned compensation..................................... 0 (680) (612) -------- -------- -------- Total stockholders' equity........................ 53,022 56,709 60,157 -------- -------- -------- Total liabilities and stockholders' equity........ $214,686 $211,083 $228,694 ======== ======== ========
The accompanying notes are an integral part of these consolidated balance sheets. F-3 87 ALLIED HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 AND THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE SIX FOR THE YEARS ENDED MONTHS ENDED DECEMBER 31, JUNE 30, ------------------------------ ------------------- 1994 1995 1996 1996 1997 -------- -------- -------- -------- -------- (UNAUDITED) REVENUES.................................... $297,236 $381,464 $392,547 $200,565 $208,969 -------- -------- -------- -------- -------- OPERATING EXPENSES: Salaries, wages, and fringe benefits...... 157,979 195,952 204,838 105,315 109,634 Operating supplies and expenses........... 51,532 62,179 62,880 31,526 32,563 Purchased transportation.................. 9,486 32,084 34,533 17,666 19,170 Insurance and claims...................... 12,043 16,022 16,849 8,039 8,098 Operating taxes and licenses.............. 14,301 16,564 16,122 8,381 8,190 Depreciation and amortization............. 16,314 25,431 26,425 12,931 13,786 Rent expenses............................. 3,214 5,354 4,975 2,481 2,470 Communications and utilities.............. 1,855 3,435 3,111 1,740 1,534 Other operating expenses.................. 1,781 3,522 4,219 1,431 2,074 -------- -------- -------- -------- -------- Total operating expenses.......... 268,505 360,543 373,952 189,510 197,519 -------- -------- -------- -------- -------- Operating income.................. 28,731 20,921 18,595 11,055 11,450 -------- -------- -------- -------- -------- OTHER INCOME (EXPENSE): Interest expense.......................... (5,462) (11,260) (10,720) (5,396) (5,408) Interest income........................... 312 707 603 303 357 -------- -------- -------- -------- -------- (5,150) (10,553) (10,117) (5,093) (5,051) -------- -------- -------- -------- -------- INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM...................................... 23,581 10,368 8,478 5,962 6,399 INCOME TAX PROVISION........................ (9,393) (4,222) (3,557) (2,504) (2,688) -------- -------- -------- -------- -------- INCOME BEFORE EXTRAORDINARY ITEM............ 14,188 6,146 4,921 3,458 3,711 EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT, net of income tax benefit of $2,072, $573, and $573 for the years ended December 31, 1994 and 1996 and for the six months ended June 30, 1996, respectively.............................. (2,627) 0 (935) (935) 0 -------- -------- -------- -------- -------- NET INCOME.................................. $ 11,561 $ 6,146 $ 3,986 $ 2,523 $ 3,711 ======== ======== ======== ======== ======== PER COMMON SHARE: Income before extraordinary item.......... $ 1.84 $ 0.80 $ 0.64 $ 0.45 $ 0.48 Extraordinary loss on early extinguishment of debt................................ (0.34) 0.00 (0.12) (0.12) 0.00 -------- -------- -------- -------- -------- NET INCOME PER COMMON SHARE................. $ 1.50 $ 0.80 $ 0.52 $ 0.33 $ 0.48 ======== ======== ======== ======== ======== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING............................... 7,725 7,725 7,725 7,725 7,725 ======== ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated statements. F-4 88 ALLIED HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 AND THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED) (IN THOUSANDS)
FOREIGN COMMON STOCK ADDITIONAL RETAINED CURRENCY --------------- PAID-IN EARNINGS TRANSLATION UNEARNED SHARES AMOUNT CAPITAL (DEFICIT) ADJUSTMENT COMPENSATION TOTAL ------ ------ ---------- --------- ----------- ------------ ------- BALANCE, December 31, 1993................. 7,725 $0 $42,977 $(7,218) $ 0 $ 0 $35,759 Net income............................... 0 0 0 11,561 0 0 11,561 Foreign currency translation adjustment, net of income taxes of $978............ 0 0 0 0 (1,485) 0 (1,485) ----- -- ------- ------- ------- ----- ------- BALANCE, December 31, 1994................. 7,725 0 42,977 4,343 (1,485) 0 45,835 Net income............................... 0 0 0 6,146 0 0 6,146 Foreign currency translation adjustment, net of income taxes of $701............ 0 0 0 0 1,041 0 1,041 ----- -- ------- ------- ------- ----- ------- BALANCE, December 31, 1995................. 7,725 0 42,977 10,489 (444) 0 53,022 Net income............................... 0 0 0 3,986 0 0 3,986 Foreign currency translation adjustment, net of income taxes of $181............ 0 0 0 0 (299) 0 (299) Restricted stock awards.................. 85 0 680 0 0 (680) 0 ----- -- ------- ------- ------- ----- ------- BALANCE, December 31, 1996................. 7,810 0 43,657 14,475 (743) (680) 56,709 Net income (unaudited)................... 0 0 0 3,711 0 0 3,711 Foreign currency translation adjustment, net of income taxes of $181 (unaudited)............................ 0 0 0 0 (331) 0 (331) Restricted stock awards (unaudited)...... 0 0 0 0 0 68 68 ----- -- ------- ------- ------- ----- ------- BALANCE, June 30, 1997 (Unaudited)......... 7,810 $0 $43,657 $18,186 $(1,074) $(612) $60,157 ===== == ======= ======= ======= ===== =======
The accompanying notes are an integral part of these consolidated statements. F-5 89 ALLIED HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 AND THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (UNAUDITED) (IN THOUSANDS)
FOR THE SIX FOR THE YEARS ENDED MONTHS ENDED DECEMBER 31, JUNE 30, ------------------------------ ------------------- 1994 1995 1996 1996 1997 -------- -------- -------- -------- -------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income.......................................... $ 11,561 $ 6,146 $ 3,986 $ 2,523 $ 3,711 -------- -------- -------- -------- -------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization..................... 16,314 25,431 26,425 12,931 13,786 Gain on sale of property and equipment............ (401) (57) (13) (359) 27 Extraordinary loss on early extinguishment of debt, net....................................... 2,627 0 935 935 0 Deferred income taxes............................. 4,189 1,806 1,921 84 1,405 Change in operating assets and liabilities, excluding effect of business acquired: Increase in short-term investments.............. 0 0 (8,520) 0 (301) Receivables, net................................ (3,155) 1,299 (9) (6,149) (5,699) Inventories..................................... 457 163 82 148 (128) Prepayments and other current assets............ (95) (444) 452 (2,150) (2,333) Trade accounts payable.......................... (1,907) 645 4,565 1,247 (2,934) Accrued liabilities............................. (1,482) (4,927) 1,277 6,069 6,685 -------- -------- -------- -------- -------- Total adjustments............................ 16,547 23,916 27,115 12,756 10,508 -------- -------- -------- -------- -------- Net cash provided by operating activities.... 28,108 30,062 31,101 15,279 14,219 -------- -------- -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment................. (30,545) (18,210) (25,972) (14,376) (6,910) Proceeds from sale of property and equipment........ 1,032 768 3,447 1,734 114 Purchase of business, net of cash acquired.......... (32,332) 0 0 0 (12,898) Increase in the cash surrender value of life insurance......................................... (356) (589) (1,981) (991) (1,283) -------- -------- -------- -------- -------- Net cash used in investing activities........ (62,201) (18,031) (24,506) (13,633) (20,977) -------- -------- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of long-term debt........................ (73,839) (11,952) (57,691) (47,692) (11,404) Proceeds from issuance of long-term debt............ 113,113 0 42,657 40,000 20,655 Other, net.......................................... (1,243) (827) (655) (513) 0 -------- -------- -------- -------- -------- Net cash provided by (used in) financing activities................................. 38,031 (12,779) (15,689) (8,205) 9,251 -------- -------- -------- -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS......................................... (137) 183 (80) 69 (57) -------- -------- -------- -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS......................................... 3,801 (565) (9,174) (6,490) 2,436 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD...... 7,911 11,712 11,147 11,147 1,973 -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD............ $ 11,712 $ 11,147 $ 1,973 $ 4,657 $ 4,409 ======== ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated statements. F-6 90 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1994, 1995, AND 1996 (INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED) 1. ORGANIZATION AND OPERATIONS Allied Holdings, Inc. (the "Company"), a Georgia corporation, is a holding company which operates through its wholly owned subsidiaries. The principal subsidiary of the Company is Allied Automotive Group, Inc. ("AAG"), a Georgia corporation. AAG is comprised of Allied Systems, Ltd. ("Allied Systems"), a Georgia limited partnership, Auto Haulaway, Inc. ("Auto Haulaway"), an Ontario, Canada corporation, Inter Mobile, Inc. ("Inter Mobile"), Legion Transportation, Inc. ("Legion"), and Auto Haulaway Releasing Services (1981) Limited ("Releasing"). Allied Systems and Auto Haulaway are engaged in the business of transporting automobiles and light trucks from manufacturing plants, ports, auctions, and railway distribution points to automobile dealerships. The Company acquired all of the outstanding capital stock of Auto Haulaway on October 31, 1994 (Note 2). Currently, Inter Mobile, Legion, and Releasing are not significant to the consolidated financial position or results of operations of the Company. During 1996, the Company incorporated Axis Group, Inc. ("Axis Group"). Axis Group provides logistics solutions to the finished vehicle, service, and aftermarket parts segments of the automotive market. Axis Group identifies new and innovative methods of distribution as well as better use of traditional and emerging technologies to help customers solve the most complex transportation, inventory management, and logistics problems. The Company has three other operating subsidiaries, Allied Industries, Inc. ("Allied Industries"), Haul Insurance Limited ("Haul"), and Link Information Systems, Inc. ("Link"). These subsidiaries provide services to AAG, Axis Group, and the other subsidiaries of the Company. Allied Industries provides administrative, financial, risk management, and other related services. During December 1995, the Company incorporated Haul as a captive insurance company. Haul was formed for the purpose of insuring general liability, automobile liability, and workers' compensation for the Company. Link, which was incorporated in 1996, provides information systems hardware, software, and support. 2. ACQUISITION OF AUTO HAULAWAY On October 31, 1994, the Company acquired all of the outstanding capital stock of Auto Haulaway for approximately $30 million. The acquisition has been accounted for under the purchase method, and accordingly, the operating results of Auto Haulaway have been included in the accompanying financial statements since the date of the acquisition. In connection with the acquisition, the Company refinanced approximately $35 million of Auto Haulaway's long-term debt, which resulted in an extraordinary loss on the extinguishment of the debt of approximately $2.6 million, net of income taxes of approximately $2.1 million. The source of funds utilized for the payment of the purchase price and the debt refinancing was borrowings under the Company's revolving credit agreement and available cash on hand. The following unaudited pro forma results of operations for the year ended December 31, 1994 assume that the acquisition of Auto Haulaway had occurred on January 1, 1994. The pro forma results are not necessarily indicative of what actually would have occurred if the acquisition of Auto Haulaway had been consummated on January 1, 1994. In addition, they are not intended to be a projection of future results and do F-7 91 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) not reflect any synergies that might be achieved from combined operations (in thousands, except per share data).
DECEMBER 31, 1994 ------------ Revenues.................................................... $410,631 Operating income............................................ 35,245 Income before extraordinary item............................ 14,871 Net income.................................................. 12,244 Income per share before extraordinary item.................. $ 1.93 Net income per share........................................ $ 1.58 Average shares outstanding.................................. 7,725
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated. FOREIGN CURRENCY TRANSLATION The assets and liabilities of the Company's Canadian subsidiaries are translated into U.S. dollars using current exchange rates in effect at the balance sheet date, and revenues and expenses are translated at average monthly exchange rates. The resulting translation adjustments are recorded as a separate component of stockholders' equity, net of related income taxes. REVENUE RECOGNITION Substantially all revenue is derived from transporting automobiles and light trucks from manufacturing plants, ports, auctions, and railway distribution points to automobile dealerships. Revenue is recorded by the Company when the vehicles are delivered to the dealerships. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. INVENTORIES Inventories consist primarily of tires, parts, materials, and supplies for servicing the Company's tractors and trailers. Inventories are recorded at the lower of cost (on a first-in, first-out basis) or market. PREPAYMENTS AND OTHER CURRENT ASSETS Prepayments and other current assets consist of the following at December 31, 1995 and 1996 and June 30, 1997 (in thousands):
DECEMBER 31, JUNE 30, ------------------ -------- 1995 1996 1997 ------- ------- -------- Tires on tractors and trailers.......................... $ 5,944 $ 6,785 $ 6,611 Prepaid insurance....................................... 3,192 2,572 3,307 Other................................................... 3,264 2,583 4,336 ------- ------- ------- $12,400 $11,940 $14,254 ======= ======= =======
F-8 92 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) TIRES ON TRACTORS AND TRAILERS Tires on tractors and trailers are capitalized and amortized to operating supplies and expenses on a cents per mile basis. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Major property additions, replacements, and betterments are capitalized, while maintenance and repairs which do not extend the useful lives of these assets are expensed currently. Depreciation is provided using the straight-line method for financial reporting and accelerated methods for income tax purposes. The detail of property and equipment at December 31, 1995 and 1996 and June 30, 1997 is as follows (in thousands):
DECEMBER 31, ------------------- JUNE 30, 1995 1996 1997 USEFUL LIVES -------- -------- -------- ------------- Tractors and trailers..................... $164,422 $181,841 $186,288 4 to 10 years Buildings and facilities (including leasehold improvements)................. 22,951 23,679 23,786 4 to 25 years Land...................................... 9,999 9,953 9,953 Furniture, fixtures, and equipment........ 9,745 10,520 10,560 3 to 10 years Service cars and equipment................ 1,330 1,175 2,190 3 to 10 years -------- -------- -------- 208,447 227,168 232,777 Less accumulated depreciation and amortization............................ 73,574 94,616 106,413 -------- -------- -------- $134,873 $132,552 $126,364 ======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
FOR THE SIX FOR THE YEARS ENDED MONTHS ENDED DECEMBER 31, JUNE 30, -------------------------- --------------- 1994 1995 1996 1996 1997 ------- ------- ------ ------ ------ Cash paid during the period for interest.......... $ 3,738 $11,470 $8,514 $3,623 $6,124 Cash paid during the period for income taxes, net of refunds...................................... 6,205 1,364 (280) 730 228 Liabilities assumed in connection with business acquired........................................ 48,261 0 0 0 0 Capital lease obligations terminated.............. 4,093 0 0 0 0
GOODWILL The acquisition of Auto Haulaway resulted in goodwill of approximately $23,425,000. Goodwill related to the acquisition is being amortized on a straight-line basis over 20 years. Other goodwill is being amortized on a straight-line basis over ten years. Amortization (included in depreciation and amortization expense) for the years ended December 31, 1994, 1995, and 1996 amounted to approximately $607,000, $1,407,000, and $1,541,000, respectively. Amortization for the six months ended June 30, 1996 and 1997 amounted to approximately $772,000 and $846,000, respectively. Accumulated amortization was approximately $4,082,000, $5,623,000, and $6,454,000 at December 31, 1995 and 1996 and June 30, 1997, respectively. The Company periodically evaluates the realizability of goodwill based upon expectations of nondiscounted cash flows and operating income for each subsidiary having a material goodwill balance. The Company believes no impairment of goodwill exists at June 30, 1997. F-9 93 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CASH SURRENDER VALUE OF LIFE INSURANCE The Company maintains life insurance policies for certain employees of the Company. Under the terms of the policies, the Company will receive, upon the death of the insured, the lesser of aggregate premiums paid or the face amount of the policy. Any excess proceeds over premiums paid are remitted to the employee's beneficiary. The Company records the increase in cash surrender value each year as a reduction of premium expense. The Company has recorded approximately $2,146,000 and $4,127,000 of cash surrender value as of December 31, 1995 and 1996, respectively, included in other assets on the accompanying balance sheets. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107 ("SFAS No. 107"), "Disclosures About Fair Value of Financial Instruments," requires disclosure of the following information about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of the following disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties other than in a forced sale or liquidation. The amounts disclosed represent management's best estimates of fair value. In accordance with SFAS No. 107, the Company has excluded certain financial instruments and all other assets and liabilities from its disclosure. Accordingly, the aggregate fair value amounts presented are not intended to, and do not, represent the underlying fair value of the Company. The methods and assumptions used to estimate fair value are as follows: Cash and Cash Equivalents The carrying amount approximates fair value due to the relatively short period to maturity of these instruments. Short-Term Investments The Company's short-term investments are comprised of debt securities, all classified as trading securities, which are carried at their fair value based upon the quoted market prices of those investments. Accordingly, net realized and unrealized gains and losses on trading securities are included in net earnings. Long-Term Debt The carrying amount approximates fair value based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities. Interest Rate Cap Agreements The Company has entered into several interest rate protection agreements which expire at various dates through February 1999. The agreements protect outstanding floating rate debt at varying amounts ranging from $47,000,000 in 1996 to $33,000,000 in 1999. Under the agreements, the Company is F-10 94 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) reimbursed when actual interest rates exceed a limit, as defined. The limit, based primarily upon the 90-day LIBOR, ranges from 6.5% to 8% over the protection period and certain of the agreements limit the reimbursement if actual LIBOR exceeds a specified rate. The fair value of the interest rate cap agreements is the amount at which they could be settled, based on estimates obtained from brokers. The asset and (liability) amounts recorded in the balance sheet and the estimated fair values of financial instruments at December 31, 1995 and 1996 and June 30, 1997 consisted of the following (in thousands):
CARRYING FAIR AMOUNT VALUE --------- --------- December 31, 1995: Cash and cash equivalents................................. $ 11,147 $ 11,147 Long-term debt............................................ (111,002) (111,002) Interest rate cap agreements.............................. 228 0 December 31, 1996: Cash and cash equivalents................................. $ 1,973 $ 1,973 Short-term investments.................................... 8,520 8,520 Long-term debt............................................ (95,983) (95,983) Interest rate cap agreements.............................. 309 0 June 30, 1997: Cash and cash equivalents................................. $ 4,409 $ 4,409 Short-term investments.................................... 8,821 8,821 Long-term debt............................................ (105,234) (105,234) Interest rate cap agreements.............................. 209 0
ACCRUED LIABILITIES Accrued liabilities consist of the following at December 31, 1995 and 1996 and June 30, 1997 (in thousands):
DECEMBER 31, ----------------- JUNE 30, 1995 1996 1997 ------- ------- -------- Wages and benefits........................................ $14,540 $12,566 $15,274 Claims and insurance reserves............................. 9,649 13,145 14,844 Other..................................................... 3,380 4,636 7,315 ------- ------- ------- $27,569 $30,347 $37,433 ======= ======= =======
CLAIMS AND INSURANCE RESERVES In the United States, the Company retains liability up to $500,000 for each claim for automobile, workers' compensation, and general liability, including personal injury and property damage claims. In addition to the $500,000 per occurrence deductible for automobile liability, there is a $250,000 aggregate deductible for those claims which exceed the $500,000 per occurrence deductible. In addition, the Company retains liability up to $250,000 for each cargo damage claim. In Canada, the Company retains liability up to CDN $100,000 for each claim for personal injury, property damage, and cargo damage. The estimated costs of all known and potential losses are accrued by the Company. In the opinion of management, adequate provision has been made for all incurred claims. Subsequent to December 31, 1996, the Company increased its liability up to $650,000 for each claim for workers' compensation. The Company also increased its aggregate deductible for automobile liability to F-11 95 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) $500,000 for those claims which exceed the per occurrence deductible. These changes are in effect for the fiscal year beginning January 1, 1997. INCOME TAXES The Company follows the practice of providing for income taxes based on SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns (Note 4). EARNINGS PER SHARE Earnings per share are calculated by dividing net income by the weighted average number of common shares outstanding for the years presented. The dilutive effect of equivalent shares derived from stock options and restricted stock was less than 3% for the years ended December 31, 1995 and 1996 and for the six months ended June 30, 1996 and 1997 (there were no stock options or restricted stock outstanding during 1994), and therefore, the equivalent shares were not included in the computation of earnings per share. In February 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings per Share." This new statement will not result in changes to the Company's earnings per share for the first six months of 1997 or prior years. RECLASSIFICATION Certain amounts in the December 31, 1994, 1995, and 1996 financial statements have been reclassified to conform to the current period presentation. INTERIM UNAUDITED DATA FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 In the opinion of management, the unaudited condensed consolidated financial statements contain all of the normal and recurring adjustments necessary to present fairly the consolidated financial position of the Company and its subsidiaries at June 30, 1997 and the consolidated results of operations and cash flows of the Company and its subsidiaries for the six months ended June 30, 1996 and 1997. 4. INCOME TAXES For all periods presented, the accompanying financial statements reflect provisions for income taxes computed in accordance with the requirements of SFAS No. 109. The following summarizes the components of the income tax provision for the years ended December 31, 1994, 1995, and 1996 (in thousands):
1994 1995 1996 ------ ------- ------- Current: Federal.................................................. $3,991 $ 571 $ 369 State.................................................... 607 177 269 Foreign.................................................. 325 1,989 932 Deferred: Federal.................................................. 3,599 3,371 4,365 State.................................................... 630 422 646 Foreign.................................................. 241 (2,308) (3,024) ------ ------- ------- Total income tax provision....................... $9,393 $ 4,222 $ 3,557 ====== ======= =======
F-12 96 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) For the six months ended June 30, 1996 and 1997, the Company recorded an income tax provision of $2,504 and $2,688, respectively. The provision for income taxes differs from the amounts computed by applying federal statutory rates due to the following for the years ended December 31, 1994, 1995, and 1996 (in thousands):
1994 1995 1996 ------ ------ ------ Provision computed at the federal statutory rate............ $8,018 $3,525 $2,883 State income taxes, net of federal income tax benefit....... 943 415 604 Insurance premiums, net of recovery......................... 42 54 (115) Earnings in jurisdictions taxed at rates different from the statutory U.S. federal rate............................... 0 (252) (494) Other, net.................................................. 390 480 679 ------ ------ ------ Income tax provision........................................ $9,393 $4,222 $3,557 ====== ====== ======
The tax effect of significant temporary differences representing deferred tax assets and liabilities at December 31, 1995 and 1996 is as follows (in thousands):
1995 1996 -------- -------- Noncurrent deferred tax assets (liabilities): Tax carryforwards......................................... $ 1,775 $ 3,623 Postretirement benefits................................... 1,535 1,501 Depreciation and amortization............................. (10,085) (13,823) Other, net................................................ 1,214 1,212 -------- -------- Net noncurrent deferred tax liabilities........... (5,561) (7,487) -------- -------- Current deferred tax assets (liabilities): Tires on tractors and trailers............................ (2,244) (2,615) Liabilities not currently deductible...................... 3,881 2,470 Other, net................................................ (511) 498 -------- -------- Net current deferred tax assets................... 1,126 353 -------- -------- Net deferred tax liabilities...................... $ (4,435) $ (7,134) ======== ========
The Company has certain tax carryforwards available to offset future income taxes consisting of net operating losses that expire from 2002 to 2012, foreign tax credits that expire from 2001 to 2002, and alternative minimum tax credits that have no expiration dates. Management believes that a valuation allowance is not considered necessary based upon the Company's earnings history, the projections for future taxable income, and other relevant considerations over the periods during which the deferred tax assets are deductible. 5. LEASE COMMITMENTS RELATED PARTIES Prior to December 1995, the Company leased automobiles and service trucks from a related party under leases generally having one-year to three-year lease terms at fixed monthly rental rates. In addition, the Company leases office space from a related party under a lease which expires in 2003. Rental expenses under these noncancellable leases amounted to approximately $1,398,000 in 1994, $1,652,000 in 1995, and $1,030,000 in 1996. In the opinion of management, the terms of these leases are as favorable as those which could be obtained from unrelated lessors. F-13 97 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) UNRELATED PARTIES The Company leases equipment and certain terminal facilities from unrelated parties under noncancellable operating lease agreements which expire in various years through 2003. Rental expenses under these leases amounted to approximately $454,000, $1,796,000, and $3,245,000 in 1994, 1995, and 1996, respectively. The Company also leases certain terminal facilities and revenue equipment from unrelated parties under cancelable leases (i.e., month-to-month terms). The total rental expenses under these leases were approximately $1,973,000, $1,965,000, and $2,142,000 for the years ended December 31, 1994, 1995, and 1996, respectively. Future minimum rental commitments under all noncancellable operating lease agreements, excluding lease agreements that expire within one year, are as follows as of December 31, 1996 (in thousands):
RELATED PARTY OTHER TOTAL ------- ------ ------- 1997........................................................ $1,061 $2,840 $ 3,901 1998........................................................ 1,093 2,563 3,656 1999........................................................ 1,126 1,750 2,876 2000........................................................ 1,159 812 1,971 2001........................................................ 1,194 618 1,812 Thereafter.................................................. 1,540 1,052 2,592 ------ ------ ------- Total............................................. $7,173 $9,635 $16,808 ====== ====== =======
6. LONG-TERM DEBT Long-term debt consisted of the following at December 31, 1995 and 1996 and June 30, 1997 (in thousands):
DECEMBER 31 ------------------ JUNE 30, 1995 1996 1997 -------- ------- -------- Revolving credit and term loan agreement................ $100,000 $49,348 $ 59,737 Senior subordinated notes............................... 0 40,000 40,000 Floating rate installment note payable with interest at LIBOR plus 2.25% (8.48% at December 31, 1996)......... 8,909 6,635 5,497 Fixed rate installment note payable bearing interest at 10%................................................... 2,093 0 0 -------- ------- -------- 111,002 95,983 105,234 Less current maturities of long-term debt............... (4,368) (2,275) (8,248) -------- ------- -------- $106,634 $93,708 $ 96,986 ======== ======= ========
In February 1996, the Company issued $40,000,000 of senior subordinated notes ("Senior Subordinated Notes") through a private placement. The Senior Subordinated Notes mature February 1, 2003 and bear interest at 12% annually. Proceeds from the Senior Subordinated Notes were used to reduce borrowings under the Company's revolving credit and term loan agreement (the "Agreement"). In connection with the issuance of the Senior Subordinated Notes, the Company refinanced the Agreement (the "Refinancing") to provide for the Senior Subordinated Notes. In addition, the floating rate installment note payable was amended and refinanced to allow for the Senior Subordinated Notes, and the interest rate was changed from prime plus 2% to the LIBOR plus 2.25%. The Agreement enables the Company to borrow up to the lesser of $130,000,000 or the borrowing base amount, as defined in the Agreement. After the Refinancing, annual commitment fees are .375% of the undrawn portion of the commitment. Amounts outstanding under the revolving portion of the Agreement, after giving consideration to the Refinancing, mature February 1998, subject to one-year extensions, at which F-14 98 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) time the balance outstanding converts into a term loan which matures four years after the maturity date of the revolving portion of the Agreement. The interest rate for the Agreement is, at the Company's option, either (1) the bank's base rate, as defined, or (2) the bank's Eurodollar rate, as defined, as determined at the date of each borrowing, plus an applicable margin. The Agreement is unsecured and contains restrictive covenants which, among other things, limit indebtedness and distributions, require certain cash flow and leverage ratios to be maintained, and require a minimum consolidated tangible net worth, as defined. After the Refinancing, and assuming that the extension of the revolving portion of the Agreement is not exercised, future maturities of long-term debt are as follows at December 31, 1996 (in thousands): 1997........................................................ $ 2,275 1998........................................................ 12,144 1999........................................................ 11,956 2000........................................................ 9,870 2001........................................................ 7,403 Thereafter.................................................. 52,335 ------- $95,983 =======
At December 31, 1996, the weighted average interest rate on borrowings under the revolving credit agreement was 7.3%, and approximately $8,520,000 was committed under letters of credit. At December 31, 1996, the Company had available borrowings under the Agreement of approximately $48,000,000. Property and equipment with a net book value of approximately $10,348,000 at December 31, 1996 are secured as collateral under an installment note payable. 7. EMPLOYEE BENEFITS PENSION PLANS The Company maintains the Allied Defined Benefit Pension Plan, a trusteed noncontributory defined benefit pension plan for management and office personnel in the United States, and the Pension Plan for Employees of Auto Haulaway, Inc. and Associated Companies for management and office personnel in Canada (the "Plans"). Under the Plans, benefits are paid to eligible employees upon retirement based primarily on years of service and compensation levels at retirement. Contributions to the Plans reflect benefits attributed to employees' services to date and services expected to be rendered in the future. The Company's funding policy is to contribute annually at a rate that is intended to fund future service benefits as a level percentage of pay and past service benefits over a 30-year period. F-15 99 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table sets forth the Plans' status and amounts recognized in the Company's balance sheets as of December 31, 1995 and 1996 (in thousands):
1995 1996 ------- ------- Actuarial present value of benefit obligations: Accumulated benefit obligation, including vested benefits of $15,046 and $16,444 in 1995 and 1996, respectively........................................... $15,349 $16,810 ======= ======= Projected benefit obligation................................ $19,609 $21,438 Plan assets at fair value................................... 17,106 19,052 ------- ------- Projected benefit obligation in excess of plan assets....... (2,503) (2,386) Unrecognized net loss....................................... 3,180 2,787 Unrecognized prior service cost............................. (508) (472) Unrecognized net transition asset being recognized over approximately 15 years.................................... (312) (270) ------- ------- Accrued pension cost recognized in the consolidated balance sheets.................................................... $ (143) $ (341) ======= =======
The net periodic pension cost consisted of the following components for the years ended December 31, 1994, 1995, and 1996 (in thousands):
1994 1995 1996 ------- ------- ------- Service cost for benefits earned during the period........ $ 826 $ 732 $ 993 Interest cost on projected benefit obligation............. 972 1,336 1,523 Actual (gain) loss on plan assets......................... 69 (2,522) (2,226) Net amortization and deferral of actuarial gains and losses.................................................. (1,149) 1,169 713 ------- ------- ------- Net periodic pension cost................................. $ 718 $ 715 $ 1,003 ======= ======= =======
The following assumptions were used:
1994 1995 1996 ------- ------- ------- Weighted average discount rate............................ 8.5% 7.5% 7.75% Increase in future compensation levels.................... 3.5-6.0 3.5-6.0 3.5-6.0 Expected long-term rate of return on assets -- United States.................................................. 10.0 10.0 10.0 Expected long-term rate of return on assets -- Canada..... 7.5 7.5 7.5
At December 31, 1996, plan assets consisted primarily of U.S. and international corporate bonds and stocks, convertible equity securities, and U.S. and Canadian government securities. A substantial number of the Company's employees are covered by union-sponsored, collectively bargained, multiemployer pension plans. The Company contributed and charged to expense approximately $8,350,000, $10,916,000, and $11,444,000 for the years ended December 31, 1994, 1995, and 1996, respectively, for such plans. These contributions are determined in accordance with the provisions of negotiated labor contracts and are generally based on the number of man-hours worked. 401(K) PLAN The Company has a 401(k) plan covering all of its employees in the United States. Prior to July 1, 1993, the Company did not contribute to this plan; however, the Company did incur the cost of administering this plan. The Company's administrative expense for the 401(k) plan was approximately $221,000, $160,000, and $165,000 in fiscal years 1994, 1995, and 1996, respectively. Beginning July 1, 1993, the Company contributes the lesser of 3% of participant wages or $1,000 per year for each nonbargaining unit participant of the plan. F-16 100 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company contributed approximately $183,000, $225,000, and $225,000 to the plan during the years ended December 31, 1994, 1995, and 1996, respectively. POSTRETIREMENT BENEFIT PLANS The Company provides certain health care and life insurance benefits for eligible employees who retired prior to July 1, 1993 and their dependents. Generally, the medical plan pays a stated percentage of most medical expenses reduced for any deductibles and payments by government programs or other group coverage. The life insurance plan pays a lump-sum death benefit based on the employee's salary at retirement. The plans are unfunded. Employees retiring after July 1, 1993 are not entitled to any postretirement medical or life insurance benefits. The following table sets forth the status of the plan reconciled to the accrued postretirement benefit cost recognized in the Company's balance sheets at December 31, 1995 and 1996 (in thousands):
1995 1996 ------ ------ Accumulated postretirement benefit obligation, retirees..... $4,111 $3,586 Unrecognized net gain (loss)................................ (155) 338 ------ ------ Accrued postretirement benefit cost......................... 3,956 3,924 Less current portion........................................ (258) (303) ------ ------ $3,698 $3,621 ====== ======
Net periodic benefit cost for 1994, 1995, and 1996 included the following components (in thousands):
1994 1995 1996 ---- ---- ---- Service cost of benefits earned............................. $ 0 $ 0 $ 0 Interest cost on accumulated postretirement benefit obligation................................................ 325 308 260 ---- ---- ---- Net periodic postretirement benefit cost.................... $325 $308 $260 ==== ==== ====
Assumptions used in the computation of the accumulated postretirement benefit obligation and net periodic benefit cost are as follows:
1994 1995 1996 ---- ---- ----- Discount rate............................................... 8.5% 7.5% 7.75% Initial health care cost trend rate......................... 12.5 11.0 10.25 Ultimate health care cost trend rate........................ 5.5 5.5 5.5 Year ultimate health care cost trend rate reached........... 2003 2003 2003
If the health care cost trend rate were increased 1%, the accumulated postretirement benefit obligation as of December 31, 1996 would have increased by approximately $177,000. The effect of this change on the periodic postretirement benefit cost for 1996 would be approximately $13,000. A substantial number of the Company's employees are covered by union-sponsored, collectively bargained, multiemployer health and welfare benefit plans. The Company contributed and charged to expense approximately $11,700,000, $13,723,000, and $14,811,000 in 1994, 1995, and 1996, respectively, in connection with these plans. These required contributions are determined in accordance with the provisions of negotiated labor contracts and are for both active and retired employees. 8. COMMITMENTS AND CONTINGENCIES The Company is involved in various litigation and environmental matters relating to employment practices, damages, and other matters arising from operations in the ordinary course of business. In the F-17 101 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position or results of operations. The Company has entered into employment agreements with certain executive officers of the Company. The agreements, which are substantially similar, provide for compensation to the officers in the form of annual base salaries and bonuses based on earnings. The employment agreements also provide for severance benefits upon the occurrence of certain events, including a change in control, as defined. 9. REVENUES FROM MAJOR CUSTOMERS Substantially all of the Company's trade receivables and revenues are realized through the automotive industry. In 1994, 1995, and 1996, approximately 77%, 80%, and 82%, respectively, of the Company's revenues were derived from three customers, one of which, Ford Motor Company ("Ford"), accounted for approximately 58%, 52%, and 53% of revenues, respectively. The Company had accounts receivable from Ford of approximately $8,081,000 and $8,964,000 at December 31, 1995 and 1996, respectively. 10. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION The Company operates in one industry segment: transporting automobiles and light trucks from manufacturing plants, ports, auctions, and railway distribution points to automotive dealerships. Prior to the acquisition of Auto Haulaway on October 31, 1994, the Company only operated in the United States. Auto Haulaway operates in Canada. Geographic financial information as of December 31, 1995 and 1996 and June 30, 1997 and for the years ended December 31, 1994, 1995, and 1996 and the six months ended June 30, 1996 and 1997 is as follows (in thousands):
DECEMBER 31, JUNE 30, ------------------------------ ------------------- 1994 1995 1996 1996 1997 -------- -------- -------- -------- -------- Revenues: United States $274,293 $258,038 $264,909 $133,841 $133,165 Canada............................ 22,943 123,426 127,638 66,724 75,804 -------- -------- -------- -------- -------- $297,236 $381,464 $392,547 $200,565 $208,969 ======== ======== ======== ======== ======== Operating income (loss): United States..................... $ 27,141 $ 19,821 $ 19,129 $ 9,143 $ 7,678 Canada............................ 1,590 1,100 (534) 1,912 3,772 -------- -------- -------- -------- -------- $ 28,731 $ 20,921 $ 18,595 $ 11,055 $ 11,450 ======== ======== ======== ======== ========
DECEMBER 31, ------------------- JUNE 30, 1995 1996 1997 -------- -------- -------- Identifiable assets: United States........................................ $136,948 $133,618 $152,734 Canada............................................... 77,738 77,465 75,960 -------- -------- -------- $214,686 $211,083 $228,694 ======== ======== ========
11. STOCKHOLDERS' EQUITY The Company has authorized 5,000,000 shares of preferred stock with no par value. No shares have been issued, and therefore, there were no shares outstanding at December 31, 1995 and 1996. The board of directors F-18 102 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) has the authority to issue these shares and to fix dividends, voting and conversion rights, redemption provisions, liquidation preferences, and other rights and restrictions. In addition, the Company adopted a long-term incentive plan which allows the issuance of grants or awards of incentive stock options, restricted stock, stock appreciation rights, performance units, and performance shares to employees and directors of the Company to acquire up to 400,000 shares of the Company's common stock. During December 1996, the Company granted 85,000 shares of restricted stock to certain employees of the Company. In connection with the award of the restricted stock, the Company recorded $680,000 of unearned compensation in the accompanying balance sheets which will be amortized over five years, the vesting period of the restricted stock. In addition, the Company has granted nonqualified stock options under the long-term incentive plan. Options granted become exercisable after one year in 20% or 33 1/3% increments per year and expire ten years from the date of the grant. No restricted stock or stock options were issued during the six months ended June 30, 1997.
WEIGHTED AVERAGE OPTION PRICE EXERCISE SHARES (PER SHARE) PRICE ------- ------------ -------- Outstanding as of January 1, 1995........................... 8,550 $11.75 $11.75 Granted................................................... 128,500 9.50 9.50 Exercised................................................. 0 N/A N/A Lapsed.................................................... 0 N/A N/A ------- ------------ ------ Outstanding as of December 31, 1995......................... 137,050 $9.50-$11.75 $ 9.64 Granted................................................... 34,000 9.00 9.00 Exercised................................................. 0 N/A N/A Lapsed.................................................... 0 N/A N/A ------- ------------ ------ Outstanding as of December 31, 1996......................... 171,050 $9.00-$11.75 $ 9.51 ======= ============ ======
1995 1996 ---------- -------- Options exercisable at year-end............................. 2,850 41,867 Weighted average exercise price of options exercisable at year-end.................................................. $ 11.75 $ 9.81 Weighted average grant-date fair value of options granted during the year........................................... $1,220,750 $306,000
The weighted average remaining contractual life of options outstanding at December 31, 1996 was 9.2 years. The Company has adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," but applies Accounting Principles Board Opinion No. 25 and related interpretations in accounting for the long-term incentive plan. If the Company had elected to recognize compensation cost for the long-term incentive plan based on the fair value at the grant dates for awards under the plan, consistent F-19 103 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) with the method prescribed by SFAS No. 123, net income and earnings per share would have been changed to the pro forma amounts indicated below at December 31, 1995 and 1996 (in thousands, except per share data):
1995 1996 ------ ------ Net income: As reported............................................... $6,146 $3,986 Pro forma................................................. 6,136 3,844 Earnings per share: As reported............................................... $ 0.80 $ 0.52 Pro forma................................................. 0.79 0.50
The fair value of the Company's stock options used to compute pro forma net income and earnings per share disclosures is the estimated present value at grant date using the Black-Scholes option pricing model with the following weighted average assumptions for 1995 and 1996: dividend yield of 0%, expected volatility of 34%, a risk-free interest rate of 5.7%, and an expected holding period of five years. 12. QUARTERLY FINANCIAL DATA (UNAUDITED)
1995 ---------------------------------------- FIRST SECOND THIRD FOURTH -------- -------- ------- -------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Revenues............................................... $101,062 $102,252 $82,192 $ 95,958 Operating income....................................... 6,265 7,617 632 6,407 Net income (loss)...................................... 2,063 2,848 (1,182) 2,417 Net income (loss) per share............................ $ 0.27 $ 0.37 $ (0.15) $ 0.31 Average shares outstanding............................. 7,725 7,725 7,725 7,725 Stock prices: High................................................. $ 12.500 $ 11.000 $11.750 $ 10.000 Low.................................................. 9.750 8.500 7.250 7.375
1996 ---------------------------------------- FIRST(1) SECOND THIRD FOURTH -------- -------- ------- -------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Revenues............................................... $ 93,396 $107,169 $87,609 $104,373 Operating income....................................... 3,090 7,965 987 6,553 Income (loss) before extraordinary item(1)............. 360 3,098 (936) 2,399 Income (loss) per share before extraordinary item(1)... 0.05 0.40 (0.12) 0.31 Net income (loss)...................................... (575) 3,098 (936) 2,399 Net income (loss) per share............................ $ (0.07) $ 0.40 $ (0.12) $ 0.31 Average shares outstanding............................. 7,725 7,725 7,725 7,725 Stock prices: High................................................. $ 9.875 $ 10.500 $10.625 $ 10.500 Low.................................................. 7.750 7.750 8.375 7.000
F-20 104 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1997 --------------------- FIRST SECOND -------- --------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Revenues.................................................... $96,393 $112,576 Operating income............................................ 2,806 8,644 Net income.................................................. 198 3,513 Net income per share........................................ $ 0.03 $ 0.45 Average shares outstanding.................................. 7,725 7,725 Stock prices: High...................................................... $ 8.250 $ 11.125 Low....................................................... 6.250 5.500
- --------------- (1) During the first quarter of 1996, the Company recorded an extraordinary loss on extinguishment of debt of approximately $935,000, net of taxes. 13. SUBSEQUENT EVENTS KAR-TAINER INTERNATIONAL LIMITED ("KAR-TAINER") In April 1997, the Company completed the acquisition of the stock of Kar-Tainer for approximately $13,100,000 and Kar-Tainer became a wholly-owned subsidiary of Axis Group. Kar-Tainer, with offices in Bermuda, United States, London and South Africa, is a leader in the containerized shipping of vehicles. As a result of the acquisition of Kar-Tainer, the Company recorded goodwill of approximately $12,677,000 which will be amortized over 30 years. RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND RC MANAGEMENT CORP. (COLLECTIVELY, "RYDER") On September 30, 1997, the Company completed the acquisition of Ryder from Ryder System, Inc. ("Ryder System") for approximately $114,500,000 in cash (the "Acquisition"). The Acquisition is consistent with the Company's growth strategy to increase its market share of the North American automotive carrier industry while expanding its range of services and capabilities. The Acquisition has been accounted for under the purchase method, and, accordingly, the results of operations for Ryder will be included with those of the Company for periods subsequent to the date of the Acquisition. THE OFFERING On September 30, 1997, the Company issued and sold $150,000,000 of 8 5/8% senior notes (the "Notes") through a private placement. The Company raised approximately $144,650,000, net of discounts and expenses, through the issuance of the Notes. The net proceeds from the Notes were used to fund the Acquisition, pay related fees and expenses, and reduce amounts owed on outstanding Company debt. The Company's obligations under the Notes are guaranteed by substantially all of the subsidiaries of the Company (the "Guarantors"). Separate financial statements of the Guarantors are not provided herein as (i) the Guarantors are jointly and severally liable for the Company's obligations under the Notes (ii) the subsidiaries which are not Guarantors are inconsequential to the consolidated operations of the Company and its subsidiaries and (iii) the net assets and earnings of the Guarantors are substantially equivalent to the net assets and earnings of the consolidated entity as reflected in these consolidated financial statements. PRO FORMA INFORMATION The unaudited pro forma combined information below presents the combined results of operations as if the Acquisition and the Offering had occurred on January 1, 1996 and balance sheet information as if the Acquisition and the Offering had occurred as of June 30, 1997. The unaudited pro forma combined information, based upon the historical consolidated financial statements of the Company and Ryder, assumes an acquisition cost of approximately $114,500,000 and further assumes that an estimated $56,605,000 excess F-21 105 ALLIED HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) of acquisition cost over the net value of Ryder's tangible assets is allocated to goodwill with a useful life of 40 years. The unaudited pro forma combined information is not necessarily indicative of the results of operations of the combined company had the acquisition occurred on January 1, 1996 or financial position had the acquisition occurred on June 30, 1997, nor is it necessarily indicative of future results or financial position. The following proforma data is unaudited and is in thousands except per share data.
YEAR ENDED SIX MONTHS DECEMBER 31, ENDED JUNE 30, 1996 1997 ------------ -------------- Statement of Income Data: Revenues.................................................. $960,661 $524,665 Net income before extraordinary item...................... 5,674 10,097 Earnings per share........................................ 0.73 1.31
JUNE 30, 1997 -------- Balance Sheet Data: Total Assets.............................................. $540,000 Borrowings................................................ 231,789 Stockholders' equity...................................... 60,157
NEW CREDIT FACILITY Concurrent with the closing of the Offering, the Company closed on a new credit facility (the "New Credit Facility") which allows the Company to borrow under a revolving line of credit, and issue letters of credit, up to the lesser of $230,000,000 or a borrowing base amount (as defined in the New Credit Facility) that is determined based on a defined percentage of the Company's accounts receivable and equipment. The New Credit Facility matures in 2002, and the annual commitment fees are due on the undrawn portion of the commitment over the agreement period. The interest rate for the New Credit Facility is, at the Company's option, either (i) the bank's Base Rate, as defined, or (ii) the bank's Eurodollar rate, as defined, as determined at the date of the borrowing, plus an applicable margin. The Company has the right to repay the oustanding debt under the New Credit Facility, in whole or in part, without penalty or premium subject to a limitation that prepayment of Eurodollar rate loans are subject to a breakage penalty if prepaid other than on the last day of the applicable interest period. The Company is subject to mandatory prepayment with a defined percentage of net proceeds from certain asset sales, new debt offerings, and new equity offerings. The revolving line of credit allows the Company to repay and reborrow so long as there is no event of default. Borrowings under the New Credit Facility are secured by a first priority security interest on assets of the Company and certain of its subsidiaries other than real estate but including a pledge of stock of certain subsidiaries. In addition, the Guarantors of the Notes are also Guarantors of the New Credit Facility. The New Credit Facility sets forth a number of affirmative, negative, and financial covenants binding on the Company. The negative covenants limit the ability of the Company to, among other things, incur debt, incur liens, make investments, make dividend or other distributions, or enter into any merger or other consolidation transaction. The financial covenants include the maintenance of a minimum consolidated tangible net worth, compliance with a leverage ratio and a coverage ratio, and limitations on capital expenditures. F-22 106 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholder of Ryder Automotive Carrier Services, Inc.: We have audited the accompanying consolidated balance sheets of Ryder Automotive Carrier Services, Inc. and subsidiaries as of December 31, 1995 and 1996, and the related consolidated statements of operations, cash flows and shareholder's equity for each of the years in the three-year period ended December 31, 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ryder Automotive Carrier Services, Inc. and subsidiaries as of December 31, 1995 and 1996, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1996, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Miami, Florida February 28, 1997 F-23 107 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31, ------------------- JUNE 30, 1995 1996 1997 -------- -------- ----------- (UNAUDITED) ----------- ASSETS Current assets: Cash...................................................... $ 4,558 $ 1,441 $ 6,047 Receivables, net.......................................... 43,945 39,404 46,396 Inventories............................................... 11,012 4,594 3,624 Deferred income taxes..................................... 5,653 7,620 6,509 Prepaid expenses and other current assets................. 13,768 12,813 13,928 -------- -------- -------- Total current assets.............................. 78,936 65,872 76,504 Revenue earning equipment, net.............................. 137,967 142,535 134,493 Operating property and equipment, net....................... 37,326 28,641 26,806 Goodwill.................................................... 40,113 43,266 42,550 Other assets................................................ 11,955 13,200 10,862 -------- -------- -------- Total Assets...................................... $306,297 $293,514 $291,215 ======== ======== ======== LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities: Accounts payable.......................................... $ 25,531 $ 22,700 $ 21,246 Accrued expenses and other current liabilities............ 53,116 59,452 57,657 -------- -------- -------- Total current liabilities......................... 78,647 82,152 78,903 -------- -------- -------- Deferred income taxes....................................... 28,685 26,992 26,300 Other non-current liabilities............................... 15,924 19,574 20,773 Advances (to) from Ryder.................................... 2,692 (2,154) 647 Shareholder's equity: Common stock and additional paid-in capital, $1 par value, 7,500 shares authorized, 1,000 shares issued and outstanding............................................ 157,335 157,384 157,384 Retained earnings......................................... 25,074 11,640 9,314 Translation adjustment.................................... (2,060) (2,074) (2,106) -------- -------- -------- Total shareholder's equity........................ 180,349 166,950 164,592 -------- -------- -------- Total Liabilities and Shareholder's Equity........ $306,297 $293,514 $291,215 ======== ======== ========
See accompanying notes to consolidated financial statements. F-24 108 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------ ------------------- 1994 1995 1996 1996 1997 -------- -------- -------- -------- -------- (UNAUDITED) Revenue..................................... $645,402 $594,446 $583,292 $297,945 $315,156 -------- -------- -------- -------- -------- Operating Expense: Salaries, wages and benefits.............. 321,363 293,145 301,276 153,981 166,290 Operating supplies and expenses........... 99,569 90,331 95,178 49,437 46,146 Purchased transportation.................. 61,988 63,596 62,670 30,853 38,080 Insurance and claims...................... 28,384 28,143 37,569 15,754 14,388 Depreciation and amortization............. 37,262 40,700 38,838 20,608 19,818 Rent expense.............................. 2,525 2,914 3,291 1,633 1,470 Communications and utilities.............. 4,651 4,934 5,727 2,823 3,344 Operating taxes and licenses.............. 27,247 24,715 23,976 12,444 11,136 Restructuring charges..................... -- -- 18,328 4,174 -- Other operating expense................... 12,563 9,730 13,628 5,616 4,643 -------- -------- -------- -------- -------- Total operating expense........... 595,552 558,208 600,481 297,323 305,315 -------- -------- -------- -------- -------- Operating income (loss)........... 49,850 36,238 (17,189) 622 9,841 -------- -------- -------- -------- -------- Other Income: Miscellaneous income, net................. 310 4,504 2,470 1,269 738 Interest income (expense)................. (82) 2,402 29 697 894 -------- -------- -------- -------- -------- 228 6,906 2,499 1,966 1,632 -------- -------- -------- -------- -------- Earnings (Loss) Before Income Taxes......... 50,078 43,144 (14,690) 2,588 11,473 Provision (Benefit) For Income Taxes........ 20,428 17,777 (1,256) 1,163 3,818 -------- -------- -------- -------- -------- Net Earnings (Loss)......................... $ 29,650 $ 25,367 $(13,434) $ 1,425 $ 7,655 ======== ======== ======== ======== ========
See accompanying notes to consolidated financial statements. F-25 109 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (IN THOUSANDS)
COMMON STOCK AND ADDITIONAL RETAINED TRANSLATION PAID-IN CAPITAL EARNINGS ADJUSTMENT TOTAL --------------- -------- ----------- -------- At December 31, 1993............................. $139,640 $ 24,794 $(1,744) $162,690 Net earnings................................... -- 29,650 -- 29,650 Dividend....................................... (13,229) (53,057) -- (66,286) Currency adjustment............................ -- -- (558) (558) -------- -------- ------- -------- At December 31, 1994............................. 126,411 1,387 (2,302) 125,496 Net earnings................................... -- 25,367 -- 25,367 Dividend....................................... -- (1,680) -- (1,680) Capital contribution........................... 30,924 -- -- 30,924 Currency adjustment............................ -- -- 242 242 -------- -------- ------- -------- At December 31, 1995............................. 157,335 25,074 (2,060) 180,349 Net loss....................................... -- (13,434) -- (13,434) Capital contribution........................... 49 -- -- 49 Currency adjustment............................ -- -- (14) (14) -------- -------- ------- -------- At December 31, 1996............................. 157,384 11,640 (2,074) 166,950 Net earnings................................... -- 7,655 -- 7,655 Dividend....................................... -- (9,981) -- (9,981) Currency adjustment............................ -- -- (32) (32) -------- -------- ------- -------- At June 30, 1997 (unaudited)..................... $157,384 $ 9,314 $(2,106) $164,592 ======== ======== ======= ========
See accompanying notes to consolidated financial statements. F-26 110 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------ ------------------- 1994 1995 1996 1996 1997 -------- -------- -------- -------- -------- (UNAUDITED) Cash flows from operating activities: Net earnings (loss)....................... $ 29,650 $ 25,367 $(13,434) $ 1,425 $ 7,655 Depreciation and amortization............. 37,262 40,700 38,838 20,608 19,818 Deferred income tax expense (benefit)..... (89) 2,861 362 257 324 Decrease (increase) in receivables........ 6,158 (2,334) 4,541 (12,876) (6,992) Decrease (increase) in inventories........ (2,912) (2,722) 6,418 4,190 970 Decrease (increase) in prepaid and other current assets......................... (4,267) (600) 955 (1,083) (1,115) Increase (decrease) in accounts payable... 13,185 (18,610) (2,831) (1,162) (1,454) Increase (decrease) in accrued expenses and other liabilities.................. (5,651) (9,250) 6,336 (10,556) (1,795) Increase in other non-current liabilities............................ 3,157 8,912 3,650 (12,135) 1,199 Other, net................................ (1,826) (6,173) 2,005 2,636 1,910 -------- -------- -------- -------- -------- 74,667 38,151 46,840 (8,696) 20,520 Cash flows from investing activities: Purchases of property and revenue earning equipment.............................. (43,789) (64,563) (45,222) (20,420) (10,035) Sales of property and revenue earning equipment.............................. 3,103 11,910 10,011 5,112 1,996 Other, net................................ 2,609 (5,606) 1,926 (637) (663) -------- -------- -------- -------- -------- (38,077) (58,259) (33,285) (15,945) (8,702) Cash flows from financing activities: Net increase (decrease) in advances from Ryder.................................. 29,163 (8,951) (16,721) 23,814 2,769 Dividends................................. (66,286) (1,680) -- -- (9,981) Capital contributions..................... -- 30,924 49 -- -- -------- -------- -------- -------- -------- (37,123) 20,293 (16,672) 23,814 (7,212) -------- -------- -------- -------- -------- Increase (decrease) in cash................. (533) 185 (3,117) (827) 4,606 Cash at beginning of period............... 4,906 4,373 4,558 4,558 1,441 -------- -------- -------- -------- -------- Cash at end of period....................... $ 4,373 $ 4,558 $ 1,441 $ 3,731 $ 6,047 ======== ======== ======== ======== ======== Summary of Noncash Activities: Contribution of goodwill from Ryder....... $ -- $ -- $ 7,853 $ 7,853 $ -- Increase in advances from Ryder........... -- -- 7,853 7,853 --
See accompanying notes to consolidated financial statements. F-27 111 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 (INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization. Ryder Automotive Carrier Services, Inc. ("RACS"), a Florida corporation and a wholly-owned subsidiary of Ryder System, Inc. ("Ryder"), is a holding company which operates through its wholly-owned subsidiaries. The principal subsidiaries of RACS are Ryder Automotive Operations, Inc. ("RAOI"), MCL Ryder Transport, Inc. ("MCL"), a Canadian corporation, QAT, Inc. ("QAT") and Blazer Truck Lines, Inc. (Blazer). RAOI is principally comprised of Commercial Carriers, Inc. ("CCI"), Ryder Freight Broker, Inc. and F. J. Boutell Driveaway Co., Inc. ("Boutell"). CCI, Boutell, QAT and MCL are engaged in the business of transporting automobiles and light and medium-duty trucks from manufacturing plants, ports and railway distribution points to other distribution points and automobile dealers. CCI also manufacturers equipment for RACS's use in the transportation and delivery of automobiles and trucks. Blazer provided inbound logistics to the automobile industry and was sold on February 28, 1997 (see Note 19). Basis of Presentation. The accompanying consolidated financial statements include the operations, assets and liabilities of Ryder Automotive Carrier Services, Inc. and subsidiaries (the "Company"). The financial statements do not include assets and liabilities of Ryder not specifically identifiable to the Company. Reserves for workers' compensation claims, postretirement benefits other than pensions, auto and general liability claims which are from $500,000 to $1,000,000 per occurrence and medical and dental claims are maintained by Ryder. The financial information included herein is not necessarily indicative of the financial position and results of operations or cash flows that would have occurred had the Company been an independent stand-alone entity during the periods presented, nor is it necessarily indicative of future results of the Company. All significant intercompany accounts and transactions have been eliminated. Revenue Recognition. Revenue is recorded by the Company when the vehicles are dispatched to the dealerships and other distribution points. Estimated direct costs to complete delivery of freight in-transit are accrued. All other expenses are recognized as incurred. Receivables. Receivables consist primarily of trade receivables resulting from vehicle shipments. Receivables are reduced by amounts considered by management to be uncollectible based on historical loss experience and review of the current status of existing receivables. Inventories. Inventories consist primarily of parts, materials and fuel as well as inventory related to the manufacturing of trailers and headramps. Inventories are stated at the lower of cost or market. Tires in Service. The Company allocates a portion of the acquisition costs of tractors and trailers to tires in service and amortizes this amount on a straight-line basis over seven years. The cost of replacement tires and tire repairs are expensed when incurred. Revenue Earning Equipment, Operating Property and Equipment and Depreciation. Revenue earning equipment, principally tractors and trailers, and operating property and equipment are stated at cost. Provision for depreciation is computed using the straight-line method on all depreciable assets. Annual straight-line depreciation rates are 14% for revenue earning equipment, 3% to 10% for buildings and improvements and 14% to 20% for furniture, fixtures and equipment. Effective January 1, 1995, the estimated residual values used to calculate the provision for depreciation on certain types of revenue earning equipment were changed to reflect recent experience. As a result of this change, depreciation expense was decreased by $2.2 million and $1.2 million for the years ended December 31, 1995 and 1996, respectively. Gains on sales of revenue earning equipment, net of vehicle disposition costs, are reported as reductions of other operating expense and totaled $0.8 million, $2.6 million and $0.1 million for the years ended December 31, 1994, 1995 and 1996, respectively, and $0.1 million for each of the six month periods ended F-28 112 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) June 30, 1996 and 1997. Gains on sales of operating property and equipment are also reflected in other operating expense. Goodwill. Goodwill is amortized on a straight-line basis over 40 years. Amortization (included in depreciation and amortization expense) amounted to approximately $1.3 million for each of the years in the three-year period ended December 31, 1996. Accumulated amortization was approximately $11.5 million at December 31, 1995 and 1996, respectively. During 1996, Ryder contributed $7.9 million in goodwill to the Company for acquisitions made in prior years. Impairment of Long-Lived Assets. Long-lived assets, including goodwill, used in the Company's operations are reviewed for impairment when circumstances indicate that the carrying amount of an asset may not be recoverable. The primary indicators of recoverability are the associated current and forecasted undiscounted operating cash flows. If management has made a decision to dispose of an asset or a group of assets, those assets are reported at the lower of carrying amount or the estimated fair value less costs to sell. Accrued Insurance and Loss Reserves. The Company participates in Ryder's overall risk management programs for vehicle and general liability, workers' compensation, property (including cargo) and other. The major programs are summarized as follows: Vehicle and general liability -- The Company has recorded reserves which reflect the Company's portion of the undiscounted estimated liabilities up to $500,000 per occurrence (plus allocated loss adjustment expense) and an estimate of claims incurred but not reported. For exposures from $500,000 to $1 million per occurrence, the Company is charged a premium by Ryder based on the Company's loss experience and the related liability is retained by Ryder. Costs associated with insurance premiums to third party insurance companies for coverage in excess of $1 million are charged by Ryder to the Company based on the Company's pro rata share of Ryder's revenue. Workers' compensation -- Ryder has recorded reserves which reflect the Company's portion of the undiscounted estimated workers' compensation liabilities up to $1 million per injury (plus allocated loss adjustment expense) and an estimate of claims incurred but not reported. The Company is billed by Ryder based on actuarial projections of expected losses. For losses in excess of $1 million per injury, Ryder has third party insurance coverage, the cost of which is charged by Ryder to the Company based on the Company's proportionate share of losses up to $1 million. At December 31, 1995 and 1996 and June 30, 1997 the workers' compensation reserves maintained by Ryder on the Company's behalf were $58.3 million, $47.1 million, and $46.2 million, respectively. Property, including cargo -- The Company has recorded reserves for estimated damages to transported vehicles. The accruals for these claims include both reported claims and an estimate of claims incurred but not reported for amounts up to $50,000 per occurrence. Damages in excess of $50,000 per occurrence are insured by a third party insurance company. Such liabilities, whether recorded as a liability by Ryder or the Company, are necessarily based on estimates and, while management believes that the amounts are adequate, there can be no assurance that changes to management's estimates may not occur due to limitations inherent in the estimation process. Changes in the estimates of these reserves are charged or credited to income in the period determined. For reserves recorded by the Company, amounts estimated to be paid within one year have been classified as accrued expenses with the remainder included in other non-current liabilities. Income Taxes. The Company has been included in consolidated income tax filings of Ryder for Federal and state income tax purposes. However, the income tax provisions included in the accompanying Consolidated Financial Statements have been determined as if the Company was an independent stand-alone entity filing separate income tax returns. F-29 113 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred taxes are provided using the asset and liability method for temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax balances are adjusted for any tax law changes in the periods that include the enactment date of such changes. See Note 12. Foreign Currency Translation. The Company's Canadian operations use the local currency as their functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect on the balance sheet date. Items included in the Statements of Operations are translated at the average exchange rates for the year. The impact of currency fluctuation is included in shareholder's equity as a translation adjustment. Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Interim Unaudited Data for the Six Months Ended June 30, 1996 and 1997. In the opinion of management, the unaudited consolidated financial statements contain all of the normal and recurring adjustments necessary to present fairly the consolidated financial position of the Company at June 30, 1997 and the consolidated results of operations and cash flows of the Company for the six months ended June 30, 1996 and 1997. NOTE 2 TRANSACTIONS WITH RYDER Certain Ryder branch locations provide fuel, vehicle repairs and maintenance services to the Company. Rates charged to the Company for these items approximate rates charged to significant Ryder customers for similar items and reflect the cost plus a mark-up. The Company participates in Ryder's combined risk management programs for vehicle and general liability, workers' compensation liability and property losses and Ryder processes claims related to vehicle and general liability and workers' compensation. The Company also participates in Ryder's medical and dental, postretirement and savings plans. See Notes 14 and 15. Ryder provides various general and administrative services to the Company including treasury, legal, human resources, accounting and others. Costs for these services are charged to the Company through a management fee, which is based on the Company's equity and revenue levels. The Company's cash and financing needs are managed by Ryder. The accompanying Consolidated Balance Sheets do not include Ryder's general corporate debt, which is used to finance the operations of all of Ryder's business units. However, Ryder allocates its corporate interest expense to each business unit based upon a target debt to equity ratio. The Company's shareholder's equity in the Consolidated Balance Sheets has been periodically adjusted to effect this target debt to equity ratio. Interest expense charged (or credited) to the Company by Ryder is principally based upon the interest cost incurred by Ryder for certain of its indebtedness. Management believes the methods used to determine intercompany charges and cost allocations are reasonable, however, such costs may not be representative of those which would be incurred if the Company operated as an independent stand-alone entity. F-30 114 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Amounts charged and allocated by Ryder and its subsidiaries to the Company for the above expense items are summarized in the following table:
YEAR ENDED DECEMBER 31, --------------------------- 1994 1995 1996 ------- ------- ------- (IN THOUSANDS) Operating expense: Salaries, wages and benefits: Medical and dental................................... $ 3,653 $ 2,589 $ 2,615 Postretirement....................................... 1,305 1,139 2,536 Savings plan......................................... 277 368 402 Other................................................ 1,306 117 118 Operating supplies and expense: Fuel, repairs and maintenance........................ 23,700 19,094 21,459 Insurance and claims.................................... 24,674 18,754 22,823 Other operating expense: General and administrative expense................... 721 432 1,542 Management fees...................................... 3,370 3,258 3,098 Interest income (expense)................................. 858 (511) (252)
NOTE 3 RESTRUCTURING AND OTHER CHARGES During 1996, the Company implemented several restructuring initiatives in an effort to reduce costs, improve profitability and align the organizational structure with the strategic direction of the Company. As a result of the initiatives, the Company recorded pretax charges in 1996 of $18.3 million which included restructuring costs of $5.5 million, early retirement costs of $4.2 million, asset write-downs of $6.0 million and other charges of $2.6 million. The charges reduced net income by $14.4 million. The pre tax charge of $4.2 million related to early retirement costs is included in the results of operations for the six month period ended June 30, 1996. The Company's pretax charges included $8.0 million in employee-related costs, which were primarily related to the planned elimination of approximately 140 positions. This amount included $4.2 million for approximately 60 employees who retired pursuant to a voluntary early retirement program. The headcount reductions resulted from consolidating and reorganizing corporate and field operations and affected employee groups across all levels of the Company. Nearly 50% and 65% of the separations occurred by December 31, 1996 and June 30, 1997, respectively, with the remaining separations expected to be completed by the end of 1997. The Company recorded $7.7 million in estimated closure costs, including asset write-downs of $6.0 million relating to both anticipated property sales and the anticipated sale of Blazer Truck Lines, Inc. (See Note 19). The Company also incurred $2.6 million of other costs, including employee relocation relating to the implementation of the restructuring. Management believes that the remaining restructuring liabilities of approximately $6.0 million and $2.0 million at December 31, 1996 and June 30, 1997, respectively, are adequate to complete its plans and that the liabilities will be substantially paid by the end of 1997. The additional pension and postretirement liabilities will be paid in accordance with the provisions of the existing plans. As a result of these actions, and prior to considering the effect of the sale of the Company discussed in Note 20, earnings are ultimately expected to be benefited by approximately $9.0 million annually. F-31 115 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 4 RECEIVABLES
DECEMBER 31, ----------------- JUNE 30, 1995 1996 1997 ------- ------- -------- (IN THOUSANDS) Trade accounts receivable................................... $36,152 $35,706 $39,496 Current portion of owner-operator notes receivable.......... 1,813 2,932 3,097 Other receivables........................................... 6,158 1,507 4,538 ------- ------- ------- 44,123 40,145 47,131 Allowance for doubtful accounts............................. (178) (741) (735) ------- ------- ------- $43,945 $39,404 $46,396 ======= ======= =======
No bad debt expense was recorded for the year ended December 31, 1994. Bad debt expense totaled $0.1 million and $0.6 million for the years ended December 31, 1995 and 1996, respectively. NOTE 5 INVENTORIES
DECEMBER 31, ----------------- 1995 1996 ------- ------- (IN THOUSANDS) Trailer manufacturing inventory............................. $ 9,499 $ 3,149 Parts, materials and fuel................................... 1,513 1,445 ------- ------- $11,012 $ 4,594 ======= =======
NOTE 6 PREPAID EXPENSES AND OTHER CURRENT ASSETS
DECEMBER 31, ----------------- 1995 1996 ------- ------- (IN THOUSANDS) Prepaid pension............................................. $ 5,876 $ 5,457 Tires in service............................................ 4,037 3,944 Licenses and permits........................................ 1,706 1,410 Operating taxes............................................. 1,002 882 Other....................................................... 1,147 1,120 ------- ------- $13,768 $12,813 ======= =======
NOTE 7 REVENUE EARNING EQUIPMENT, NET
DECEMBER 31, --------------------- JUNE 30, 1995 1996 1997 --------- --------- --------- (IN THOUSANDS) Tractors.................................................... $ 226,505 $ 226,941 $ 225,944 Trailers.................................................... 142,858 150,453 147,998 Other....................................................... 966 279 1,349 --------- --------- --------- 370,329 377,673 375,291 Accumulated depreciation.................................... (232,362) (235,138) (240,798) --------- --------- --------- $ 137,967 $ 142,535 $ 134,493 ========= ========= =========
F-32 116 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 8 OPERATING PROPERTY AND EQUIPMENT, NET
DECEMBER 31, ------------------- 1995 1996 -------- -------- (IN THOUSANDS) Buildings and improvements.................................. $ 43,316 $ 37,227 Furniture, fixtures and equipment........................... 20,265 20,455 Land........................................................ 12,265 8,866 Service vehicles and other.................................. 6,653 3,513 -------- -------- 82,499 70,061 Accumulated depreciation.................................... (45,173) (41,420) -------- -------- $ 37,326 $ 28,641 ======== ========
NOTE 9 OTHER ASSETS
DECEMBER 31, ----------------- 1995 1996 ------- ------- (IN THOUSANDS) Long-term portion of owner-operator notes receivable........ $ 4,035 $ 6,322 Long-term portion of property notes receivable.............. 2,871 2,173 Properties held for sale.................................... 4,845 4,518 Other....................................................... 204 187 ------- ------- $11,955 $13,200 ======= =======
NOTE 10 ACCRUED EXPENSES AND OTHER LIABILITIES
DECEMBER 31, ------------------- 1995 1996 -------- -------- (IN THOUSANDS) Vehicle and general liability reserves...................... $ 20,207 $ 26,552 Salaries and wages.......................................... 22,760 21,805 Employee benefits........................................... 9,448 6,708 Cargo liability reserves.................................... 5,910 5,782 Operating taxes............................................. 4,255 4,140 Environmental liabilities................................... 543 1,198 Other, including restructuring.............................. 5,917 12,841 -------- -------- 69,040 79,026 Non-current portion......................................... (15,924) (19,574) -------- -------- Accrued expenses and other liabilities...................... $ 53,116 $ 59,452 ======== ========
During 1995 and 1996, the Company released employee benefit reserves of $9.9 million and $0.8 million, respectively, related to prior year FICA taxes. F-33 117 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 11 LEASES The Company leases offices and office equipment under operating lease agreements. During 1994, 1995 and 1996, rent expense was $3.3 million, $3.2 million and $2.8 million, respectively. Future minimum payments for operating leases in effect at December 31, 1996 are as follows (in thousands): 1997........................................................ $ 891 1998........................................................ 893 1999........................................................ 847 2000........................................................ 766 2001........................................................ 732 Thereafter.................................................. 3,063 ------ $7,192 ======
NOTE 12 INCOME TAXES The provision (benefit) for income taxes included the following components:
YEAR ENDED DECEMBER 31, --------------------------- 1994 1995 1996 ------- ------- ------- (IN THOUSANDS) Current tax expense (benefit): Federal................................................. $18,188 $13,469 $(1,214) State................................................... 2,472 1,288 (404) Foreign................................................. (143) 159 -- ------- ------- ------- 20,517 14,916 (1,618) ------- ------- ------- Deferred tax expense (benefit): Federal................................................. (621) 1,517 68 State................................................... 355 1,321 334 Foreign................................................. 177 23 (40) ------- ------- ------- (89) 2,861 362 ------- ------- ------- Provision (benefit) for income taxes...................... $20,428 $17,777 $(1,256) ======= ======= =======
A reconciliation of the Federal statutory tax rate with the effective tax rate follows:
% OF PRETAX INCOME -------------------- YEAR ENDED DECEMBER 31, -------------------- 1994 1995 1996 ----- ---- ----- Statutory tax rate.......................................... 35.0 35.0 (35.0) Impact on deferred taxes for changes in tax rates........... 0.6 -- -- State income taxes, net of Federal income tax benefit....... 3.1 4.0 (0.3) Amortization of goodwill.................................... 0.9 1.0 3.1 Restructuring and other charges............................. -- -- 19.1 Miscellaneous items, net.................................... 1.2 1.2 4.5 ----- ---- ----- Effective tax rate.......................................... 40.8 41.2 (8.6) ===== ==== =====
The lower 1996 effective tax rate is primarily due to the permanent differences associated with the charge for restructuring and other items. Additionally, lower income before taxes increased the rate impact of normal, recurring permanent differences. F-34 118 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) As described in Note 1, the Company was wholly-owned by Ryder for all of the periods presented in the accompanying Consolidated Financial Statements. The deferred tax assets and liabilities shown below have been determined as though the Company was a separate company and not part of Ryder's consolidated Federal income tax returns. The components of the net deferred income tax liability were as follows:
DECEMBER 31, ------------------- 1995 1996 -------- -------- (IN THOUSANDS) Deferred income tax assets: Accrued insurance and loss reserves....................... $ 9,761 $ 11,091 Accrued compensation and benefits......................... 4,027 3,733 Restructuring and other charges........................... -- 1,622 Miscellaneous accruals and other.......................... 3,656 6,256 -------- -------- 17,444 22,702 Valuation allowance....................................... (1,812) (3,490) -------- -------- Deferred income tax assets........................ 15,632 19,212 -------- -------- Deferred income tax liabilities: Property and equipment bases differences.................. (32,984) (32,510) Other items............................................... (5,680) (6,074) -------- -------- Deferred income tax liabilities................... (38,664) (38,584) -------- -------- Net deferred income tax liability........................... $(23,032) $(19,372) ======== ========
A valuation allowance has been established to reduce the income tax benefits of tax loss carryforwards to amounts expected to be realized. Income taxes paid totaled $19 million in 1994 and $15 million in 1995. There were no income tax payments in 1996. NOTE 13 FAIR VALUES OF FINANCIAL INSTRUMENTS The carrying amounts of the Company's notes receivable, which originate from the sale of equipment to owner-operators, were $5.8 million and $9.3 million as of December 31, 1995 and 1996, respectively. As of the same dates, the fair values of the notes receivable were $6.0 million and $9.5 million, respectively. The fair values were determined from discounted future cash flows through maturity or expiration using current rates. The fair values of all other financial instruments approximate their carrying amounts. F-35 119 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 14 PENSION AND SAVINGS PLANS The Company sponsors three defined benefit pension plans, covering substantially all employees not covered by union-administered plans. These plans generally provide participants with benefits based on years of service and recent average compensation levels. Funding policy for these plans is to make contributions based on normal costs plus amortization of unfunded past service liability but not greater than the maximum allowable contribution deductible for Federal income tax purposes. The majority of the plans' assets are invested in a master trust which, in turn, is primarily invested in listed stocks and bonds. Total pension expense was as follows:
YEAR ENDED DECEMBER 31, ---------------------------- 1994 1995 1996 ------- -------- ------- (IN THOUSANDS) Company-administered plans: Present value of benefits earned during the year....... $ 1,604 $ 1,203 $ 1,443 Interest cost on projected benefit obligation.......... 3,214 3,320 3,755 Return on plan assets: Actual.............................................. (710) (14,145) (8,397) Deferred............................................ (3,583) 9,669 2,863 Additional expense from early retirement program....... -- -- 2,650 Other, net............................................. (575) (583) (691) ------- -------- ------- (50) (536) 1,623 Union-administered plans................................. 19,625 18,948 20,921 ------- -------- ------- Net pension expense...................................... $19,575 $ 18,412 $22,544 ======= ======== =======
As a part of the Company's restructuring and other profit improvement initiatives, certain employees accepted early retirement benefits, which increased 1996 pension expense by $2.7 million. The following table sets forth the plans' funded status and the Company's prepaid pension expense:
DECEMBER 31, ----------------- 1995 1996 ------- ------- (IN THOUSANDS) Plan assets at fair value................................... $66,734 $71,334 Actuarial present value of service rendered to date: Accumulated benefit obligation, including vested benefits of $43,819 and $47,770 in 1995 and 1996, respectively........................................... 44,429 50,107 Additional benefit based on estimated future salary levels................................................. 2,972 4,225 ------- ------- Projected benefit obligation................................ 47,401 54,332 ------- ------- Plan assets in excess of projected benefit obligation....... 19,333 17,002 Unrecognized transition amount.............................. (4,311) (3,685) Other, primarily unrecognized prior service cost and net gains..................................................... (9,146) (7,860) ------- ------- Prepaid pension expense..................................... $ 5,876 $ 5,457 ======= =======
F-36 120 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table sets forth the actuarial assumptions used for the Company's dominant plan:
DECEMBER 31, ------------------ 1994 1995 1996 ---- ---- ---- Discount rate............................................... 8.5% 7.5% 7.5% Rate of increase in compensation levels..................... 5.0% 5.0% 5.0% Expected long-term rate of return on plan assets............ 8.5% 8.5% 8.5% Transition amortization in years............................ 17 17 17 Gain and loss amortization in years......................... 9 9 9
The Company also contributed to various defined benefit, union-administered, multi-employer plans for employees under collective bargaining agreements. The Company contributed and charged to expense approximately $19.6 million, $18.9 million, and $20.9 million for the years ended December 31, 1994, 1995, and 1996, respectively, for such plans. These contributions are determined in accordance with the provisions of negotiated labor contracts and are generally based on the number of hours or days worked. In addition, the Company participates in certain defined contribution savings plans sponsored by Ryder that cover substantially all eligible employees. Contributions to the plans include employee contributions and contributions made by Ryder under a matching program. Defined contribution expense totaled $0.3 million, $0.4 million and $0.4 million for the years ended December 31, 1994, 1995 and 1996, respectively. NOTE 15 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Company participates in Ryder plans which provide retired employees with certain health care and life insurance benefits. Substantially all employees not covered by union-administered health and welfare plans are eligible for these benefits. Health care benefits are generally provided to qualified retirees and eligible dependents. Generally, these plans require employee contributions which vary based on years of service and include provisions which cap Company contributions. Reserves related to these plans are carried by Ryder. Total periodic postretirement benefit expense was as follows:
YEAR ENDED DECEMBER 31, ------------------------ 1994 1995 1996 ------ ------ ------ (IN THOUSANDS) Current year service cost................................... $ 230 $ 216 $ 185 Interest accrued on postretirement benefit obligation....... 867 923 828 Additional expense from early retirement program............ -- -- 1,523 Other, net.................................................. 208 -- -- ------ ------ ------ Periodic postretirement benefit expense..................... $1,305 $1,139 $2,536 ====== ====== ======
As part of the Company's restructuring and other profit improvement initiatives, certain employees accepted early retirement benefits which increased 1996 postretirement benefit expense by $1.5 million. F-37 121 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company's postretirement benefit plans are not funded. The following summarizes the reserves carried by Ryder:
DECEMBER 31, ----------------- 1995 1996 ------- ------- (IN THOUSANDS) Accumulated postretirement benefit obligation: Retirees.................................................. $ 9,509 $10,006 Fully eligible active plan participants................... 863 800 Other active plan participants............................ 2,908 2,314 ------- ------- 13,280 13,120 Unrecognized net gains (losses)............................. (1,872) 300 ------- ------- Accrued unfunded postretirement benefit obligation.......... $11,408 $13,420 ======= ======= Discount rate............................................... 7.5% 7.5%
The actuarial assumptions include health care cost trend rates projected ratably from 11% in 1997 to 6% in the year 2003 and thereafter. Increasing the assumed health care cost trend rates by 1% in each year would have increased the accumulated postretirement benefit obligation as of December 31, 1996 by $1.0 million and would not have had a material effect on periodic postretirement benefit expense for 1996. NOTE 16 ENVIRONMENTAL MATTERS The Company's operations involve storing and dispensing petroleum products, primarily diesel fuel. In 1988, the Environmental Protection Agency issued regulations that established requirements for testing and replacing underground storage tanks. The Company is involved in various stages of investigation, cleanup and tank replacement to comply with the regulations. In addition, the Company received notices from the Environmental Protection Agency and others that it has been identified as a potentially responsible party (PRP) under the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act and similar state statutes and may be required to share in the cost of cleanup of four identified disposal sites. The Company records a liability for environmental assessments and/or cleanup when it is probable a loss has been incurred. Generally, the timing of these accruals coincides with the identification of an environmental problem through the Company's internal procedures or upon notification from regulatory agencies. The estimate of loss is based on information obtained from independent environmental engineers and/or from Company experts regarding the nature and extent of environmental contamination, remedial alternatives available and the cleanup criteria required by relevant governmental agencies. The estimated costs include amounts for anticipated site testing, consulting, remediation, disposal, post-remediation monitoring and legal fees, as appropriate. These amounts represent the estimated undiscounted costs to fully resolve the environmental matters in accordance with prevailing Federal, state and local requirements based on information presently available. The liability includes estimates of cost sharing with other PRPs at Superfund sites. The Company's environmental expenses were $0.6 million, $2.0 million and $1.2 million for the years ended December 31, 1994, 1995 and 1996, respectively. The ultimate costs of the Company's environmental liabilities cannot be projected with certainty due to the presence of several unknown factors, primarily the level of contamination, the effectiveness of selected remediation methods, the stage of investigation at individual sites, the determination of the Company's liability in proportion to other responsible parties and the recoverability of such costs from third parties. Based on information presently available, management believes that the ultimate disposition of these matters, although potentially material to the results of operations in any one year, will not have a material adverse effect on the Company's financial condition or liquidity. F-38 122 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 17 INDUSTRY SEGMENT, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION The Company operates solely in the automotive industry, primarily transporting automobiles and light and medium-duty trucks from manufacturing plants, ports and railway distribution points to automobile dealerships and other distribution points. In 1994, 1995 and 1996, approximately 83.8%, 84.9% and 85.6%, respectively, of the Company's revenue was derived from six customers, one of which, General Motors, accounted for approximately 51.1%, 51.6% and 49.9% of revenue, respectively. The Company operates in the United States and Canada. Operating income (loss) shown below includes gains on the sale of operating property and equipment in the amounts of $0.2 million, $3.5 million and $1.6 million for 1994, 1995 and 1996, respectively. Geographic financial information is as follows:
YEAR ENDED DECEMBER 31, ------------------------------ 1994 1995 1996 -------- -------- -------- (IN THOUSANDS) Revenue: United States........................................ $610,088 $556,663 $547,158 Canada............................................... 35,314 37,783 36,134 -------- -------- -------- $645,402 $594,446 $583,292 ======== ======== ======== Operating income (loss): United States........................................ $ 50,800 $ 37,107 $(13,186) Canada............................................... (950) (869) (4,003) -------- -------- -------- $ 49,850 $ 36,238 $(17,189) ======== ======== ======== Identifiable assets: United States........................................ $233,645 $265,200 $257,095 Canada............................................... 40,942 41,097 36,419 -------- -------- -------- $274,587 $306,297 $293,514 ======== ======== ========
NOTE 18 COMMITMENTS AND CONTINGENCIES The Company is a party to various claims, legal actions and complaints arising in the ordinary course of business which relate to the Company's operations, including the manufacture of trailers and headramps. While any proceeding or litigation has an element of uncertainty, management believes that the disposition of these matters will not have a material impact on the financial condition, liquidity or results of operations of the Company. The Company has entered into employment agreements with certain executive officers of the Company. The agreements, which are substantially similar, provide for compensation to the officers in the form of annual base salaries and bonuses based on earnings. The employment agreements also provide for severance benefits upon the occurrence of certain events, including a change in control, as defined. F-39 123 RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 19 SALE OF BLAZER In the fourth quarter of 1996, management made a decision to dispose of Blazer, an in-bound logistics provider to the automotive industry. Consistent with this decision and included within the full year restructuring charge discussed in Note 3, management recorded restructuring and other charges of $2.8 million and asset write-downs of $4.2 million to reduce the carrying values of Blazer assets to an estimate of fair value less costs to sell. The Company sold Blazer on February 28, 1997. The condensed financial statements of Blazer are as follows: STATEMENTS OF OPERATIONS AND CHANGES IN COMPANY INVESTMENT
FOR THE SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, --------------------------- ------------------ 1994 1995 1996 1996 1997 ------- ------- ------- ------- -------- (IN THOUSANDS) Revenue................................... $25,529 $19,366 $14,520 $7,565 $ 2,204 Operating expense......................... 25,897 19,816 22,203 8,357 2,277 ------- ------- ------- ------ ------- Operating loss............................ (368) (450) (7,683) (792) (73) Other expense............................. (378) (110) (9) 10 14 ------- ------- ------- ------ ------- Loss before income taxes.................. (746) (560) (7,692) (802) (87) Income tax benefit........................ (19) (472) (320) 275 739 ------- ------- ------- ------ ------- Net income (loss)......................... (727) (88) (7,372) (527) 652 Company investment at beginning of period.................................. 721 5 (151) (151) (7,648) Net change in Company investment.......... 11 (68) (125) 453 6,996 ------- ------- ------- ------ ------- Company investment at end of period....... $ 5 $ (151) $(7,648) $ (225) $ -- ======= ======= ======= ====== =======
BALANCE SHEETS
DECEMBER 31, ----------------- JUNE 30, 1995 1996 1997 ------- ------- -------- (IN THOUSANDS) Current assets............................................ $ 2,049 $ 1,526 $ -- Property and equipment, net............................... 1,687 428 -- Other assets, principally goodwill........................ 3,428 -- -- ------- ------- ------- Total assets.............................................. $ 7,164 $ 1,954 $ -- ======= ======= ======= Current liabilities....................................... $ 2,768 $ 5,976 -- Other liabilities......................................... 4,547 3,626 -- Company investment........................................ (151) (7,648) -- ------- ------- ------- Total liabilities and Company investment.................. $ 7,164 $ 1,954 $ -- ======= ======= =======
NOTE 20 SUBSEQUENT EVENT On August 21, 1997, Ryder announced that it had reached a definitive agreement and received the necessary regulatory approvals to sell the stock of the Company, along with another business unit, to Allied Holdings, Inc. ("Allied") for approximately $114.5 million in cash and assumption of certain liabilities of the business. The sale of the Company to Allied is expected to be completed by September 30, 1997. F-40 124 ============================================================== ================================================ - -------------------------------------------------------------- ------------------------------------------------ NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED $150,000,000 TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN, OR INCORPORATED BY REFERENCE IN, THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN [ALLIED HOLDINGS LOGO] AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE NEW NOTES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OFFER TO EXCHANGE ALL OUTSTANDING NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY 8 5/8% SERIES A SENIOR NOTES DUE 2007 CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT FOR BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS 8 5/8% SERIES B SENIOR NOTES DUE 2007 OR INCORPORATED BY REFERENCE HEREIN OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. ___________________ __________________ PROSPECTUS ___________________ TABLE OF CONTENTS PAGE ---- , 1997 - -------------------------------------------------------------- ------------------------------------------------ ==============================================================
125 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS The provisions of the Georgia Business Corporation Code and the Registrant's Bylaws set forth the extent to which the Registrant's directors and officers may be indemnified against liabilities they may incur while serving in such capacities. Under these indemnification provisions, the Registrant is required to indemnify any of its directors or officers against any reasonable expenses (including attorneys' fees) incurred by such director or officer in defense of any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and whether formal or informal, to which such director or officer was made a party, or in defense of any claim, issue or matter therein, by reason of the fact that such director or officer is or was a director or officer of the Registrant or who, while a director of the Registrant, is or was serving at the Registrant's request as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, to the extent that such director or officer has been successful, on the merits or otherwise, in such defense. The Registrant also must indemnify any of its directors, and may indemnify any of its officers, against any liability incurred in connection with any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and whether formal or informal, by reason of the fact that such director or officer is or was a director or officer of the Registrant or who, while a director or officer of the Registrant, is or was serving at the Registrant's request as a director, officer, partner, trustee, employee, or agent of another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, if such director or officer acted in a manner such director or officer believed in good faith to be in, or not opposed to, the best interests of the Registrant, or, with respect to any criminal proceeding, had no reasonable cause to believe such director's or officer's conduct was unlawful, if a determination has been made that the director or officer has met these standards of conduct. Such indemnification in connection with a proceeding by or in the right of the Registrant, however, is limited to reasonable expenses, including attorneys' fees, incurred in connection with the proceeding. The Registrant may also provide advancement of expenses incurred by a director or officer in defending any such action, suit, or proceeding upon receipt of a written affirmation of such officer or director that such director or officer has met certain standards of conduct and an undertaking by or on behalf of such director or officer to repay such advances unless it is ultimately determined that such director or officer is entitled to indemnification by the Registrant. The Registrant may not indemnify a director or officer in connection with a proceeding by or in the right of the Registrant in which the director or officer was adjudged liable to the Registrant, or in connection with a proceeding in which he was adjudged liable on the basis that he improperly received a personal benefit. The Registrant's Articles of Incorporation contain a provision which provides that, to the fullest extent permitted by the Business Corporation Code of Georgia, directors of the Registrant shall not be personally liable to the Registrant or its shareholders for monetary damages for breach of his duty of care or any other duty as a director. The Registrant maintains an insurance policy insuring the Registrant and directors and officers of the Registrant against certain liabilities, including liabilities under the Securities Act of 1933. II-1 126 ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits (See exhibit index immediately preceding the exhibits for the page number where each exhibit can be found) EXHIBIT NUMBER DESCRIPTION OF EXHIBITS - ------ ----------------------- (1) 4.1 Indenture dated September 30, 1997 by and among the Company, the Guarantors and The First National Bank of Chicago, as Trustee. (1) 4.2 Purchase Agreement dated September 19, 1997 by and among the Company and the Initial Purchasers. (1) 4.3 Form of 8 5/8% Series A Senior Note due 2007 (Included in Exhibit 4.1). (1) 4.4 Registration Rights Agreement dated September 30, 1997 by and between the Company and Bear, Stearns & Co. Inc., as initial purchaser. (1) 4.5 $230 million Revolving Credit Agreement among Allied Holdings, Inc. and BankBoston, N.A., individually and as Administrative Agent, et al., dated September 30, 1997. (1) 4.6 Form of 8 5/8% Series B Senior Note due 2007 (Included in Exhibit 4.1). (1) 4.7 Form of Guarantee (Included in Exhibit 4.1). (2) 5.1 Opinion of Troutman Sanders LLP. (1) 12.1 Statement regarding Ratio of Earnings to Fixed Charges (2) 23.1 Consent of Troutman Sanders LLP (Included in Exhibit 5.1). (1) 23.2 Consent of Arthur Andersen LLP. (1) 23.3 Consent of KPMG Peat Marwick LLP (1) 24.1 Power of Attorney. (Included on the signature pages in Part II of this Registration Statement) (1) 25.1 Statement of Eligibility of the Trustee under the Indenture filed as Exhibit 4.1 (1) 99.1 Form of Letter of Transmittal (1) 99.2 Form of Notice of Guaranteed Delivery 99.3 Acquisition Agreement among Allied Holdings, Inc., AH Acquisition Corp., Canadian Acquisition Corp., and Axis International Incorporated and Ryder System, Inc. dated August 20, 1997 (incorporated by reference from Form 8-K filed with the Commission on August 29, 1997). - - - - - - - - - - (1) Filed herewith. (2) To be filed by amendment. II-2 127 ITEM 22. UNDERTAKINGS. The Registrant hereby undertakes the following: (a)(1) To file, during any period in which offers or sales are being made, a post effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment 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. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the Offering. (b) For purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act 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. (c) See Item 20. (d) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day after receipt of such request, and to send the incorporation documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (e) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-3 128 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. ALLIED HOLDINGS, INC. By /s/ Robert J. Rutland ------------------------------------------------------- Robert J. Rutland, Chairman and Chief Executive Officer By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------- Mitchell Poole, Jr., President, Chief Operating Officer, Chief Financial Officer, and Assistant Secretary Each person whose signature to this Registration Statement appears below appoints Robert J. Rutland and Joseph W. Collier, 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/ Robert J. Rutland Chairman of the Board of Directors and Chief October 1, 1997 - -------------------------- Executive Officer, and Director Robert J. Rutland /s/ Guy W. Rutland, III Chairman Emeritus and Director October 1, 1997 - -------------------------- Guy W. Rutland, III /s/ A. Mitchell Poole, Jr. President, Chief Operating Officer, Chief October 1, 1997 - -------------------------- Financial Officer, Assistant Secretary and A. Mitchell Poole, Jr. Director Vice Chairman, Executive Vice President, and - -------------------------- Director Bernard O. De Wulf /s/ Berner F. Wilson, Jr. Vice Chairman, Secretary and Director October 1, 1997 - -------------------------- Berner F. Wilson, Jr. /s/ Guy W. Rutland, IV Vice President and Director October 1, 1997 - -------------------------- Guy W. Rutland, IV /s/ Joseph W. Collier Director October 1, 1997 - -------------------------- Joseph W. Collier Director - -------------------------- David G. Bannister Director - -------------------------- Robert R. Woodson
II-4 129 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. ALLIED AUTOMOTIVE GROUP, INC. By /s/ Joseph W. Collier ----------------------------------------------- Joseph W. Collier, President and Chief Executive Officer By /s/ David S. Forbes ----------------------------------------------- David S. Forbes, Chief Financial Officer, Treasurer and Assistant Secretary Each person whose signature to this Registration Statement appears below appoints David S. Forbes and Joseph W. Collier, 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/ Joseph W. Collier President, Chief Executive Officer and October 1, 1997 - ---------------------- Director Joseph W. Collier /s/ Tom Baker Director October 1, 1997 - ---------------------- Tom Baker /s/ Tex R. Flippin Director October 1, 1997 - ---------------------- Tex R. Flippin. /s/ Michael E. Axelrod Director October 1, 1997 - ---------------------- Michael E. Axelrod
II-5 130 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. ALLIED INDUSTRIES INCORPORATED By /s/ Daniel H. Popky ------------------------------------------------------ Daniel H. Popky, Treasurer and Chief Financial Officer By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------ Mitchell Poole, Jr., President and Chief Executive Officer Each person whose signature to this Registration Statement appears below appoints Daniel H. Popky and A. Mitchell Poole, Jr., 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/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ William J. Berberich Director October 1, 1997 - -------------------------- William J. Berberich /s/ Daniel H. Popky Treasurer, Chief Financial Officer and October 1, 1997 - -------------------------- Director Daniel H. Popky
II-6 131 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. HAUL RISK MANAGEMENT SERVICES, INC. By /s/ Herbert A. Terwilliger ---------------------------------------------------- Herbert A. Terwilliger, President and Chief Executive Officer By /s/ Daniel H. Popky ----------------------------------------------------- Daniel H. Popky, Treasurer and Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Herbert A. Terwilliger and Daniel H. Popky, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. Director October 1, 1997 - -------------------------- A. Mitchell Poole, Jr. Director - -------------------------- Bernard O. De Wulf /s/ Berner F. Wilson, Jr. Director October 1, 1997 - -------------------------- Berner F. Wilson, Jr. /s/ Herbert A. Terwilliger President, Chief Executive Officer, October 1, 1997 - -------------------------- and Director Herbert A. Terwilliger
II-7 132 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. LINK INFORMATION SYSTEMS, INC. By /s/ Douglas A. Lauer ------------------------------------------------ Douglas A. Lauer, President and, Chief Executive Officer By /s/ Daniel H. Popky ------------------------------------------------ Daniel H. Popky, Vice President, Chief Financial Officer, Chief Financial Officer, and Assistant Secretary Each person whose signature to this Registration Statement appears below appoints Douglas A. Lauer and Daniel H. Popky, 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/ Douglas A. Lauer President, Chief Executive Officer and October 1, 1997 - -------------------------- Director Douglas A. Lauer /s/ A. Mitchell Poole, Jr. Director October 1, 1997 - -------------------------- A. Mitchell Poole, Jr. /s/ Samuel Whitehurst Director October 1, 1997 - -------------------------- Samuel Whitehurst
II-8 133 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. ALLIED SOUTHWOODS, INC. By /s/ A. Mitchell Poole, Jr. ----------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ Daniel H. Popky ----------------------------------------------------- Daniel H. Popky, Vice President and Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and Daniel H. Popky, 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/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Vice President, Chief Financial Officer and October 1, 1997 - -------------------------- Director Daniel H. Popky
II-9 134 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. AXIS GROUP, INC. By /s/ Douglas R. Cartin ------------------------------------------------ Douglas R. Cartin, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President, Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Douglas R. Cartin and David S. Forbes, 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/ Berner F. Wilson, Jr. Director October 1, 1997 - ------------------------ Berner F. Wilson, Jr. /s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997 - ------------------------ Director Douglas R. Cartin /s/ Robert C. Matheson Director October 1, 1997 - ------------------------ Robert C. Matheson /s/ Gary R. Long Director October 1, 1997 - ------------------------ Gary R. Long
II-10 135 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. ALLIED SYSTEMS, LTD. (L.P.) BY: ALLIED AUTOMOTIVE GROUP, INC., as Managing General Partner By /s/ Joseph W. Collier ------------------------------------------------ Joseph W. Collier, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President, Chief Financial Officer, Each person whose signature to this Registration Statement appears below appoints Joseph W. Collier and David S. Forbes, 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/ Joseph W. Collier President and Chief Executive Officer, and October 1, 1997 - --------------------- Director of the Managing Director Joseph W. Collier /s/ David S. Forbes Vice President and Chief Financial Officer, October 1, 1997 - --------------------- and Director of the Managing Director David S. Forbes
II-11 136 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. ALLIED, INC. By /s/ Joseph W. Collier ------------------------------------------------ Joseph W. Collier, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President and Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Joseph W. Collier and David S. Forbes, 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/ Joseph W. Collier President and Chief Executive Officer and October 1, 1997 - ---------------------- Director Joseph W. Collier /s/ Tom Baker Director October 1, 1997 - ---------------------- Tom Baker /s/ Tex R. Flippin Director October 1, 1997 - ---------------------- Tex R. Flippin /s/ Michael E. Axelrod Director October 1, 1997 - ---------------------- Michael E. Axelrod
II-12 137 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. INTER MOBILE, INC. By /s/ Joseph W. Collier ----------------------------------------------------- Joseph W. Collier, President, Chief Executive Officer and Chief Financial Officer By /s/ Tex R. Flippin ----------------------------------------------------- Tex R. Flippin, Vice President Each person whose signature to this Registration Statement appears below appoints Joseph W. Collier and Tex R. Flippin, 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/ Joseph W. Collier President, Chief Executive Officer, October 1, 1997 - --------------------- Chief Financial Officer, and Director Joseph W. Collier /s/ Tex R. Flippin Vice President and Director October 1, 1997 - --------------------- Tex R. Flippin
II-13 138 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. LEGION TRANSPORTATION, INC. By /s/ Joseph W. Collier ----------------------------------------------------- Joseph W. Collier, President, Chief Executive Officer and Chief Financial Officer By /s/ Tex R. Flippin ----------------------------------------------------- Tex R. Flippin, Vice President Each person whose signature to this Registration Statement appears below appoints Joseph W. Collier and Tex R. Flippin, 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/ Joseph W. Collier President, Chief Executive Officer, October 1, 1997 - ---------------------- Chief Financial Officer, and Director Joseph W. Collier /s/ Tex R. Flippin Vice President and Director October 1, 1997 - ---------------------- Tex R. Flippin
II-14 139 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. INNOVATIVE CAR CARRIERS, INC. By /s/ Joseph W. Collier ----------------------------------------------------- Joseph W. Collier, President, Chief Executive Officer and Chief Financial Officer By /s/ Tex R. Flippin ----------------------------------------------------- Tex R. Flippin, Vice President Each person whose signature to this Registration Statement appears below appoints Joseph W. Collier and Tex R. Flippin, 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/ Michael E. Axelrod Director October 1, 1997 - ---------------------- Michael E. Axelrod
II-15 140 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. AUTOMOTIVE TRANSPORT SERVICES, INC. By /s/ Joseph W. Collier ----------------------------------------------------- Joseph W. Collier, President, Chief Executive Officer and Chief Financial Officer By /s/ Tex R. Flippin ----------------------------------------------------- Tex R. Flippin, Vice President Each person whose signature to this Registration Statement appears below appoints Joseph W. Collier and Tex R. Flippin, 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/ Michael E. Axelrod Director October 1, 1997 - ---------------------- Michael E. Axelrod
II-16 141 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. AUTO HAULAWAY, INC. By /s/ Joseph W. Collier ------------------------------------------------ Joseph W. Collier, President and Chief Executive Officer By /s/ Daniel H. Popky ------------------------------------------------- Daniel H. Popky, Vice President and Chief Financial Officer, Each person whose signature to this Registration Statement appears below appoints Joseph W. Collier and Daniel H. Popky, 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/ Joel M. Rose Director October 1, 1997 - ---------------- Joel M. Rose
II-17 142 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. AXIS INTERNATIONAL, INC. By /s/ Douglas R. Cartin ------------------------------------------------ Douglas R. Cartin, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President, Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Douglas R. Cartin and David S. Forbes, 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/ Berner F. Wilson, Jr. Director October 1, 1997 - ------------------------ Berner F. Wilson, Jr. /s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997 - ------------------------ Director Douglas R. Cartin /s/ Robert C. Matheson Director October 1, 1997 - ------------------------ Robert C. Matheson /s/ Gary R. Long Director October 1, 1997 - ------------------------ Gary R. Long
II-18 143 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. AXIS TRUCK LEASING, INC. By /s/ Douglas R. Cartin ------------------------------------------------ Douglas R. Cartin, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President, Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Douglas R. Cartin and David S. Forbes, 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/ Berner F. Wilson, Jr. Director October 1, 1997 - ------------------------ Berner F. Wilson, Jr. /s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997 - ------------------------ Director Douglas R. Cartin /s/ Robert C. Matheson Director October 1, 1997 - ------------------------ Robert C. Matheson /s/ Gary R. Long Director October 1, 1997 - ------------------------ Gary R. Long
II-19 144 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. AXIS NORTH AMERICA, INC. By /s/ Douglas R. Cartin ------------------------------------------------ Douglas R. Cartin, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President, Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Douglas R. Cartin and David S. Forbes, 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/ Berner F. Wilson, Jr. Director October 1, 1997 - ------------------------ Berner F. Wilson, Jr. /s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997 - ------------------------ Director Douglas R. Cartin /s/ Robert C. Matheson Director October 1, 1997 - ------------------------ Robert C. Matheson /s/ Gary R. Long Director October 1, 1997 - ------------------------ Gary R. Long
II-20 145 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. AUTO HAULAWAY RELEASING SERVICES (1981) LIMITED By /s/ Joseph W. Collier ------------------------------------------------ Joseph W. Collier, President and Chief Executive Officer By /s/ Daniel H. Popky -------------------------------------------------- Daniel H. Popky, Vice President and Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Joseph W. Collier and Daniel H. Popky, 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/ Joel M. Rose Directors October 1, 1997 - ---------------- Joel M. Rose
II-21 146 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. DECATUR DRIVER EXCHANGE COMPANY, INC. By /s/ Douglas R. Cartin ------------------------------------------------ Douglas R. Cartin, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President, Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Douglas R. Cartin and David S. Forbes, 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/ Berner F. Wilson, Jr. Director October 1, 1997 - ------------------------ Berner F. Wilson, Jr. /s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997 - ------------------------ Director Douglas R. Cartin /s/ Robert C. Matheson Director October 1, 1997 - ------------------------ Robert C. Matheson /s/ Gary R. Long Director October 1, 1997 - ------------------------ Gary R. Long
II-22 147 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. CLAIREMONT DRIVER EXCHANGE COMPANY, INC. By /s/ Douglas R. Cartin ------------------------------------------------ Douglas R. Cartin, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President, Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Douglas R. Cartin and David S. Forbes, 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/ Berner F. Wilson, Jr. Director October 1, 1997 - ------------------------- Berner F. Wilson, Jr. /s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997 - ------------------------- Director Douglas R. Cartin /s/ Robert C. Matheson Director October 1, 1997 - ------------------------- Robert C. Matheson /s/ Gary R. Long Director October 1, 1997 - ------------------------- Gary R. Long
II-23 148 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. KAR-TAINER INTERNATIONAL, INC. By /s/ Douglas R. Cartin ------------------------------------------------ Douglas R. Cartin, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes., Vice President, Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Douglas R. Cartin and David S. Forbes, 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/ Douglas R. Cartin President, Chief Executive Officer, and October 1, 1997 - --------------------- Director Douglas R. Cartin /s/ Richard Cox Director October 1, 1997 - --------------------- Richard Cox /s/ Robert C. Matheson Director October 1, 1997 - ---------------------- Robert C. Matheson
II-24 149 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. AH ACQUISITION CORP. By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------ A. Mitchell Poole, Jr., President and, Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------------ David S. Forbes, Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director October 1, 1997 - -------------------------- Daniel H. Popky
II-25 150 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. CANADIAN ACQUISITION CORP. By /s/ A. Mitchell Poole, Jr. ----------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------------- David S. Forbes., Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director October 1, 1997 - -------------------------- Daniel H. Popky
II-26 151 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. AXIS NATIONAL INCORPORATED By /s/ Douglas R. Cartin ------------------------------------------------ Douglas R. Cartin, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President, Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Douglas R. Cartin and David S. Forbes, 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/ Berner F. Wilson, Jr. Director October 1, 1997 - ------------------------- Berner F. Wilson, Jr. /s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997 - ------------------------- Director Douglas R. Cartin /s/ Robert C. Matheson Director October 1, 1997 - ------------------------- Robert C. Matheson /s/ Gary R. Long Director October 1, 1997 - ------------------------- Gary R. Long
II-27 152 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. RC MANAGEMENT CORP. By /s/ Douglas R. Cartin ------------------------------------------------ Douglas R. Cartin, President and, Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President, Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Douglas R. Cartin and David S. Forbes, 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/ Berner F. Wilson, Jr. Director October 1, 1997 - ------------------------- Berner F. Wilson, Jr. /s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997 - ------------------------- Director Douglas R. Cartin /s/ Robert C. Matheson Director October 1, 1997 - ------------------------- Robert C. Matheson /s/ Gary R. Long Director October 1, 1997 - ------------------------- Gary R. Long
II-28 153 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. RYDER AUTOMOTIVE CARRIER SERVICES, INC. By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------------- David S. Forbes., Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director October 1, 1997 - -------------------------- Daniel H. Popky
II-29 154 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. RYDER AUTOMOTIVE ACQUISITION LLC BY: CANADIAN ACQUISITION CORP, as Member By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------------- David S. Forbes., Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director of Member October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Operating Officer and October 1, 1997 - -------------------------- Director of Member A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director of Member October 1, 1997 - -------------------------- Daniel H. Popky
II-30 155 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. MCL RYDER TRANSPORT, INC. By /s/ A. Mitchell Poole, Jr. ----------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ----------------------------------------------------- David S. Forbes, Vice President and Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Joel M. Rose Director October 1, 1997 - ---------------- Joel M. Rose
II-31 156 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. RYDER AUTOMOTIVE OPERATIONS, INC. By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------------- David S. Forbes., Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director October 1, 1997 - -------------------------- Daniel H. Popky
II-32 157 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. RYDER FREIGHT BROKER, INC. By /s/ A. Mitchell Poole, Jr. ----------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ----------------------------------------------------- David S. Forbes, Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director October 1, 1997 - -------------------------- Daniel H. Popky
II-33 158 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. QAT, INC. By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------ A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------------ David S. Forbes, Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director October 1, 1997 - -------------------------- Daniel H. Popky
II-34 159 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. OSHCO, INC. By /s/ Douglas R. Cartin ------------------------------------------------ Douglas R. Cartin, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President, Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Douglas R. Cartin and David S. Forbes, 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/ Berner F. Wilson, Jr. Director October 1, 1997 - ------------------------ Berner F. Wilson, Jr. /s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997 - ------------------------ Director Douglas R. Cartin /s/ Robert C. Matheson Director October 1, 1997 - ------------------------ Robert C. Matheson /s/ Gary R. Long Director October 1, 1997 - ------------------------ Gary R. Long
II-35 160 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. TERMINAL SERVICE CO. By /s/ Douglas R. Cartin ------------------------------------------------ Douglas R. Cartin, President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------ David S. Forbes, Vice President, Chief Financial Officer Each person whose signature to this Registration Statement appears below appoints Douglas R. Cartin and David S. Forbes, 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/ Berner F. Wilson, Jr. Director October 1, 1997 - ------------------------- Berner F. Wilson, Jr. /s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997 - ------------------------- Director Douglas R. Cartin /s/ Robert C. Matheson Director October 1, 1997 - ------------------------- Robert C. Matheson /s/ Gary R. Long Director October 1, 1997 - ------------------------- Gary R. Long
II-36 161 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. F.J. BOUTELL DRIVEWAY CO., INC. By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------------- David S. Forbes., Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director October 1, 1997 - -------------------------- Daniel H. Popky
II-37 162 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. RMX, INC. By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------------- David S. Forbes., Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director October 1, 1997 - -------------------------- Daniel H. Popky
II-38 163 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. TRANSPORT SUPPORT, INC. By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------------- David S. Forbes., Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director October 1, 1997 - -------------------------- Daniel H. Popky
II-39 164 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. COMMERCIAL CARRIERS, INC. By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------------- David S. Forbes., Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director October 1, 1997 - -------------------------- Daniel H. Popky
II-40 165 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-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Georgia, on the 1st day of October 1997. B&C, INC. By /s/ A. Mitchell Poole, Jr. ------------------------------------------------------- A. Mitchell Poole, Jr., President and Chief Executive Officer By /s/ David S. Forbes ------------------------------------------------------- David S. Forbes., Chief Financial Officer and Secretary Each person whose signature to this Registration Statement appears below appoints A. Mitchell Poole, Jr. and David S. Forbes, 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/ Robert J. Rutland Director October 1, 1997 - -------------------------- Robert J. Rutland /s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997 - -------------------------- Director A. Mitchell Poole, Jr. /s/ Daniel H. Popky Director October 1, 1997 - -------------------------- Daniel H. Popky
II-41 EX-4.1 2 INDENTURE 1 EXHIBIT 4.1 ================================================================================ ------------------------------------ ALLIED HOLDINGS, INC. SERIES A AND SERIES B 85/8% SENIOR NOTES DUE 2007 ------------------------------------ INDENTURE Dated as of September 30, 1997 ------------------------------------ The First National Bank of Chicago ------------------------------------ Trustee ------------------------------------ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section 310 (a)(1) ............................................. 7.10 (a)(2) ............................................. 7.10 (a)(3) ............................................. N.A. (a)(4) ............................................. N.A. (a)(5) ............................................. 7.10 (b) ................................................ 7.10 (c) ................................................ N.A. 311 (a) ................................................ 7.11 (b) ................................................ 7.11 (c) ................................................ N.A. 312 (a) ................................................ 2.05 (b) ................................................ 11.03 (c) ................................................ 11.03 313 (a) ................................................ 7.06 (b)(1) ............................................. N.A. (b)(2) ............................................. 7.07 (c) ................................................ 7.06;11.02 (d) ................................................ 7.06 314 (a) ................................................ 4.03;11.02 (b) ................................................ N.A. (c)(1) ............................................. 11.04 (c)(2) ............................................. 11.04 (c)(3) ............................................. N.A. (d) ................................................ N.A. (e) ................................................ 11.05 (f) ................................................ N.A. 315 (a) ................................................ 7.01 (b) ................................................ 7.05,11.02 (c) ................................................ 7.01 (d) ................................................ 7.01 (e) ................................................ 6.11 316 (a)(last sentence) ................................. 2.09 (a)(1)(A) .......................................... 6.05 (a)(1)(B) .......................................... 6.04 (a)(2) ............................................. N.A. (b) ................................................ 6.07 (c) ................................................ 2.12 317 (a)(1) ............................................. 6.08 (a)(2) ............................................. 6.09 (b) ................................................ 2.04 318 (a) ................................................ 11.01 (b) ................................................ N.A. (c) ................................................ 11.01 N.A. means not applicable
*This Cross-Reference Table is not part of the Indenture. 3 TABLE OF CONTENTS
Page ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions....................................................... 1 Section 1.02. Other Definitions................................................. 15 Section 1.03. Incorporation by Reference of Trust Indenture Act................. 15 Section 1.04. Rules of Construction............................................. 15 ARTICLE 2 THE NOTES Section 2.01. Form and Dating................................................... 16 Section 2.02. Execution and Authentication...................................... 17 Section 2.03. Registrar and Paying Agent........................................ 17 Section 2.04. Paying Agent to Hold Money in Trust............................... 18 Section 2.05. Holder Lists...................................................... 18 Section 2.06. Transfer and Exchange............................................. 18 Section 2.07. Replacement Notes................................................. 30 Section 2.08. Outstanding Notes................................................. 30 Section 2.09. Treasury Notes.................................................... 30 Section 2.10. Temporary Notes................................................... 31 Section 2.11. Cancellation...................................................... 31 Section 2.12. Defaulted Interest................................................ 31 ARTICLE 3 REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee................................................ 31 Section 3.02. Selection of Notes to Be Redeemed................................. 32 Section 3.03. Notice of Redemption.............................................. 32 Section 3.04. Effect of Notice of Redemption.................................... 33 Section 3.05. Deposit of Redemption Price....................................... 33 Section 3.06. Notes Redeemed in Part............................................ 33 Section 3.07. Optional Redemption............................................... 33 Section 3.08. Mandatory Redemption.............................................. 34 Section 3.09. Offer to Purchase by Application of Excess Proceeds............... 34 ARTICLE 4 COVENANTS Section 4.01. Payment of Notes.................................................. 36 Section 4.02. Maintenance of Office or Agency................................... 36 Section 4.03. Reports........................................................... 36 Section 4.04. Compliance Certificate............................................ 37 Section 4.05. Taxes............................................................. 38 Section 4.06. Stay, Extension and Usury Laws.................................... 38 Section 4.07. Restricted Payments............................................... 38 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries...................................................... 40
i 4 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock............................................................. 41 Section 4.10. Asset Sales....................................................... 43 Section 4.11. Transactions with Affiliates...................................... 44 Section 4.12. Liens............................................................. 44 Section 4.13. Additional Subsidiary Guarantees.................................. 45 Section 4.14. Corporate Existence............................................... 45 Section 4.15. Offer to Repurchase Upon Change of Control........................ 45 Section 4.16. Payments for Consent.............................................. 46 ARTICLE 5 SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets.......................... 46 Section 5.02. Successor Corporation Substituted................................. 47 ARTICLE 6 DEFAULTS AND REMEDIES Section 6.01. Events of Default................................................. 47 Section 6.02. Acceleration...................................................... 49 Section 6.03. Other Remedies.................................................... 49 Section 6.04. Waiver of Past Defaults........................................... 49 Section 6.05. Control by Majority............................................... 50 Section 6.06. Limitation on Suits............................................... 50 Section 6.07. Rights of Holders of Notes to Receive Payment..................... 50 Section 6.08. Collection Suit by Trustee........................................ 50 Section 6.09. Trustee May File Proofs of Claim.................................. 51 Section 6.10. Priorities........................................................ 51 Section 6.11. Undertaking for Costs............................................. 51 ARTICLE 7 TRUSTEE Section 7.01. Duties of Trustee................................................. 52 Section 7.02. Rights of Trustee................................................. 53 Section 7.03. Individual Rights of Trustee...................................... 53 Section 7.04. Trustee's Disclaimer.............................................. 53 Section 7.05. Notice of Defaults................................................ 54 Section 7.06. Reports by Trustee to Holders of the Notes........................ 54 Section 7.07. Compensation and Indemnity........................................ 54 Section 7.08. Replacement of Trustee............................................ 55 Section 7.09. Successor Trustee by Merger, etc.................................. 56 Section 7.10. Eligibility; Disqualification..................................... 56 Section 7.11. Preferential Collection of Claims Against Company................. 56 ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance........................................................ 56 Section 8.02. Legal Defeasance and Discharge.................................... 56 Section 8.03. Covenant Defeasance............................................... 57 Section 8.04. Conditions to Legal or Covenant Defeasance........................ 57
ii 5 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions..................... 58 Section 8.06. Repayment to Company.............................................. 59 Section 8.07. Reinstatement..................................................... 59 ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. Without Consent of Holders of Notes............................... 59 Section 9.02. With Consent of Holders of Notes.................................. 60 Section 9.03. Compliance with Trust Indenture Act............................... 61 Section 9.04. Revocation and Effect of Consents................................. 61 Section 9.05. Notation on or Exchange of Notes.................................. 62 Section 9.06. Trustee to Sign Amendments, etc................................... 62 ARTICLE 10 SUBSIDIARY GUARANTEES Section 10.01. Subsidiary Guarantees............................................. 62 Section 10.02. Execution and Delivery of Subsidiary Guarantees................... 63 Section 10.03. Guarantors May Consolidate, etc., on Certain Terms................ 63 Section 10.04. Releases Following Sale of Assets................................. 64 Section 10.05. Limitation on Guarantor Liability................................. 64 Section 10.06. Trustee to Include Paying Agent................................... 65 ARTICLE 11 MISCELLANEOUS Section 11.01. Trust Indenture Act Controls...................................... 65 Section 11.02. Notices........................................................... 65 Section 11.03. Communication by Holders of Notes with Other Holders of Notes.................................................. 66 Section 11.04. Certificate and Opinion as to Conditions Precedent................ 66 Section 11.05. Statements Required in Certificate or Opinion..................... 67 Section 11.06. Rules by Trustee and Agents....................................... 67 Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders........................................ 67 Section 11.08. Governing Law..................................................... 67 Section 11.09. No Adverse Interpretation of Other Agreements..................... 68 Section 11.10. Successors........................................................ 68 Section 11.11. Severability...................................................... 68 Section 11.12. Counterpart Originals............................................. 68 Section 11.13. Table of Contents, Headings, etc.................................. 68 EXHIBITS Exhibit A-1 FORM OF NOTE (OTHER THAN REGULATION S TEMPORARY NOTE) Exhibit A-2 FORM OF REGULATION S TEMPORARY NOTE Exhibit B FORM OF CERTIFICATE OF TRANSFER Exhibit C FORM OF CERTIFICATE OF EXCHANGE Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Exhibit E FORM OF SUBSIDIARY GUARANTEE
iii 6 INDENTURE dated as of September 30, 1997 between Allied Holdings, Inc., a Georgia corporation (the "Company"), the Guarantors named on the signature pages hereto (together with all other Persons who execute a Subsidiary Guarantee pursuant to the terms of this Indenture, the "Guarantors"), and The First National Bank of Chicago, as trustee (the "Trustee"). The Company, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 8 5/8% Series A Senior Notes due 2007 (the "Series A Notes") and the 8 5/8% Series B Senior Notes due 2007 (the "Series B Notes" and, together with the Series A Notes, the "Notes"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "144A Global Note" means the global note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A. "Acquired Debt" means, with respect to any specified Person, (a) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (b) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange. "Asset Sale" means (a) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a sale and leaseback), excluding sales of services and ancillary products in the ordinary course of business consistent with past practices (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole shall be governed by Section 4.15 hereof and/or Section 5.01 hereof and not by Section 4.10 hereof, and (b) the issue or sale by the Company or any of its Subsidiaries of Equity Interests of any of the Company's Subsidiaries (other than directors' qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary of the Company), in the case of either clause (a) or (b), whether in a single transaction or a series of related 7 transactions (i) that have a fair market value in excess of $1.0 million or (ii) for net proceeds in excess of $1.0 million. Notwithstanding the foregoing, the following shall be deemed not to be Asset Sales: (a) a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary; (b) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary; (c) a Permitted Investment or Restricted Payment that is permitted by Section 4.07 hereof; (d) the exchange of Rigs or terminals for other assets that are usable in the business of the Company and its Restricted Subsidiaries to the extent that the assets received by the Company and its Restricted Subsidiaries have a fair market value at least equal to the fair market value of the Rigs and terminals exchanged by the Company, in each case as determined in good faith by the Board of Directors; (e) a disposition of Cash Equivalents solely for cash or other Cash Equivalents; (f) a saleleaseback transaction involving Rigs or real estate within one year of the acquisition of such Rigs or real estate; and (g) the sale of accounts receivables and related assets customarily transferred in an asset securitization transaction involving accounts receivable to a Receivables Subsidiary or by a Receivables Subsidiary in connection with a Qualified Receivables Transaction. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company, or any authorized committee of the Board of Directors. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means (a) in the case of a corporation, corporate stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (c) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (a) United States dollars, (b) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than six months from the date of acquisition, (c) certificates of deposit and Eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any lender party to the New Credit Facility or with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Keefe Bank Watch Rating of AB or better, (d) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above and (e) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within six months after the date of acquisition. "Cedel" means Cedel Bank, societe anonyme. 2 8 "Change of Control" means, with respect to the Company or any successor Person permitted by Section 5.01, the occurrences of any of the following: (a) the adoption of a plan relating to the liquidation or dissolution of the Company; (b) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" or "group" (as such terms are used in Section 13(d)(3) of the Exchange Act), other than the Principals, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and rule 13d-5 under the Exchange Act), directly or indirectly, of (i) more than 35% of the voting power of the outstanding voting stock of the Company or (ii) more of the voting power of the outstanding voting stock of the Company than that beneficially owned by the Principals; or (c) the first day on which more than a majority of the members of the Board of Directors are not continuing Directors. "Closing Date" means the date of the closing of the sale of the Notes. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus, to the extent deducted in computing such Consolidated Net Income, (a) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale, (b) provision for taxes based on income or profits, (c) Consolidated Interest Expense, (d) depreciation and amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and (e) nonrecurring charges relating to the Acquisition, to the extent that such charges are set forth in "Unaudited Pro Forma Financial Information," including the notes thereto, in each case on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization of, a Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in the same proportion) that the Net Income of such Person was included in calculating Consolidated Net Income. "Consolidated Interest Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, guarantees, redeems or repays any Indebtedness (other than revolving credit borrowings) subsequent to the commencement of the period for which the Consolidated Interest Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Consolidated Interest Coverage Ratio is made (the "Calculation Date"), then the Consolidated Interest Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee, redemption or repayment of Indebtedness as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (a) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, and other transactions consummated by the Company or any of its Restricted Subsidiaries with respect to which pro forma effect may be given pursuant to Article 11 of Regulation S-X under the Securities Act, in each case during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (d) of the proviso set forth in the definition of Consolidated Net Income, (b) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded and (c) the Consolidated Interest Expense attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, 3 9 but only to the extent that the obligations giving rise to such Consolidated Interest Expense will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "Consolidated Interest Expense" means, with respect to any Person for any period, the sum, without duplication, of (a) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), (b) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period and (c) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon), in each case, on a consolidated basis and in accordance with GAAP. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (a) if the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting is a gain, the Net Income of such Person shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof, (b) if the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting is a loss, the Net Income of such Person shall be excluded except to the extent that (i) the Company or any of its Restricted Subsidiaries funds such loss by means of the provision of additional capital to such Person or (ii) the aggregate losses of such Person excluded pursuant to this clause (b) exceed the aggregate gains of such Person excluded pursuant to clause (a), (c) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (d) the cumulative effect of a change in accounting principles shall be excluded and (e) solely for purposes of calculating Consolidated Interest Expense for purposes of Section 4.09 hereof. The Net Income of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Restricted Subsidiaries. "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (a) the consolidated equity of the common stockholders of such Person and its consolidated Restricted Subsidiaries as of such date, plus (b) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Stock) that by its terms is not entitled to the payment of dividends unless such dividends may be declared and paid only out of net earnings in respect of the year of such declaration and payment, but only to the extent of any cash received by such Person upon issuance of such preferred stock, less (i) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within 12 months after the acquisition of such business) subsequent to the Closing Date in the book value of any asset owned by such Person or a consolidated Restricted Subsidiary of such Person, (ii) all investments as of such date in unconsolidated Subsidiaries and in Persons that are not Restricted Subsidiaries and (iii) all unamortized debt discount and expense and unamortized deferred charges as of such date, in each case determined in accordance with GAAP. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (a) was a member of such Board of Directors on the Closing Date or (b) 4 10 was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Company. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.07 hereof, substantially in the form of Exhibit A-1 hereto, except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, until a successor shall have been appointed and become such pursuant to the applicable provision of this Indenture, and, thereafter, "Depositary" shall mean or include such successor. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof (or of any security into which it is convertible or for which it is exchangeable) have the right to require the issuer to repurchase such Capital Stock (or such security into which it is convertible or for which it is exchangeable) upon the occurrence of an Asset Sale or a Change of Control shall not constitute Disqualified Stock if such Capital Stock (and all such securities into which it is convertible or for which it is exchangeable) provides that the issuer thereof will not repurchase or redeem any such Capital Stock (or any such security into which it is convertible or for which it is exchangeable) pursuant to such provisions prior to compliance by the Company with Sections 3.07, 4.10 or 4.15 hereof, as the case may be. "Domestic Restricted Subsidiary" means a Restricted Subsidiary that is not formed, incorporated or organized in a jurisdiction outside of the United States. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means the Notes issued in the Exchange Offer pursuant to Section 2.06(f) hereof. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. 5 11 "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Existing Indebtedness" means Indebtedness (other than Indebtedness under the New Credit Facility) in existence on the Closing Date, until such Indebtedness is repaid. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A-1 or A-2 hereto issued in accordance with Article Two hereof. "Global Note Legend" means the legend set forth in Section 2.06(g)(ii) to be placed on all Global Notes issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States is pledged. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Guarantors" means all Domestic Restricted Subsidiaries and Canadian Subsidiaries of the Company existing on the Closing Date (other than AH Industries, Inc.), and all Subsidiaries of the Company created or acquired by the Company after the Closing Date that becomes a Guarantor in accordance with Section 4.13 hereof. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (a) currency exchange or interest rate swap, cap or collar agreements and (b) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange or interest rates. "Holder" means a Person in whose name a Note is registered. "IAI Global Note" means the Global Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold or transferred to Institutional Accredited Investors. "Indebtedness" means, with respect to any Person, (a) any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued 6 12 expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, (b) all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) and (c) to the extent not otherwise included, the Guarantee by such Person of any indebtedness of any other Person. "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP, excluding, however, trade accounts receivable and bank deposits made in the ordinary course of business. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in Section 4.07 hereof. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any option or other agreement to sell or give a Lien). "Limited-Recourse Debt" means Indebtedness (a) as to which neither the Company nor any of its Restricted Subsidiaries (i) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or is otherwise directly or indirectly liable (as a guarantor or otherwise) or (ii) constitutes the lender, except, in the case of clauses (i) and (ii), to the extent permitted by Sections 4.07 and 4.09 hereof, (b) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company 7 13 or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity and (c) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries, except to the extent of any Indebtedness incurred by the Company or any of its Restricted Subsidiaries in accordance with clause (a) (i) above. "Liquidated Damages" means all liquidated damages then owing pursuant to Section 5 of the Registration Rights Agreement. "Make-Whole Amount" means, with respect to any Note, an amount equal to the excess, if any, of (a) the present value of the remaining principal, premium and interest payments that would be payable with respect to such Note if such Note were redeemed on October 1, 2002, computed using a discount rate equal to the Treasury Rate plus 75 basis points, over (b) the outstanding principal amount of such Note. "Make-Whole Average Life" means, with respect to any date of redemption of Notes, the number of years (calculated to the nearest one-twelfth) from such redemption date to October 1, 2002. "Make-Whole Price " means, with respect to any Note, the greater of (a) the sum of the principal amount of and Make-Whole Amount with respect to such Note, and (b) the redemption price of such Note on October 1, 2002. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (a) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (i) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (ii) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (b) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (a) the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, (b) taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), (c) amounts applied to the repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale and (d) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "New Credit Facility" means that certain credit agreement, dated the Closing Date, by and among the Company and BankBoston, N.A., as administrative agent, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Note Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. 8 14 "Non-U.S. Person" means a person who is not a U.S. Person. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Offering" means the Offering of the Notes by the Company. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 11.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee. "Participant" means, with respect to DTC, Euroclear or Cedel, a Person who has an account with DTC, Euroclear or Cedel, respectively (and, with respect to DTC, shall include Euroclear and Cedel). "Permitted Investments" means (a) any Investment in the Company or in a Restricted Subsidiary of the Company; (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary of the Company or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (d) any Restricted Investment made as a result of the receipt of non-cash consideration from (i) an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof or (ii) a disposition of assets that does not constitute an Asset Sale; (e) any Investments received solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (f) loans or advances to owner-operators and employees of the Company or its Restricted Subsidiaries made in the ordinary course of business; (g) Investments in an amount not to exceed $5.0 million in Haul Insurance Limited to the extent required by applicable laws or regulations or pursuant to any directive or request (whether or not having the force of law) of any governmental authority having jurisdiction over Haul Insurance Limited; (h) Investments received in connection with the settlement of any ordinary course obligations owed to the Company or any of its Restricted Subsidiaries; (i) other Investments in businesses related to the businesses operated by the Company and its Restricted Subsidiaries in an aggregate amount not to exceed $30.0 million, provided that the aggregate amount of such Investments shall not exceed $15.0 million in any calendar year; and (j) investments by the Company or a Restricted Subsidiary of the Company in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person or assets in connection with a Qualified Receivables Transaction; provided that any Investment in any such Person is in the form of a Purchase Money Note, an equity interest or interests in accounts receivable generated by the Company or a Subsidiary of the Company and transferred to any Person in connection with a Qualified Receivables Transaction or any such Person owning such accounts receivable. 9 15 "Permitted Liens" means (a) Liens in favor of the Company or any of its Restricted Subsidiaries; (b) Liens securing Obligations incurred pursuant to clause (i) of the second paragraph of Section 4.09 hereof; (c) Liens on property or Equity Interests of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets or Equity Interests other than those of the Person merged into or consolidated with the Company; (d) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (e) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (f) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (v) of the second paragraph of Section 4.09 hereof covering only the assets acquired with such Indebtedness; (g) Liens existing on the Closing Date; (h) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefore; (i) Liens securing the Notes or any Guarantee thereof, (j) Liens securing Permitted Refinancing Indebtedness to the extent that the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded was permitted to be secured by a Lien; (k) Liens on Investments of the Company or any of its Restricted Subsidiaries in any Person that is not a Restricted Subsidiary of the Company to secure the Indebtedness of such Person; (l) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $2.0 million at any one time outstanding and that (i) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (ii) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary and (m) Liens on assets of a Receivables Subsidiary securing Indebtedness incurred in connection with a Qualified Receivables Transaction, provided that such Indebtedness was incurred in connection with such Qualified Receivables Transaction. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries; provided that: (a) the principal amount (or accredit value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accredit value, if applicable), plus premium and accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith); (b) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (c) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (d) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary that is an obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof 10 16 (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "Principals" means the directors and executive officers of the Company on the Closing Date, as set forth under "Management" in the offering memorandum of the Company, dated September 19, 1997 with respect to the Notes, their respective spouses and lineal descendants, and any Affiliate of any of the foregoing. "Private Placement Legend" means the legend set forth in Section 2.06(g)(i) hereof to be placed on all Notes issued under this Indenture except as otherwise permitted by the provisions of this Indenture. "Purchase Money Note" means a promissory note evidencing a line of credit, which may be irrevocable, from, or evidencing other Indebtedness owed to, the Company or any Subsidiary of the Company in connection with a Qualified Receivables Transaction, which note shall be repaid from cash available to the maker of such note, other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors in respect of interest, principal and other amounts owing to such investors and amounts paid in connection with the purchase of newly generated receivables. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Qualified Receivables Transaction" means any transaction or series of transactions that may be entered into by the Company or any Subsidiary of the Company pursuant to which the Company or any Subsidiary of the Company may sell, convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a transfer by the Company or any Subsidiary of the Company) and (b) any other person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any Subsidiary of the Company, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable. "Receivables Subsidiary" means a Wholly Owned Subsidiary of the Company (other than a Guarantor), which engages in no activities other than in connection with the financing of accounts receivable and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary (a) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any other Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness)) pursuant to Standard Securitization Undertakings, (ii) is recourse to or obligates the Company or any other Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings or (iii) subjects any property or asset of the Company or any other Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (b) with which neither the Company nor any other Subsidiary of the Company has any material contract, agreement, arrangement or understanding (except in connection with a Purchase Money Note or Qualified Receivables Transaction) other than on terms no less favorable to the Company or such other Subsidiary of the Company than those that might be obtained at the time from persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing accounts receivable, and (c) to which neither the Company nor any other Subsidiary of the Company has any obligation to maintain or preserve such entity's financial condition or cause such entity 11 17 to achieve certain levels of operating results. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers' Certificate certifying, to the best of such officer's knowledge and belief after consulting with counsel, that such designation complied with the foregoing conditions. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Closing Date by and among the Company and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a Regulation S Temporary Global Note or Regulation S Permanent Global Note. "Regulation S Permanent Global Note" means a permanent global Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Restricted Period. "Regulation S Temporary Global Note" means a single temporary global Note in the form of Note attached hereto as Exhibit A-2 bearing the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Regulation S. "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. "Restricted Global Notes" means the 144A Global Note, the IAI Global Note and the Regulation S Global Notes, each of which shall bear the Private Placement Legend. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Period" means the 40-day restricted period as defined in Regulation S. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Rigs" means specialized tractor-trailers used to haul to automobiles and light trucks. "Rule 144" means Rule 144 under the Securities Act. "Rule 144A" means Rule 144A under the Securities Act. 12 18 "Rule 903" means Rule 903 under the Securities Act. "Rule 904" means Rule 904 under the Securities Act. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement. "Significant Subsidiary" means any Restricted Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the date hereof. "Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any Subsidiary of the Company which are reasonably customary in an accounts receivable transaction. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subsidiary" means, with respect to any Person, (a) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (b) any partnership (i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (ii) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "Subsidiary Guarantee" means the Guarantee of the Notes by each of the Guarantors pursuant to Article Ten hereof in the form of Subsidiary Guarantee attached hereto as Exhibit E and any additional Guarantee of the Notes to be executed by any Subsidiary of the Company pursuant to Section 4.13 hereof. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Transfer Restricted Securities" means securities that bear or are required to bear the legend set forth in Section 2.06(g) hereof. "Treasury Rate" means, at any time of computation, the yield to maturity at such time (as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519), which has become publicly available at least two business days prior to the date of the redemption notice or, if such Statistical Release is no longer published, any publicly available source of similar market data) of United States Treasury securities with a constant maturity most nearly equal to the Make-Whole Average Life; 13 19 provided, however, that if the Make-Whole Average Life is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the Make-Whole Average Life is less than one year, the weekly average yield on actually traded United States Treasury Securities adjusted to a constant maturity of one year shall be used. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Global Note" means a permanent global note in the form of Exhibit A-1 attached hereto that bears the Global Note Legend and the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with and registered in the name of the Depositary, representing a series of Notes that do not bear the Private Placement Legend. "Unrestricted Global Note" means one or more global Notes that do not and are not required to bear the Private Placement Legend and are deposited with and registered in the name of the Depositary or its nominee. "Unrestricted Definitive Note" means one or more Definitive Notes that do not and are not required to bear the Private Placement Legend. "Unrestricted Subsidiary" means any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary (a) has no Indebtedness other than Limited-Recourse Debt, (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding comply with Section 4.11 hereof and (c) except to the extent permitted by Section 4.07 hereof, is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (i) to subscribe for additional Equity Interests or (ii) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results. "U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. 14 20 SECTION 1.02. OTHER DEFINITIONS.
Defined in Term Section "Affiliate Transaction"........................................ 4.11 "Asset Sale Offer"............................................. 3.09 "Change of Control Offer"...................................... 4.15 "Change of Control Payment".................................... 4.15 "Change of Control Payment Date"............................... 4.15 "Covenant Defeasance".......................................... 8.03 "Event of Default"............................................. 6.01 "Excess Proceeds".............................................. 4.10 "incur"........................................................ 4.09 "Legal Defeasance" ............................................ 8.02 "Offer Amount"................................................. 3.09 "Offer Period"................................................. 3.09 "Paying Agent"................................................. 2.03 "Permitted Debt................................................ 4.09 "Purchase Date"................................................ 3.09 "Registrar".................................................... 2.03 "Restricted Payments".......................................... 4.07
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; "obligor" on the Notes means the Company and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; 15 21 (c) "or" is not exclusive; (d) words in the singular include the plural, and in the plural include the singular; (e) provisions apply to successive events and transactions; and (f) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2 THE NOTES SECTION 2.01. FORM AND DATING. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained, the Guarantors in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. Notes issued in global form shall be substantially in the form of Exhibits A-1 or A-2 attached hereto (including the Global Note Legend and the "Schedule of Exchanges in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A-1 attached hereto (but without the Global Note Legend and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Restricted Period shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel Bank certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to 16 22 another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note or an IAI Global Note, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Company. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in Regulation S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes that are held by the Agent Members through Euroclear or Cedel Bank. SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Notes for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Notes and may be in facsimile form. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by an Officer, authenticate Notes for original issue up to the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate principal amount of Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying 17 23 Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Notes. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA ss. 312(a). SECTION 2.06. TRANSFER AND EXCHANGE. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary or (ii) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Company for Definitive Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 18 24 2.07 and 2.11 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to Section 2.07 or 2.11 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the procedures of the Depositary therefor. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. The Trustee shall have no obligation to ascertain the Depositary's compliance with any such restrictions on transfer. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs as applicable: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period transfers of beneficial interests in the Temporary Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred only to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests (other than transfers of beneficial interests in a Global Note to Persons who take delivery thereof in the form of a beneficial interest in the same Global Note), the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in the specified Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer ore exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this 19 25 Indenture, the Notes and otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. (iii) Transfer of Beneficial Interests to Another Restricted Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in another Restricted Global Note if the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transferee will take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver (x) a certificate in the form of Exhibit B hereto, including the certifications in item (3) thereof, (y) to the extent required by item 3(d) of Exhibit B hereto, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act and such beneficial interest is being transferred in compliance with any applicable blue sky securities laws of any State of the United States and (z) if the transfer is being made to an Institutional Accredited Investor and effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A under the Securities Act, Rule 144 under the Securities Act or Rule 904 under the Securities Act, a certificate from the transferee in the form of Exhibit D hereto. (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in the Unrestricted Global Note. Beneficial interests in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in the Unrestricted Global Note or transferred to Persons who take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in the Unrestricted Global Note, a 20 26 certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such beneficial interest is being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in any Restricted Global Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Notes. (i) If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon receipt by the Registrar of the following documentation (all of which may be submitted by facsimile): (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; 21 27 (E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(d) thereof, a certificate from the transferee to the effect set forth in Exhibit D hereof and, to the extent required by item 3(d) of Exhibit B, an Opinion of Counsel from the transferee or the transferor reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act and such beneficial interest is being transferred in compliance with any applicable blue sky securities laws of any State of the United States; (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Definitive Notes issued in exchange for beneficial interests in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such names and in such authorized denominations as the holder shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Definitive Notes issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be (A) exchanged for a Definitive Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act or (B) transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to the conditions set forth in clause (A) above or unless the transfer is pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (iii) Notwithstanding 2.06(c)(i), a holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; 22 28 (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company, to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such beneficial interest in a Restricted Global Note is being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. (iv) If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii), the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Definitive Notes issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in such names and in such authorized denominations as the holder shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Definitive Notes issued in exchange for a beneficial interest pursuant to this section 2.06(c)(iii) shall not bear the Private Placement Legend. Beneficial interests in an Unrestricted Global Note cannot be exchanged for a Definitive Note bearing the Private Placement Legend or transferred to a Person who takes delivery thereof in the form of a Definitive Note bearing the Private Placement Legend. (d) Transfer or Exchange of Definitive Notes for Beneficial Interests. (i) If any Holder of Restricted Definitive Notes proposes to exchange such Notes for a beneficial interest in a Restricted Global Note or to transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation (all of which may be submitted by facsimile): 23 29 (A) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Definitive Notes are being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Definitive Notes are being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Definitive Notes are being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Definitive Notes are being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(d) thereof, a certificate from the transferee to the effect set forth in Exhibit D hereof and, to the extent required by item 3(d) of Exhibit B, an Opinion of Counsel from the transferee or the transferor reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act and such Definitive Notes are being transferred in compliance with any applicable blue sky securities laws of any State of the United States; (F) if such Definitive Notes are being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such Definitive Notes are being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cancel the Definitive Notes, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the IAI Global Note. (ii) A Holder of Restricted Definitive Notes may exchange such Notes for a beneficial interest in the Unrestricted Global Note or transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in the Unrestricted Global Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; 24 30 (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; (2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such Definitive Notes are being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. (iii) A Holder of Unrestricted Definitive Notes may exchange such Notes for a beneficial interest in the Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in the Unrestricted Global Note. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the Unrestricted Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of beneficial interests transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above. (e) Transfer and Exchange of Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall 25 31 provide any additional certifications, documents and information, as applicable, pursuant to the provisions of this Section 2.06(e). (i) Restricted Definitive Notes may be transferred to and registered in the name of Persons who take delivery thereof if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver (x) a certificate in the form of Exhibit B hereto, including the certifications in item (3) thereof, (y) to the extent required by item 3(d) of Exhibit B hereto, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act and such beneficial interest is being transferred in compliance with any applicable blue sky securities laws of any State of the United States and (z) if the transfer is being made to an Institutional Accredited Investor and effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A under the Securities Act, Rule 144 under the Securities Act or Rule 904 under the Securities Act, a certificate from the transferee in the form of Exhibit D hereto. (ii) Restricted Definitive Notes may be exchanged by any Holder thereof for an Unrestricted Definitive Note or transferred to Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder, in the case of an exchange, or the transferee, in the case of a transfer, is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a 26 32 certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such Restricted Definitive Note is being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. (iii) A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request for such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. Unrestricted Definitive Notes cannot be exchanged for or transferred to Persons who take delivery thereof in the form of a Restricted Definitive Note. (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.02, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by persons that are not (x) broker-dealers, (y) Persons participating in the distribution of the Exchange Notes or (z) Persons who are affiliates (as defined in Rule 144) of the Company and accepted for exchange in the exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrent with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company shall execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount. (g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A 27 33 "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS NOT ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT). THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY, (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE." (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." (iii) Regulation S Temporary Global Note Legend.he Regulation S Temporary Global Note shall bear a legend in substantially the following form: 28 34 "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON." (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note, by the Trustee or by the Depositary at the direction of the Trustee, to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note, by the Trustee or by the Depositary at the direction of the Trustee, to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 4.10, 4.15 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. 29 35 (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. SECTION 2.07. REPLACEMENT NOTES. If any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon the written order of the Company signed by two Officers of the Company, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. SECTION 2.08. OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. SECTION 2.09. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Trustee knows are so owned shall be so disregarded. 30 36 SECTION 2.10.TEMPORARY NOTES. Until definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes upon a written order of the Company signed by two Officers of the Company. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. SECTION 2.11.CANCELLATION. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all cancelled Notes shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. SECTION 2.12.DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. ARTICLE 3 REDEMPTION AND PREPAYMENT SECTION 3.01.NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (a) the clause of this Indenture pursuant to which the redemption shall occur, (b) the redemption date, (c) the principal amount of Notes to be redeemed and (e) the redemption price. 31 37 SECTION 3.02.SELECTION OF NOTES TO BE REDEEMED. If less than all of the Notes are to be redeemed at any time, selection of Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption. SECTION 3.03. NOTICE OF REDEMPTION. Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date (unless a shorter time is acceptable to the Trustee), an Officers' 32 38 Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. One Business Day prior to the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered. SECTION 3.07. OPTIONAL REDEMPTION. (a) Prior to October 1, 2002, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the Make-Whole Price, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date. On and after October 1, 2002, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on October 1 of the years indicated below: 33 39
YEAR PERCENTAGE ---- ---------- 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.3125% 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.8750% 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.4375% 2005 and thereafter . . . . . . . . . . . . . . . . . . . . . . . 100.0000%
(b) Notwithstanding the foregoing, at any time on or prior to October 1, 2000, the Company may redeem up to 35% of the Notes at a redemption price equal to 108.625% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net proceeds of one or more sales of Equity Interests (other than Disqualified Stock) of the Company, provided that (i) at least $97.5 million of Notes remain outstanding immediately following each such redemption and (ii) such redemption shall occur within 90 days of the date of the consummation of such sale. (c) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. SECTION 3.08. MANDATORY REDEMPTION. Except as set forth under Sections 4.10 and 4.15 hereof, the Company shall not be required to make mandatory redemption payments with respect to the Notes. SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS. In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"), it shall follow the procedures specified below. The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the principal amount at maturity of Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: 34 40 (a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrete or accrue interest; (d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or accrue interest after the Purchase Date; (e) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may only elect to have all of such Note purchased and may not elect to have only a portion of such Note purchased; (f) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (g) that Holders shall be entitled to withdraw their election if the Company, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written request from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Purchase Date. 35 41 Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. ARTICLE 4 COVENANTS SECTION 4.01. PAYMENT OF NOTES. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace period) at the same rate to the extent lawful. SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03. SECTION 4.03. REPORTS. (a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Holders of Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if 36 42 the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial information and results of operations of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the SEC, the Company will file a copy of all such information and reports with the SEC for public availability (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. (b) For so long as any Notes remain outstanding, the Company and its Restricted Subsidiaries shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A (d) (4) under the Act. SECTION 4.04. COMPLIANCE CERTIFICATE. (a) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and the Pledge Agreement, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article Four or Article Five hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. 37 43 SECTION 4.05. TAXES. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. SECTION 4.06. STAY, EXTENSION AND USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. SECTION 4.07. RESTRICTED PAYMENTS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, (a) declare or pay any dividend or make any other payment or distribution on account of the Company's Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company) or to any direct or indirect holders of the Company's Equity Interests in their capacity as such (other than dividends or distributions (i) payable in Equity Interests (other than Disqualified Stock) of the Company or (b) to the Company or any Guarantor); (b) purchase, redeem or otherwise acquire or retire for value (including without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company (other than any such Equity Interests owned by the Company or any Guarantor); (c) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Company or any Guarantor that is subordinated to the Notes or any Guarantee thereof, except a payment of interest or principal at Stated Maturity; or (d) make any Restricted Investment (all such payments and other actions set forth in clauses (a) through (d) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in the first paragraph of Section 4.09; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Closing Date (excluding Restricted Payments permitted by clause (ii) through (vii) of the next succeeding paragraph), is less than the sum of (1) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from October 1, 1997 to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such 38 44 Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (2) 100% of the aggregate net proceeds received by the Company from the issue or sale since the Closing Date of Equity Interests of the Company (other than Disqualified Stock), plus (3) the amount by which Indebtedness of the Company and its Restricted Subsidiaries is reduced on the balance sheet of the Company upon the conversion or exchange (other than by a Restricted Subsidiary of the Company) subsequent to the Closing Date of any such Indebtedness for Equity Interests (other than Disqualified Stock) of the Company, plus (4) to the extent that any Restricted Investment that was made after the Closing Date is sold for cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment, plus (5) in the event that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary, the lesser of (A) an amount equal to the fair value (as determined by the Board of Directors) of the Company's Investments in such Restricted Subsidiary and (B) the amount of Restricted Investments previously made by the Company and its Restricted Subsidiaries in such Unrestricted Subsidiary. The foregoing provisions will not prohibit (i) the payment of any dividend within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Indenture; (ii) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Equity Interests of the Company or any Restricted Subsidiary in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company) of, other Equity Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (c)(2) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any member of the Company's (or any of its Restricted Subsidiaries') management or board of directors pursuant to any management equity subscription agreement, stock option agreement or other similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $500,000 in any twelve-month period and no Default or Event of Default shall have occurred and be continuing immediately after such transaction; (v) the repurchase or other acquisition of subordinated Indebtedness in anticipation of satisfying a sinking fund or principal payment obligation, in each case due within one year of the date of repurchase or other acquisition, provided that the date such sinking fund or principal payment obligation becomes due is prior to the final maturity date of the Notes; (vi) repurchases of Equity Interests that may be deemed to occur upon the exercise of options, warrants or other rights to acquire Capital Stock of the Company to the extent that such Equity Interests represent a portion of the exercise price of such options, warrants or other rights; and (vii) additional Restricted Payments in an amount not to exceed $5.0 million. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined in good faith by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee. Not later than 30 days following the end of any fiscal quarter in which any Restricted Payments were made, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payments were permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed. 39 45 The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of this covenant. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the greatest of (i) the net book value of such Investments at the time of such designation, (ii) the fair market value of such Investments at the time of such designation and (iii) the original fair market value of such Investments at the time they were made. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the definition of an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the Company shall be in default of such Section). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under Section 4.09 hereof is calculated on a pro forma basis as if such designation had occurred at the beginning of the four- quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i) (a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the Closing Date, (b) the New Credit Facility as in effect as of the Closing Date, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are no more restrictive with respect to such dividend and other payment restrictions than those contained in the New Credit Facility as in effect on the Closing Date, (c) the Notes, any Guarantee thereof and this Indenture, (d) applicable law, (e) any instrument governing Indebtedness or Equity Interests of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the Equity Interests, properties or assets of any Person, other than the Person, or the Equity Interests, property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this 40 46 Indenture to be incurred, (f) by reason of customary nonassignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (g) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, (h) customary restrictions in asset or stock sale agreements limiting transfer of such assets or stock pending the closing of such sale, (i) customary non-assignment provisions in contracts entered into in the ordinary course of business, (j) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive than those contained in the agreements governing the Indebtedness being refinanced, or (k) any Purchase Money Note, or other Indebtedness or contractual requirements incurred with respect to a Qualified Receivables Transaction relating to a Receivables Subsidiary. SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and that the Company's Restricted Subsidiaries will not issue any shares of preferred stock (other than to the Company or a Wholly Owned Restricted Subsidiary of the Company); provided, however, that the Company and the Guarantors may incur Indebtedness (including Acquired Debt) if the Consolidated Interest Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such four-quarter period. The provisions of the first paragraph of this covenant will not apply to the incurrence of any of the following (collectively, "Permitted Debt"): (i) the incurrence by the Company and the Guarantors of Indebtedness under (a) the New Credit Facility and (b) Capital Lease Obligations and purchase money financing in respect of property, plant and equipment, provided that the aggregate amount of Indebtedness incurred pursuant to this clause (i) shall not exceed at any time outstanding the greater of (1) $230.0 million and (2) the sum of (A) 80% of the consolidated accounts receivable of the Company as shown on the Company's most recent balance sheet, plus (B) 60% of the consolidated inventory of the Company as shown on the Company's most recent balance sheet, plus (C) 50% of the consolidated property, plant and equipment, net of depreciation, of the Company as shown on the Company's most recent balance sheet; (ii) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes, the Subsidiary Guarantees and this Indenture; (iii)the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iv) the incurrence by the Company and the Guarantors of additional Indebtedness in an aggregate amount not to exceed $10.0 million at any time outstanding; (v) the incurrence by the Company and the Guarantors of Indebtedness in connection with the acquisition of assets or a new Restricted Subsidiary; provided that such Indebtedness was incurred 41 47 by the prior owner of such assets or such Restricted Subsidiary prior to such acquisition by the Company and the Guarantors and was not incurred in connection with, or in contemplation of, such acquisition by the Company and the Guarantors; and provided further that the aggregate amount of Indebtedness incurred pursuant to this clause (v) does not exceed $5.0 million; at any time outstanding; (vi) the incurrence by the Company and its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness that was permitted to be incurred by the first paragraph, or by clauses (ii) through (ix) of the second paragraph of this Section 4.09; (vii) the incurrence of Indebtedness between or among the Company and its Restricted Subsidiaries; provided, however, that any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary, and any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be; (viii) the incurrence by the Company and its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging (a) interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding or (b) foreign currency risk; (ix) the incurrence of Indebtedness by a Restricted Subsidiary of the Company that is not a Guarantor in an aggregate amount not to exceed the sum of (a) 80% of the accounts receivable of such Subsidiary as shown on such Subsidiary's most recent balance sheet, plus (b) 60% of the inventory of such Subsidiary as shown on such Subsidiary's most recent balance sheet, plus (c) 50% of the property, plant and equipment, net of depreciation, of such Subsidiary as shown on such Subsidiary's most recent balance sheet; (x) the guarantee by the Company or any Guarantor of Indebtedness that was permitted to be incurred by another provision of this Section 4.09; and (xi) Indebtedness of a Receivables Subsidiary that is not recourse to the Company or any of its Restricted Subsidiaries (other than Standard Securitization Undertakings) incurred in connection with a Qualified Receivables Transaction. For purposes of determining the amount of any Indebtedness of any Person under this Section 4.09, (a) there shall be no double counting of direct obligations, Guarantees and reimbursement obligations for letter of credit; (b) the principal amount of any Indebtedness of such Person arising by reason of such Person having granted or assumed a Lien on its property to secure Indebtedness of another Person shall be the lower of the fair market value of such property and the principal amount of such Indebtedness outstanding (or committed to be advanced) at the time of determination; (c) the amount of any Indebtedness of such Person arising by reason of such Person having Guaranteed Indebtedness of another Person where the amount of such Guarantee is limited to an amount less than the principal amount of the Indebtedness so Guaranteed shall be such amount as so limited; (d) Indebtedness shall not include a non-recourse pledge by the Company or any of its Restricted Subsidiaries of Investments in any Person that is not a Restricted Subsidiary of the Company to secure the Indebtedness of such Person; and (e) Indebtedness of the Company and its Restricted Subsidiaries shall not include Indebtedness of a Restricted 42 48 Subsidiary whose assets consist solely of partnership or similar interests in another person that is not a Restricted Subsidiary of the Company, where the obligations with respect to such Indebtedness arise as a matter of law from the obligations of such other Person. For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (x) above or is entitled to be incurred pursuant to the first paragraph of this Section 4.09, the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this Section 4.09 and such item of Indebtedness will be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph hereof. Accrual of interest, the accretion of accredit value and the payment of interest in the form of additional Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes of this Section 4.09. SECTION 4.10. ASSET SALES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents; provided that the amount of (a) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or such Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Subsidiary Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability and (b) any securities, notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are immediately converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) shall be deemed to be cash for purposes of this provision. Within 365 days of the receipt of any Net Proceeds from an Asset Sale, the Company, at its option, may apply such Net Proceeds to the acquisition of a controlling interest in another business, the making of a capital expenditure or the acquisition of other assets (other than assets that would be classified as current assets in accordance with GAAP), in each case, in the same or a similar line of business as the Company and its Restricted Subsidiaries, or in any business reasonably complementary, related or incidental thereto, as determined in good faith by the Board of Directors. Pending the final application of any such Net Proceeds, the Company may temporarily reduce borrowings under the New Credit Facility or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be required to make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase, in accordance with the procedures set forth in this Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the 43 49 Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of an Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. SECTION 4.11. TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or such Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $3.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (b) except in the case of the provision of services in the ordinary course of business to, or the receipt of services in the ordinary course of business from, any Person who is an Affiliate of the Company solely by reason of an Investment in such Person by the Company or its Subsidiaries, with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. The foregoing provisions will not prohibit (i) any employment agreement or other compensation plan or arrangement in the ordinary course of business and either consistent with past practice or approved by a majority of the disinterested members of the Board of Directors; (ii) transactions between or among the Company and/or its Restricted Subsidiaries; (iii) any Permitted Investment or any Restricted Payment that is permitted by Section 4.07 hereof; (iv) sales of Equity Interests (other than Disqualified Stock) to Affiliates of the Company; (v) transactions with Haul Insurance Limited, provided that no less than once each calendar year, the Company delivers to the Trustee a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such transactions are in the ordinary course of business and consistent with past practices and prudent insurance underwriting standards; (vi) transactions in existence on the Closing Date, and any modifications thereof or extensions thereto the terms of which are not materially more adverse to the Company than those in existence on the Closing Date, including, in each case, all future payments pursuant thereto; and (vii) sales of accounts receivable and other related assets customarily transferred in an asset securitization transaction involving accounts receivable to a Receivables Subsidiary in a Qualified Receivables Transaction. SECTION 4.12. LIENS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien securing Indebtedness or trade payables on any asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom, except Permitted Liens, unless the Notes are equally and ratably secured with the obligations so secured until such time as such obligations are no longer secured by a Lien. 44 50 SECTION 4.13. ADDITIONAL SUBSIDIARY GUARANTEES. If the Company or any of its Restricted Subsidiaries shall acquire or create another Domestic Restricted Subsidiary after the Closing Date, or any Unrestricted Subsidiary shall cease to be an Unrestricted Subsidiary and shall become a Domestic Restricted Subsidiary, then such Subsidiary shall execute a Subsidiary Guarantee of the Notes and deliver an Opinion of Counsel, in accordance with the terms of this Indenture. SECTION 4.14. CORPORATE EXISTENCE. Subject to Article Five hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes. SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL. (a) Upon the occurrence of a Change of Control, the Company shall be obligated to make an offer (a "Change of Control Offer") to each Holder of Notes to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes at an offer price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase (the "Change of Control Payment"). Within 30 days following a Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"). Such notice, which shall govern the terms of the Change of Control offer, shall state: (i) that the Change of Control Offer is being made pursuant to this Section 4.15 and that all Notes tendered will be accepted for payment; (ii) the purchase price and the purchase date; (iii) that any Note not tendered will continue to accrue interest; (iv) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (v) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (vi) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and (vii) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent 45 51 such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. (b) On the Change of Control Payment Date, the Company shall, to the extent lawful, (i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. SECTION 4.16. PAYMENTS FOR CONSENT. Neither the Company nor any of its Restricted Subsidiaries shall, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. ARTICLE 5 SUCCESSORS SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS. Neither the Company nor any Guarantor will consolidate or merge with or into (whether or not the Company or such Guarantor, as the case may be, is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another Person unless (i) the Company or such Guarantor, as the case may be, is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company or such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the Person formed by or surviving any such consolidation or merger (if other than the Company or a Guarantor) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company or such Guarantor, as the case may be, under the Notes or such Guarantor's Guarantee thereof and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company or such Guarantor with or into another Guarantor or a Wholly Owned Restricted Subsidiary of the Company, or a merger of a Guarantor with or into another Person in connection with a Permitted Investment in such Person, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (A) 46 52 will have Consolidated Net Worth immediately after the transaction equal to or greater than the Consolidated Net Worth of the Company immediately preceding the transaction and (B) will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof. SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.01 hereof. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if: (a) default for 30 days in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Notes; (b) default in payment when due of the principal of or premium, if any, on the Notes; (c) failure by the Company or any of its Restricted Subsidiaries to comply with Section 4.15 hereof; (d) failure by the Company or any of its Restricted Subsidiaries to comply with Sections 4.07, 4.09, 4.10 or 5.01 hereof, which default continues for 60 days; (e) failure by the Company or any of its Restricted Subsidiaries for 60 days after written notice by the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes to comply with any of its other agreements in this Indenture or the Notes; (f) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists or is created after the Closing Date, which default: 47 53 (i) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (ii) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5.0 million or more; (g) failure by the Company or any of its Restricted Subsidiaries lo pay final judgments aggregating in excess of $5.0 million and either: (i) any creditor commences enforcement proceedings upon any such judgment or (ii) such judgments are not paid, discharged or stayed for a period of 60 days; (h) except as permitted by this Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee; and (i) the Company or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; or (j) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case; (ii) Restricted appoints a Custodian of the Company or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or 48 54 (iii) orders the liquidation of the Company or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days. SECTION 6.02. ACCELERATION. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising under clauses (i) and (j) of Section 6.01 with respect to the Company, any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of the Notes may not enforce this Indenture or the Notes except as provided in this Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to Section 3.07 hereof, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.04. WAIVER OF PAST DEFAULTS. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium if any, or interest on, the Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every 49 55 purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. SECTION 6.05. CONTROL BY MAJORITY. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. SECTION 6.06. LIMITATION ON SUITS. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium and Liquidated Damages, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium and Liquidated Damages, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. 50 56 SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article Six, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium and Liquidated Damages, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and Liquidated Damages, if any and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party 51 57 litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7 TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii)the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. 52 58 (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. 53 59 SECTION 7.05. NOTICE OF DEFAULTS. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA Section 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA Section 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses after the occurrence of an Event of Default specified in Section 6.01(i) or Section 6.01(j) hereof, such expenses are intended to constitute expenses of administration under any Bankruptcy Law. 54 60 To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(i) or (j) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent applicable. SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10 hereof, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The 55 61 retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section 310(b). SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article Eight. SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the 56 62 same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium and Liquidated Damages, if any, and interest on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Article Two and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (d) this Article Eight. Subject to compliance with this Article Eight, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. SECTION 8.03. COVENANT DEFEASANCE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13 and 4.15 hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of Default. SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of and premium, interest and Liquidated Damages, if any, on the outstanding Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (b) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (ii) since the 57 63 Closing Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (f) the Company shall have delivered to the Trustee an opinion of counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (h) the Company shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. 58 64 The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.06. REPAYMENT TO COMPANY. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 8.07. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES. 59 65 Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee may amend or supplement this Indenture, the Notes or the Subsidiary Guarantees without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes; (c) to provide for the assumption of the Company's or the Guarantors' obligations to the Holders of the Notes in the case of a merger or consolidation pursuant to Article Five hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Note; or (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and 4.15 hereof) and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Notes or the Subsidiary Guarantees may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes). Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. 60 66 It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than provisions relating to Sections 3.09, 4.10 and 4.15); (c) reduce the rate of or change the time for payment of interest on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, interest or Liquidated Damages, if any, on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, interest or Liquidated Damages, if any, on the Notes; (g) waive a redemption payment with respect to any Note (other than a payment required by Sections 3.09, 4.10 and 4.15 hereof); (h) release any Guarantor from its Subsidiary Guarantee of the Notes (other than as provided for in Section 10.04); or (i) make any change in the foregoing amendment and waiver provisions. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion 61 67 of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01) shall be fully protected in relying upon, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 10 SUBSIDIARY GUARANTEES SECTION 10.01. SUBSIDIARY GUARANTEES. Each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the Obligations of the Company hereunder or thereunder, that: (a) the principal of and interest, premium, if any, and Liquidated Damages, if any, on the Notes shall be promptly paid in full when due, whether at maturity, by acceleration, redemption, repurchase or otherwise, and interest on the overdue principal of and interest, premium, if any, and Liquidated Damages, if any, on the Notes, if lawful, and all other Obligations of the Company to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration, redemption, repurchase or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. The Guarantors hereby agree that their Obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise 62 68 constitute a legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Subsidiary Guarantee shall not be discharged except by complete performance of the Obligations contained in the Notes and this Indenture. If any Holder of Notes or the Trustee is required by any court or otherwise to return to the Company or Guarantors, or any custodian, Trustee, liquidator or other similar official acting in relation to either the Company or Guarantors, any amount paid either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders of Notes in respect of any Obligations guaranteed hereby until payment in full of all Obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article Six hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby and (y) in the event of any declaration of acceleration of such Obligations as provided in Article Six hereof, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Subsidiary Guarantee. The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantees. SECTION 10.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES. To evidence its Subsidiary Guarantee set forth in Section 10.01, each Guarantor hereby agrees that a notation of such Subsidiary Guarantee substantially in the form of Exhibit C (executed by the manual or facsimile signature of one of its Officers) shall be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of such Guarantor by an Officer of such Guarantor. Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee. If an Officer whose signature is on this Indenture or on the Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of the Guarantors. SECTION 10.03. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. (a) Except as set forth in Articles Four and Five hereof, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor or shall prevent any sale or conveyance of the property of a Guarantor, as an entirety or substantially as an entirety, to the Company or to another Guarantor. (b) Except as provided in Section 10.03(a) or in a transaction referred to in Section 10.04, no Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving 63 69 Person) another corporation, Person or entity whether or not affiliated with such Guarantor, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to, another corporation, Person or entity unless: (i) subject to the provisions of Section 10.04, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) shall assume all the Obligations of such Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes and this Indenture; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. Subject to Section 10.04, in case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and reasonably satisfactory in form to the Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor corporation shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor corporation thereupon may cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof. SECTION 10.04. RELEASES FOLLOWING SALE OF ASSETS. Concurrently with any sale or other disposition of assets of any Guarantor (including, if applicable, all of the Capital Stock of any Guarantor), any Liens in favor of the Trustee in the assets sold thereby shall be released; provided that in the event of an Asset Sale, the Net Proceeds from such sale or other disposition are treated in accordance with the provisions of Section 4.10. In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the Capital Stock of any Guarantor, or in the case the Company designates a Guarantor to be an Unrestricted Subsidiary in accordance with this Indenture, then such Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the Capital Stock of such Guarantor, or in the case the Company designates a Guarantor to be an Unrestricted Subsidiary in accordance with this Indenture) or the Person acquiring the property (in the event of a sale or other disposition of all of the assets of such Guarantor), shall be released and relieved of its Obligations under its Subsidiary Guarantee and Section 10.03; provided that in the event of an Asset Sale, the Net Proceeds from such sale or other disposition are treated in accordance with the provisions of Section 4.10. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of this Indenture, including, without limitation, Section 4.10, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its Obligations under its Subsidiary Guarantee. Any Guarantor not released from its Obligations under its Subsidiary Guarantee shall remain liable for the full amount of principal of and interest and Liquidated Damages, if any, on the Notes and for the other Obligations of any Guarantor under this Indenture as provided in this Article Ten. The release of any Guarantor pursuant to this Section 10.04 shall be effective whether or not such release shall be noted on any Note then outstanding or thereafter authenticated and delivered. SECTION 10.05. LIMITATION ON GUARANTOR LIABILITY. For purposes hereof, each Guarantor's liability shall be that amount from time to time equal to the aggregate liability of such Guarantor thereunder, but shall be limited to the lesser of (i) the aggregate 64 70 amount of the Obligations of the Company under the Notes and this Indenture and (ii) the amount, if any, which would not have (A) rendered such Guarantor "insolvent" (as such term is defined in the federal Bankruptcy Law and in the debtor and creditor law of the State of New York) or (B) left it with unreasonably small capital at the time its Subsidiary Guarantee was entered into, after giving effect to the incurrence of existing Indebtedness immediately prior to such time; provided, that it shall be a presumption in any lawsuit or other proceeding in which such Guarantor is a party that the amount guaranteed pursuant to its Subsidiary Guarantee is the amount set forth in clause (i) above unless any creditor, or representative of creditors of such Guarantor, or debtor in possession or trustee in bankruptcy of such Guarantor, otherwise proves in such a lawsuit that the aggregate liability of such Guarantor is limited to the amount set forth in clause (ii). In making any determination as to the solvency or sufficiency of capital of a Guarantor in accordance with the previous sentence, the right of such Guarantor to contribution from other Guarantors and any other rights such Guarantor may have, contractual or otherwise, shall be taken into account. SECTION 10.06. "TRUSTEE" TO INCLUDE PAYING AGENT. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article Ten shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully and for all intents and purposes as if such Paying Agent were named in this Article Ten in place of the Trustee. ARTICLE 11 MISCELLANEOUS SECTION 11.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), the imposed duties shall control. SECTION 11.02. NOTICES. Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Company: Allied Holdings, Inc. 160 Clairemont Avenue Decatur, Georgia 30030 Telecopier No.: (404) 370-4342 Attention: Daniel H. Popky 65 71 EXHIBIT 4.1 With a copy to: Troutman Sanders LLP 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Telecopier No.: (404) 885-3900 Attention: Thomas M. Duffy If to the Trustee: The First National Bank of Chicago One First National Plaza, Suite 0126 Chicago, IL 60670-0126 Telecopier No.: (312) 407-1708 Attention: Corporate Trust Administration The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: 66 72 (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. SECTION 11.06. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS. No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or such Guarantor under the Notes, any Guarantee thereof, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy. SECTION 11.08. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES. 67 73 SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 11.10. SUCCESSORS. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 11.11. SEVERABILITY. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.12. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following pages] 68 74 IN WITNESS WHEREOF, the parties hereto have executed this Indenture as of the date first written above. ALLIED HOLDINGS, INC. By: --------------------------------------- Name: Title: ALLIED AUTOMOTIVE GROUP, INC. By: ---------------------------------------- Name: Title: ALLIED INDUSTRIES INCORPORATED By: ---------------------------------------- Name: Title: HAUL RISK MANAGEMENT SERVICES, INC. By: ---------------------------------------- Name: Title: LINK INFORMATION SYSTEMS, INC. By: ---------------------------------------- Name: Title: 69 75 ALLIED SOUTHWOODS, INC. By: ------------------------------------- Name: Title: AXIS GROUP, INC. By: ------------------------------------- Name: Title: ALLIED SYSTEMS, LTD. (L.P.) BY: ALLIED AUTOMOTIVE GROUP, INC., as general partner By: ------------------------------------- Name: Title: ALLIED, INC. By: ------------------------------------- Name: Title: INTER MOBILE, INC. By: ------------------------------------- Name: Title: 70 76 LEGION TRANSPORTATION, INC. By: ------------------------------------- Name: Title: INNOVATIVE CAR CARRIERS, INC. By: ------------------------------------- Name: Title: AUTOMOTIVE TRANSPORT SERVICES, INC. By: ------------------------------------- Name: Title: AUTO HAULAWAY INC. By: ------------------------------------- Name: Title: AUTO HAULAWAY RELEASING SERVICES (1981) LIMITED By: ------------------------------------- Name: Title: AXIS INTERNATIONAL, INC. By: ------------------------------------- Name: Title: 71 77 AXIS TRUCK LEASING, INC. By: ------------------------------------- Name: Title: AXIS NORTH AMERICA, INC. By: ------------------------------------- Name: Title: DECATUR DRIVER EXCHANGE COMPANY, INC. By: ------------------------------------- Name: Title: CLAIREMONT DRIVER EXCHANGE COMPANY, INC. By: ------------------------------------ Name: Title: KAR-TAINER INTERNATIONAL, INC. By: ------------------------------------ Name: Title: A H ACQUISITION CORP. By: ------------------------------------ Name: Title: 72 78 CANADIAN ACQUISITION CORP. By: ------------------------------------- Name: Title: AXIS NATIONAL INCORPORATED By: ------------------------------------- Name: Title: RC MANAGEMENT CORP. By: ------------------------------------- Name: Title: RYDER AUTOMOTIVE CARRIER SERVICES, INC. By: ------------------------------------- Name: Title: RYDER AUTOMOTIVE ACQUISITION, LLC BY: CANADIAN ACQUISITION CORP., as member By: ------------------------------------- Name: Title: 73 79 MCL RYDER TRANSPORT INC. By: ------------------------------------- Name: Title: RYDER AUTOMOTIVE OPERATIONS, INC. By: ------------------------------------- Name: Title: RYDER FREIGHT BROKER, INC. By: ------------------------------------- Name: Title: QAT, INC. By: ------------------------------------- Name: Title: OSHCO, INC. By: ------------------------------------- Name: Title: TERMINAL SERVICE CO. By: ------------------------------------- Name: Title: 74 80 F.J. BOUTELL DRIVEAWAY CO., INC. By: ------------------------------------- Name: Title: RMX, INC. By: ------------------------------------- Name: Title: TRANSPORT SUPPORT, INC. By: ------------------------------------- Name: Title: COMMERCIAL CARRIERS, INC. By: ------------------------------------- Name: Title: B&C, INC. By: ------------------------------------- Name: Title: The First National Bank of Chicago By: /s/ Leland Hansen ------------------------------- Name: Leland Hansen Title: Asst. Vice Pres. 75 81 EXHIBIT A-1 (Face of Note) ================================================================================ CUSIP/CINS ------------ 8 5/8% [Series A] [Series B] Senior Notes due 2007 No. $ --- --------------- Allied Holdings, Inc. promises to pay to ------------------------------------------------- or registered assigns, the principal sum of ------------------------------------------------- Dollars on October 1, 2007. Interest Payment Dates: April 1, and October 1 Record Dates: March 15, and September 15 Dated: , 199 --------------- - Allied Holdings, Inc. By: -------------------------- Name: Title: By: -------------------------- Name: Title: This is one of the [Global] Notes referred to in the within-mentioned Indenture: (SEAL) [TRUSTEE], as Trustee By: ------------------------------- Name: Title: ================================================================================ A1-1 82 (Back of Note) 8 5/8% [Series A] [Series B] Senior Notes due 2007 [Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture] [Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Allied Holdings, Inc. a Georgia corporation (the "Company"), promises to pay interest on the principal amount of this Note at 8 5/8% per annum from ________________, 199__ until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages semi-annually on April 1 and October 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be _____________, 199__. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on the March 15 or September 15 next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium and Liquidated Damages, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available day funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, _____________, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. A1-2 83 4. INDENTURE. The Company issued the Notes under an Indenture dated as of September 30, 1997 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Section Section 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the indenture shall govern and be controlling. The Notes are unsecured obligations of the Company limited to $125.0 million in aggregate principal amount plus amounts, if any, issued to pay Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof. 5. OPTIONAL REDEMPTION. (a) Prior to October 1, 2002, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the Make-Whole Price, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date. On and after October 1, 2002, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on October 1 of the years indicated below:
YEAR PERCENTAGE ---- ---------- 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.3125% 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.8750% 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.4375% 2005 and thereafter . . . . . . . . . . . . . . . . . . . . . . . 100.0000%
(b) Notwithstanding the foregoing, at any time on or prior to October 1, 2000, the Company may redeem up to 35% of the Notes at a redemption price equal to 108.625% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net proceeds of one or more sales of Equity Interests (other than Disqualified Stock) of the Company, provided that (i) at least $97.5 million of Notes remain outstanding immediately following each such redemption and (ii) such redemption shall occur within 90 days of the date of the consummation of such sale. 6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 7. REPURCHASE AT OPTION OF HOLDER. (a) Upon the occurrence of a Change of Control, the Company will be obligated to make an offer (a "Change of Control Offer") to each Holder of Notes to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes at an offer price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase (the "Change of Control Payment"). Within 30 days following a Change of Control, A1-3 84 the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. (b) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents; provided that the amount of (a) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or such Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability and (b) any securities, notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are immediately converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) shall be deemed to be cash for purposes of this provision. Within 365 days of the receipt of any Net Proceeds from an Asset Sale, the Company, at its option, may apply such Net Proceeds to the acquisition of a controlling interest in another business, the making of a capital expenditure or the acquisition of other assets (other than assets that would be classified as current assets in accordance with GAAP), in each case, in the same or a similar line of business as the Company and its Restricted Subsidiaries, or in any business reasonably complementary, related or incidental thereto, as determined in good faith by the Board of Directors. Pending the final application of any such Net Proceeds, the Company may temporarily reduce borrowings under the New Credit Facility or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be required to make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of an Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. A1-4 85 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. 12. DEFAULTS AND REMEDIES. Events of Default include:(i) default for 30 days in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Notes; (ii) default in payment when due of the principal of or premium, if any, on the Notes; (iii) failure by the Company or any of its Restricted Subsidiaries to comply Section 4.15 of the Indenture (iv) failure by the Company or any of its Restricted Subsidiaries to comply with Sections 4.07, 4.09, 4.10 or 5.01 of the Indenture, which default continues for 60 days; (v) failure by the Company or any of its Restricted Subsidiaries for 60 days after written notice by the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes to comply with any of its other agreements in the Indenture or the Notes; (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists or is created after the Closing Date, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5.0 million or more; (vii) failure by the Company or any of its Restricted Subsidiaries lo pay final judgments aggregating in excess of $5.0 million and either (a) any creditor commences enforcement proceedings upon any such judgment or (b) such judgments are not paid, discharged or stayed for a period of 60 days; (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee; and (ix) certain events A1-5 86 of bankruptcy or insolvency with respect to the Company or any of its Restricted Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, any Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes (provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Transferred Restricted Securities shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of September 30, A1-6 87 1997, between the Company and the parties named on the signature pages thereof (the "Registration Rights Agreement"). 18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Allied Holdings, Inc. 160 Clairemont Avenue Decatur, Georgia 30030 Attention: Daniel H. Popky A1-7 88 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint --------------------------------------------------------- to transfer this Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: ---------------- Your Signature: ----------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee. Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medalian Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A1-8 89 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below: [ ] Section 4.10 [ ] Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $ -------------- Date: Your Signature: ------------------- ---------------------------- (Sign exactly as your name appears on the Note) Tax Identification No.: -------------------- Signature Guarantee. Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medalian Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A1-9 90 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount Amount of decrease Amount of increase of this Signature of in in Global Note authorized officer Principal Amount Principal Amount following such of of this of this decrease Trustee or Note Date of Exchange Global Note Global Note (or increase) Custodian ------------------- --------------------- --------------------- ---------------------- --------------------
A1-10 91 EXHIBIT A-2 (Face of Regulation S Temporary Global Note) ================================================================================ CUSIP/CINS ---------- 8 5/8% [Series A] [Series B] Senior Notes due 2007 No. $ --- ---------- Allied Holdings, Inc. promises to pay to ---------------------------------------------------- or registered assigns, the principal sum of -------------------------------------------------- Dollars on , 2007. ---------- Interest Payment Dates: April 1, and October 1 Record Dates: March 15, and September 15 Dated: , 199 ---------------- - ALLIED HOLDINGS, INC. By: ------------------------------ Name: Title: By: ------------------------------ Name: Title: This is one of the [Global] Notes referred to in the within-mentioned Indenture: [(SEAL)] [TRUSTEE], as Trustee By: ------------------------ ================================================================================ A2-1 92 (Back of Regulation S Temporary Global Note) 8 5/8% [Series A] [Series B] Senior Notes due 2007 THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS NOT ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT). THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY, (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE A2-2 93 JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Allied Holdings, Inc. a Georgia corporation (the "Company"), promises to pay interest on the principal amount of this Note at 8 5/8% per annum from ________________, 199__ until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages semi-annually on April 1 and October 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be _____________, 199__. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on the March 15 or September 15 next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium and Liquidated Damages, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available day funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, _____________, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. INDENTURE. The Company issued the Notes under an Indenture dated as of September 30, 1997 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Section Section 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the indenture shall govern A2-3 94 and be controlling. The Notes are unsecured obligations of the Company limited to $125.0 million in aggregate principal amount plus amounts, if any, issued to pay Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof. 5. OPTIONAL REDEMPTION. (a) Prior to October 1, 2002, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the Make-Whole Price, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date. On and after October 1, 2002, the Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on October 1 of the years indicated below:
YEAR PERCENTAGE ---- ---------- 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.3125% 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.8750% 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.4375% 2005 and thereafter . . . . . . . . . . . . . . . . . . . . . . . 100.0000%
(b) Notwithstanding the foregoing, at any time on or prior to October 1, 2000, the Company may redeem up to 35% of the Notes at a redemption price equal to 108.625% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net proceeds of one or more sales of Equity Interests (other than Disqualified Stock) of the Company, provided that (i) at least $97.5 million of Notes remain outstanding immediately following each such redemption and (ii) such redemption shall occur within 90 days of the date of the consummation of such sale. 6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 7. REPURCHASE AT OPTION OF HOLDER. (a) Upon the occurrence of a Change of Control, the Company will be obligated to make an offer (a "Change of Control Offer") to each Holder of Notes to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes at an offer price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase (the "Change of Control Payment"). Within 30 days following a Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act A2-4 95 and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. (b) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents; provided that the amount of (a) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or such Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Guarantee thereof) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability and (b) any securities, notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are immediately converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) shall be deemed to be cash for purposes of this provision. Within 365 days of the receipt of any Net Proceeds from an Asset Sale, the Company, at its option, may apply such Net Proceeds to the acquisition of a controlling interest in another business, the making of a capital expenditure or the acquisition of other assets (other than assets that would be classified as current assets in accordance with GAAP), in each case, in the same or a similar line of business as the Company and its Restricted Subsidiaries, or in any business reasonably complementary, related or incidental thereto, as determined in good faith by the Board of Directors. Pending the final application of any such Net Proceeds, the Company may temporarily reduce borrowings under the New Credit Facility or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be required to make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro rata basis. Upon completion of an Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the A2-5 96 Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. 12. DEFAULTS AND REMEDIES. Events of Default include:(i) default for 30 days in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Notes; (ii) default in payment when due of the principal of or premium, if any, on the Notes; (iii) failure by the Company or any of its Restricted Subsidiaries to comply Section 4.15 of the Indenture (iv) failure by the Company or any of its Restricted Subsidiaries to comply with Sections 4.07, 4.09, 4.10 or 5.01 of the Indenture, which default continues for 60 days; (v) failure by the Company or any of its Restricted Subsidiaries for 60 days after written notice by the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes to comply with any of its other agreements in the Indenture or the Notes; (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists or is created after the Closing Date, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5.0 million or more; (vii) failure by the Company or any of its Restricted Subsidiaries lo pay final judgments aggregating in excess of $5.0 million and either (a) any creditor commences enforcement proceedings upon any such judgment or (b) such judgments are not paid, discharged or stayed for a period of 60 days; (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee; and (ix) certain events of bankruptcy or insolvency with respect to the Company or any of its Restricted Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of A2-6 97 bankruptcy or insolvency, with respect to the Company, any Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes (provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Transferred Restricted Securities shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of September 30, 1997, between the Company and the parties named on the signature pages thereof (the "Registration Rights Agreement"). 18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes A2-7 98 and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Allied Holdings, Inc. 160 Clairemont Avenue Decatur, Georgia 30030 Attention: Daniel H. Popky A2-8 99 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint --------------------------------------------------------- to transfer this Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: --------------------- Your Signature: ---------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee. Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medalian Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A2-9 100 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below: [ ] Section 4.10 [ ] Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $ -------------- Date: -------------------------- Your Signature: -------------------------- (Sign exactly as your name appears on the Note) Tax Identification No.: ------------------ Signature Guarantee. Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medalian Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A2-10 101 SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Global Note, or of other Restricted Global Notes for an interest in this Regulation S Temporary Global Note, have been made:
Amount of decrease Amount of increase Principal Amount Signature of in in of this authorized officer Principal Amount Principal Amount Global Note of of this of this following such decrease Trustee or Note Date of Exchange Global Note Global Note (or increase) Custodian ------------------- --------------------- --------------------- ---------------------- --------------------
A2-11 102 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Allied Holdings, Inc. 160 Clairemont Avenue Decatur, Georgia 30030 [Registrar address block] Re: 8 5/8% Senior Notes Due 2007 Reference is hereby made to the Indenture, dated as of September __, 1997 (the "Indenture"), between Allied Holdings, Inc. as issuer (the "Company"), and [Trustee], as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ______________, (the "Transferor") owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the "Transfer"), to __________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY INTERESTS IN THE 144A GLOBAL NOTE OR DEFINITIVE NOTES PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the Book-Entry Interests or Definitive Notes are being transferred to a Person that the Transferor reasonably believes is purchasing the Book-Entry Interests or Definitive Notes for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred Book-Entry Interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY INTERESTS IN THE TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR DEFINITIVE NOTES PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of B-1 103 Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred Book-Entry Interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY INTERESTS IN THE IAI GLOBAL NOTE OR DEFINITIVE NOTES PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to Book-Entry Interests in Restricted Global Notes and Definitive Notes bearing the Private Placement Legend and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any State of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) [ ] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) [ ] such Transfer is being effected to the Company or a subsidiary thereof, or (c) [ ] such Transfer is being effected pursuant to an effective registration statement under the Securities Act; or (d) [ ] such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that the Transfer complies with the transfer restrictions applicable to Book-Entry Interests in a Restricted Global Note or Definitive Notes bearing the Private Placement Legend and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that (1) such Transfer is in compliance with the Securities Act and (2) such Transfer complies with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred Book-Entry Interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Definitive Notes and in the Indenture and the Securities Act. 4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY INTERESTS IN THE UNRESTRICTED GLOBAL NOTE OR IN DEFINITIVE NOTES THAT DO NOT BEAR THE PRIVATE PLACEMENT LEGEND. (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer B-2 104 restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred Book-Entry Interests or Definitive Notes will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Definitive Notes bearing the Private Placement Legend and in the Indenture. (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred Book-Entry Interests or Definitive Notes will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Definitive Notes bearing the Private Placement Legend and in the Indenture. (c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred Book-Entry Interests or Definitive Notes will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Definitive Notes bearing the Private Placement Legend and in the Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. --------------------------- [Insert Name of Transferor] By: ---------------------- Name: Title: Dated: ---------------, ------ B-3 105 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) [ ] Book-Entry Interests in the: (i) [ ] 144A Global Note (CUSIP _________), or (ii) [ ] Regulation S Global Note (CUSIP _________), or (iii) [ ] IAI Global Note (CUSIP ________); or (b) [ ] Restricted Definitive Notes. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) [ ] Book-Entry Interests in the: (i) [ ] 144A Global Note (CUSIP ________), or (ii) [ ] Regulation S Global Note (CUSIP ________), or (iii) [ ] IAI Global Note (CUSIP ________); or (iv) [ ] Unrestricted Global Note (CUSIP ________); or (b) [ ] Restricted Definitive Notes; or (c) [ ] Definitive Notes that do not bear the Private Placement Legend, in accordance with the terms of the Indenture. B-4 106 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Allied Holdings, Inc. 160 Clairemont Avenue Decatur, Georgia 30030 [Registrar address block] Re: 8 5/8% Senior Notes Due 2007 (CUSIP _____________________) Reference is hereby made to the Indenture, dated as of September 30, 1997 (the "Indenture"), between Allied Holdings, Inc. as issuer (the "Company") and [Trustee], as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ______________, (the "Holder") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $____________ in such Note[s] or interests (the "Exchange"). In connection with the Exchange, the Holder hereby certifies that: 1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR RESTRICTED BOOK-ENTRY INTERESTS FOR DEFINITIVE NOTES THAT DO NOT BEAR THE PRIVATE PLACEMENT LEGEND OR UNRESTRICTED BOOK-ENTRY INTERESTS (a) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY INTEREST TO UNRESTRICTED BOOK-ENTRY INTEREST. In connection with the Exchange of the Holder's Restricted Book-Entry Interest for Unrestricted Book-Entry Interests in an equal principal amount, the Holder hereby certifies (i) the Unrestricted Book-Entry Interests are being acquired for the Holder's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Book-Entry Interests are being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY INTEREST TO DEFINITIVE NOTES THAT DO NOT BEAR THE PRIVATE PLACEMENT LEGEND. In connection with the Exchange of the Holder's Restricted Book-Entry Interests for Definitive Notes that do not bear the Private Placement Legend, the Holder hereby certifies (i) the Definitive Notes are being acquired for the Holder's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Notes are being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTES TO UNRESTRICTED BOOK-ENTRY INTERESTS. In connection with the Holder's Exchange of Restricted Definitive Notes for C-1 107 Unrestricted Book-Entry Interests, (i) the Unrestricted Book-Entry Interests are being acquired for the Holder's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Book-Entry Interests are being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTES TO DEFINITIVE NOTES THAT DO NOT BEAR THE PRIVATE PLACEMENT LEGEND. In connection with the Holder's Exchange of a Restricted Definitive Note for Definitive Notes that do not bear the Private Placement Legend, the Holder hereby certifies (i) the Definitive Notes that do not bear the Private Placement Legend are being acquired for the Holder's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Notes are being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR RESTRICTED BOOK-ENTRY INTERESTS FOR RESTRICTED DEFINITIVE NOTES OR RESTRICTED BOOK-ENTRY INTERESTS (a) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY INTERESTS TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Holder's Restricted Book-Entry Interest for Restricted Definitive Notes with an equal principal amount, (i) the Restricted Definitive Notes are being acquired for the Holder's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Notes issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Notes and in the Indenture and the Securities Act. (b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTES TO RESTRICTED BOOK-ENTRY INTERESTS. In connection with the Exchange of the Holder's Restricted Definitive Note for Restricted Book-Entry Interests in the [CHECK ONE] [ ] 144A Global Note, [ ] Regulation S Global Note, [ ] IAI Global Note with an equal principal amount, (i) the Definitive Notes are being acquired for the Holder's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Definitive Note and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Book-Entry Interests issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. C-2 108 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ---------------------------------------- [Insert Name of Holder] By: ------------------------------------- Name: Title: Dated: ---------------, ---------- C-3 109 EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Allied Holdings, Inc. 160 Clairemont Avenue Decatur, Georgia 30030 [Registrar address block] Re: 8 5/8% Senior Notes Due 2007 Reference is hereby made to the Indenture, dated as of September 30, 1997 (the "Indenture"), between Allied Holdings, Inc. as issuer (the "Company"), and [Trustee], as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with our proposed purchase of $____________ aggregate principal amount of: (a) [ ] Book-Entry Interests, or (b) [ ] Definitive Notes, we confirm that: 1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (C) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Notes or Book-Entry Interests from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. D-1 110 3. We understand that, on any proposed resale of the Notes or Book-Entry Interests, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. We further understand that any subsequent transfer by us of the Notes or Book-Entry Interests therein acquired by us must be effected through one of the Placement Agents. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Notes or Book-Entry Interests purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. ---------------------------------------- [Insert Name of Accredited Investor] By: ----------------------------------- Name: Title: Dated: -----------------, ------ D-2 111 EXHIBIT E FORM OF SUBSIDIARY GUARANTEE Each Guarantor hereby, jointly and severally, unconditionally guarantees to each Holder of Notes authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the Obligations of the Company under this or any other Guarantee in connection with the Notes) to the Holders or the Trustee under the Notes or under the Indenture, that: (a) the principal of, and premium, if any, and Liquidated Damages, if any, and interest on the Notes shall be promptly paid in full when due, whether at maturity, by acceleration, redemption, repurchase or otherwise, and interest on overdue principal of and interest and Liquidated Damages if any, on any Note, if any, if lawful and all other Obligations of the Company to the Holders or the Trustee under the Indenture or under the Notes shall be promptly paid in full or performed, all in accordance with the terms thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration, redemption, repurchase or otherwise; provided that in the case of a Guarantor that is organized under the federal or provincial laws of Canada, all of the forgoing shall constitute the Guarantee of the Obligations of such Guarantor's immediate corporate or other parent under this or any other Guarantee in connection with the Notes. Failing payment when due of any amount so guaranteed, or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. The Obligations of the Guarantors to the Holders of Notes and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth in Article Ten of the Indenture, and reference is hereby made to such Indenture for the precise terms of this Subsidiary Guarantee. The terms of Article Ten of the Indenture are incorporated herein by reference. No director, officer, employee, incorporator or stockholder, as such, past, present or future, of each of the Guarantors shall have any personal liability under this Subsidiary Guarantee by reason of its status as such director, officer, employee, incorporator or stockholder. This is a continuing Subsidiary Guarantee and shall remain in full force and effect and shall be binding upon each Guarantor and its respective successors and assigns to the extent set forth in the Indenture until full and final payment of all of the Company's Obligations under the Notes and the Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders of Notes and, in the event of any transfer or assignment of rights by any Holder of Notes or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. In certain circumstances more fully described in the Indenture, any Guarantor may be released from its liability under this Subsidiary Guarantee, and any such release shall be effective whether or not noted hereon. This Subsidiary Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this Subsidiary Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers. E-1 112 For purposes hereof, each Guarantor's liability shall be that amount from time to time equal to the aggregate liability of such Guarantor hereunder, but shall be limited to the lesser of (i) the aggregate amount of the Obligations of the Company under the Notes and the Indenture and (ii) the amount, if any, which would not have (A) rendered such Guarantor "insolvent" (as such term is defined in the federal Bankruptcy Law and in the debtor and creditor law of the State of New York) or (B) left it with unreasonably small capital at the time its Subsidiary Guarantee of the Notes was entered into, after giving effect to the incurrence of existing Indebtedness immediately prior to such time; provided, that it shall be a presumption in any lawsuit or other proceeding in which such Guarantor is a party that the amount guaranteed pursuant to its Subsidiary Guarantee is the amount set forth in clause (i) above unless any creditor, or representative of creditors of such Guarantor, or debtor in possession or trustee in bankruptcy of such Guarantor, otherwise proves in such a lawsuit that the aggregate liability of such Guarantor is limited to the amount set forth in clause (ii). The Indenture provides that, in making any determination as to the solvency or sufficiency of capital of a Guarantor in accordance with the previous sentence, the right of such Guarantor to contribution from other Guarantors and any other rights such Guarantor may have, contractual or otherwise, shall be taken into account. Capitalized terms used herein have the same meanings given in the Indenture unless otherwise indicated. [GUARANTOR] By -------------------------------------------- [Name] [Title] E-2 113 EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 -------- STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) _____ --------------------------- THE FIRST NATIONAL BANK OF CHICAGO (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO ONE FIRST NATIONAL PLAZA, SUITE 0286 CHICAGO, ILLINOIS 60670-0286 ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) ------------------ ALLIED HOLDINGS, INC. (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) GEORGIA 58-0360550 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 160 CLAIREMONT AVENUE, SUITE 510 DECATUR, GEORGIA 30030 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
8-5/8% SERIES B SENIOR NOTES DUE 2007 (TITLE OF INDENTURE SECURITIES) 114 ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 2 115 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 30th day of September, 1997. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE BY /S/ RICHARD D. MANELLA RICHARD D. MANELLA VICE PRESIDENT AND SENIOR COUNSEL * EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996 (REGISTRATION NO. 333-14201). 3 116 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT September 30, 1997 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of an indenture between Allied Holdings, Inc. and The First National Bank of Chicago, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO BY: /S/ RICHARD D. MANELLA RICHARD D. MANELLA VICE PRESIDENT AND SENIOR COUNSEL 4 117 EXHIBIT 7 Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 ---------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
C400 DOLLAR AMOUNTS IN ------- THOUSANDS RCFD BIL MIL THOU ------------------ ---- ------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1) . . . . . . . 0081 4,415,563 1.a. b. Interest-bearing balances(2) . . . . . . . . . . . . . . . 0071 7.049,275 1.b. 2. Securities a. Held-to-maturity securities(from Schedule RC-B, column A) 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D)............ 1773 4,455,173 2.b. 3. Federal funds sold and securities purchased under agreements to resell 1350 4,604,233 3. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 24,185,099 4.a. b. LESS: Allowance for loan and lease losses . . . . . . . . RCFD 3123 423,419 4.b. c. LESS: Allocated transfer risk reserve . . . . . . . . . . RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) . . . . . . . . . . . 2125 23,761,680 4.d. 5. Trading assets (from Schedule RD-D) . . . . . . . . . . . . . 3545 6.930.216 5. 6. Premises and fixed assets (including capitalized leases) . . . . . . . 2145 705,704 6. 7. Other real estate owned (from Schedule RC-M) . . . . 2150 7,960 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) . . . . . . . . . . . . . . . 2130 64,504 9. Customers' liability to this bank on acceptances outstanding . . . . . 2155 562,251 9. 10. Intangible assets (from Schedule RC-M) . . . . . . . . . . . . . . . . 2143 283,716 10. 11. Other assets (from Schedule RC-F) . . . . . . . . . . . . . . . . . . 2160 1,997,778 11. 12. Total assets (sum of items 1 through 11). . . . . . . . . . . . . . . . 2170 54,837,423 12.
- --------------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 5 118 Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 ---------
SCHEDULE RC-CONTINUED DOLLAR AMOUNTS IN Thousands BIL MIL THOU ---------------- ------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) . . . . . . . . . . . RCON 2200 21,852,164 13.a (1) Noninterest-bearing(1) . . . . . . . . . . . . RCON 6631 9,474,510 13.a.1 (2) Interest-bearing . . . . . . . . . . . . . . . RCON 6636 12,377,654 13.a.2 b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II) . . . . . . . . RCFN 2200 13,756,280 13.b. (1) Noninterest bearing . . . . . . . . . . . . . RCFN 6631 330,030 13.b.1 (2) Interest-bearing RCFN 6636 13,426,250 13.b.2 14. Federal funds purchased and securities sold under agreements to repurchase: RCFD 2800 3.827,159 14 15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a b. Trading Liabilities(from Schedule RC-D)....................................... RCFD 3548 4,985,577 15.b 16. Other borrowed money: a. With original maturity of one year or less . . . . RCFD 2332 2,337,018 16.a b. With original maturity of than one year through three years . . . . . . . . A547 265,393 16.b c. With a remaining maturity of more than three years. . . . 17. Not applicable 18. Bank's liability on acceptance executed and outstanding RCFD 2920 562,251 18 19. Subordinated notes and debentures (2) . . . . . RCFD 3200 1,700,000 19 20. Other liabilities (from Schedule RC-G) . . . . . RCFD 2930 929,875 20 21. Total liabilities (sum of items 13 through 20) . . . . . RCFD 2948 50,618,199 21 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus . . . . . RCFD 3838 0 23 24. Common stock . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24 25. Surplus (exclude all surplus related to preferred stock) RCFD 3839 2,948,616 25 26. a. Undivided profits and capital reserves . . . . . . RCFD 3632 1,059,214 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . RCFD 8434 12,788 26.b. 27. Cumulative foreign currency translation adjustments . . RCFD 3284 (2,252) 27 28. Total equity capital (sum of items 23 through 27) RCFD 3210 4,219,224 (1) 28 29. Total liabilities and equity capital (sum of items 21 and 28) . . . . . . RCFD 3300 54,837,423 (2) 29 Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number auditors as of any date during 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . ..RCFD 6724 N/A M.1. 1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements submits a report on the consolidated holding company by external auditors (but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work) 3 = Directors' examination of the bank conducted in 8 = No external audit work accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority)
___________________ (1) Includes total demand deposits and noninterest-bearing time and savings deposits. (2) Includes limited-life preferred stock and related surplus. 6 EX-4.2 3 PURCHASE AGREEMENT 1 EXHIBIT 4.2 Execution Version ================================================================================ ALLIED HOLDINGS, INC. AND THE GUARANTORS NAMED ON THE SIGNATURE PAGES HERETO $150,000,000 8 5/8% Senior Notes due 2007 Purchase Agreement September 19, 1997 BEAR, STEARNS & CO. INC. BT ALEX. BROWN INCORPORATED NATIONSBANC CAPITAL MARKETS, INC. ================================================================================ 2 ALLIED HOLDINGS, INC. $150,000,000 8 5/8% Senior Notes due 2007 PURCHASE AGREEMENT September 19, 1997 New York, New York BEAR, STEARNS & CO. INC. BT ALEX. BROWN INCORPORATED NATIONSBANC CAPITAL MARKETS, INC. c/o Bear, Stearns & Co. Inc. 245 Park Avenue New York, New York 10167 Ladies & Gentlemen: Allied Holdings, Inc., a Georgia corporation (the "Company"), proposes to issue and sell to Bear, Stearns & Co. Inc., BT Alex. Brown Incorporated NationsBanc Capital Markets, Inc. (together, the "Initial Purchasers") $150,000,000 in aggregate principal amount of 8 5/8% Series A Senior Notes due 2007 (the "Series A Notes"), subject to the terms and conditions set forth herein. The Series A Notes will be issued pursuant to an indenture (the "Indenture"), to be dated the Closing Date (as defined), among the Company, the Guarantors (as defined) and The First National Bank of Chicago, as trustee (the "Trustee"). The Series A Notes will be fully and unconditionally guaranteed (the "Guarantees" and, together with the Series A Notes, the "Securities") as to payment of principal, interest, Liquidated Damages and premium, if any, on an unsecured senior basis, jointly and severally, by each entity listed on Exhibit A hereto (collectively, the "Allied Guarantors") and by each entity listed on Exhibit B hereto (collectively, the "Ryder Guarantors" and, together with the Allied Guarantors, the "Guarantors" and, together with the Company, the "Issuers") that will be acquired by the Company pursuant to the Acquisition (as defined). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Indenture. The offering of the Securities is being made in connection with the acquisition (the "Acquisition") by the Company of Ryder Automotive Carrier Services, Inc., RC Management Corp. and certain related assets ("Ryder"), pursuant to that certain Acquisition Agreement by and among the Company, A H Acquisition Corp., Canadian Acquisition Corp., Axis North America, Inc. and Ryder System, Inc. (together with all schedules, ancillary agreements and any side- letters entered into in connection with the Acquisition, the "Acquisition Agreement"), dated August 20, 1997. 1. Issuance of Securities. The Issuers propose, upon the terms and subject to the conditions set forth herein, to issue and sell to the Initial Purchasers an aggregate of $150,000,000 in principal amount of Securities. The Series A Notes and the Series B Notes (as defined) issuable in exchange therefor are collectively referred to herein as the "Notes." 3 Upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Securities Act of 1933, as amended (the "Act"), the Series A Notes (and all securities issued in exchange therefor or in substitution thereof) shall bear the following legend: "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS NOT ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY, (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE." 2. Offering. The Securities will be offered and sold to the Initial Purchasers pursuant to an exemption from the registration requirements under the Act. The Company has prepared a preliminary offering memorandum, dated August 28, 1997 (the "Preliminary Offering Memorandum"), and a final offering memorandum, dated the date hereof (the "Offering Memorandum"), relating to the Issuers, the Acquisition and the Securities. 2 4 The Initial Purchasers have advised the Company that the Initial Purchasers will make offers (the "Exempt Resales") of the Securities on the terms set forth in the Offering Memorandum, as amended or supplemented, solely to (i) persons whom the Initial Purchasers reasonably believe to be "qualified institutional buyers," as defined in Rule 144A under the Act ("QIBs"), and (ii) non-U.S. persons outside the United States in reliance upon Regulation S ("Regulation S") under the Act ("Reg S Investors"). The QIBs and Reg S Investors are collectively referred to herein as the "Eligible Purchasers." The Initial Purchasers will offer the Securities to such Eligible Purchasers initially at a price equal to 100% of the principal amount thereof. Such price may be changed at any time without notice. Holders (including subsequent transferees) of the Securities will have the registration rights set forth in the registration rights agreement relating thereto (the "Registration Rights Agreement"), to be substantially in the form of Exhibit F hereto and dated the Closing Date, for so long as such Securities constitute "Transfer Restricted Securities" (as defined in the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the Issuers will agree to file with the Securities and Exchange Commission (the "Commission"), under the circumstances set forth therein, (i) a registration statement under the Act (the "Exchange Offer Registration Statement") relating to the 8 5/8% Series B Notes due 2007 (the "Series B Notes") and the guarantees thereof by the Guarantors, (the "Series B Guarantees" and, together with the Series B Notes, the "Exchange Securities") to be offered in exchange for the Securities (the "Exchange Offer") and (ii) a shelf registration statement pursuant to Rule 415 under the Act (the "Shelf Registration Statement" and, together with the Exchange Offer Registration Statement, the "Registration Statements") relating to the resale by certain holders of the Securities, and to use their reasonable best efforts to cause such Registration Statements to be declared effective and to consummate the Exchange Offer. This Agreement, the Notes, the Guarantees, the Series B Guarantees, the Indenture, the Registration Rights Agreement, the Acquisition Agreement and the New Credit Facility (as defined in the Offering Memorandum) are hereinafter referred to collectively as the "Operative Documents." 3. Purchase, Sale and Delivery. (a) On the basis of the representations, warranties and covenants contained in this Agreement, and subject to its terms and conditions, the Company and the Allied Guarantors agree to issue and sell (and to cause the Ryder Guarantors to issue and sell) to each Initial Purchaser, and each Initial Purchaser agrees, severally and not jointly, to purchase from the Issuers, the principal amount of Securities set forth opposite its name on Schedule I hereto. The purchase price for the Securities will be $970 per $1,000 principal amount Series A Notes. (b) Delivery of the Securities shall be made, against payment of the purchase price therefor, at the offices of Troutman Sanders LLP, Atlanta, Georgia or such other location as may be mutually acceptable. Such delivery and payment shall be made at 9:00 a.m., New York City time, on September 30, 1997 or at such other time as shall be agreed upon by the Initial Purchasers and the Company. The time and date of such delivery and payment are herein called the "Closing Date." (c) On the Closing Date, one or more Securities in definitive form, registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), having an aggregate amount corresponding to the aggregate amount of the Securities sold pursuant to Exempt Resales to Eligible Purchasers (the "Global Note") shall be delivered by the Issuers to the Initial Purchasers (or as the Initial Purchasers direct), against payment by the Initial Purchasers of the purchase price therefor, by wire transfer of same day funds, to an account designated by the Company, provided that the Company shall give at least two business days' prior written notice to the Initial Purchasers of the information required to effect such wire transfer. The Global Note shall be made available to the Initial Purchasers for inspection not later than 9:30 a.m. New York City time, on the business day immediately preceding the Closing Date. 3 5 4. Agreements of the Company and the Allied Guarantors. The Company and the Allied Guarantors, jointly and severally, covenant and agree with the Initial Purchasers as follows: (a) To advise the Initial Purchasers promptly and, if requested by the Initial Purchasers, confirm such advice in writing, (i) of the issuance by any state securities commission of any stop order suspending the qualification or exemption from qualification of any Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for such purpose by any state securities commission or other regulatory authority and (ii) of the happening of any event that makes any statement of a material fact made in the Preliminary Offering Memorandum or the Offering Memorandum untrue or that requires the making of any additions to or changes in the Preliminary Offering Memorandum or the Offering Memorandum in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Company and the Allied Guarantors shall use their reasonable best efforts to prevent the issuance of any stop order or order suspending the qualification or exemption of any Securities under any state securities or Blue Sky laws and, if at any time any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption of any Securities under any state securities or Blue Sky laws, the Company and the Allied Guarantors shall use their best efforts to obtain the withdrawal or lifting of such order at the earliest possible time. (b) To furnish the Initial Purchasers and those persons identified by the Initial Purchasers to the Company, without charge, as many copies of the Preliminary Offering Memorandum and the Offering Memorandum, including all documents incorporated therein by reference, and any amendments or supplements thereto, as the Initial Purchasers may reasonably request. The Company and the Allied Guarantors consent to the use of the Preliminary Offering Memorandum and the Offering Memorandum, and any amendments and supplements thereto required pursuant hereto, by the Initial Purchasers in connection with Exempt Resales. (c) Not to amend or supplement the Preliminary Offering Memorandum or the Offering Memorandum prior to the Closing Date unless the Initial Purchasers shall previously have been advised thereof and shall not have made a reasonable objection thereto within a reasonable time after being furnished a copy thereof. The Company and the Allied Guarantors shall promptly prepare, upon the Initial Purchasers' request, any amendment or supplement to the Preliminary Offering Memorandum or the Offering Memorandum that may be reasonably necessary or advisable in connection with Exempt Resales. (d) If, after the date hereof and prior to consummation of any Exempt Resale, any event shall occur as a result of which, in the judgment of the Company and the Allied Guarantors or in the reasonable opinion of counsel for the Company and the Allied Guarantors or counsel for the Initial Purchasers, it becomes necessary or advisable to amend or supplement the Preliminary Offering Memorandum or Offering Memorandum in order to make the statements therein, in the light of the circumstances when such Offering Memorandum is delivered to an Eligible Purchaser which is a prospective purchaser, not misleading, or if it is necessary or advisable to amend or supplement the Preliminary Offering Memorandum or Offering Memorandum to comply with applicable law, (i) to notify the Initial Purchasers and (ii) forthwith to prepare an appropriate amendment or supplement to such Preliminary Offering Memorandum or Offering Memorandum so that the statements therein as so amended or supplemented will not, in the light of the circumstances when it is so delivered, be misleading, or so that such Preliminary Offering Memorandum or Offering Memorandum will comply with applicable law. 4 6 (e) To cooperate with the Initial Purchasers and counsel for the Initial Purchasers in connection with the qualification or registration of the Securities under the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may reasonably request and to continue such qualification in effect so long as required for the Exempt Resales; provided, however, that none of the Company or the Allied Guarantors shall be required in connection therewith to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to service of process in suits or taxation, in each case, other than as to matters and transactions relating to the Preliminary Offering Memorandum, the Offering Memorandum or Exempt Resales, in any jurisdiction where it is not now so subject. (f) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement becomes effective or is terminated, to pay all costs, expenses, fees and taxes incident to the performance of the obligations of the Company and the Allied Guarantors hereunder, including in connection with: (i) the preparation, printing, filing and distribution of the Preliminary Offering Memorandum and the Offering Memorandum (including, without limitation, financial statements) and all amendments and supplements thereto required pursuant hereto, (ii) the preparation (including, without limitation, duplication costs) and delivery of all agreements, correspondence and all other documents prepared and delivered in connection herewith and with the Exempt Resales, (iii) the issuance, transfer and delivery of the Securities to the Initial Purchasers, (iv) the qualification or registration of the Securities for offer and sale under the securities or Blue Sky laws of the several states (including, without limitation, the cost of printing and mailing a preliminary and final Blue Sky Memorandum and the reasonable fees and disbursements of counsel for the Initial Purchasers relating thereto), (v) furnishing such copies of the Preliminary Offering Memorandum and the Offering Memorandum, and all amendments and supplements thereto, as may be requested for use in connection with Exempt Resales, (vi) the preparation of certificates for the Securities (including, without limitation, printing and engraving thereof), (vii) the fees, disbursements and expenses of the Issuers' counsel and accountants, (viii) all fees and expenses (including fees and expenses of counsel) of the Company in connection with the approval of the Notes by DTC for "book-entry" transfer, (ix) rating the Securities by rating agencies, (x) the fees and expenses of the Trustee and its counsel, (xi) the performance by the Issuers of their obligations under the other Operative Documents and (xii) "roadshow" travel and other expenses incurred in connection with the marketing and sale of the Securities. (g) To use the proceeds from the sale of the Securities in the manner described in the Offering Memorandum under the caption "Use of Proceeds." (h) Not to voluntarily claim, and to resist actively any attempts to claim, the benefit of any usury laws against the holders of any Securities or Exchange Securities. (i) To do and perform all things required to be done and performed under this Agreement by them prior to or after the Closing Date and to satisfy all conditions precedent on their part to the delivery of the Securities. (j) Not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Act) that would be integrated with the sale of the Securities in a manner that would require the registration under the Act of the sale to the Initial Purchasers or the Eligible Purchasers of the Securities or to take any other action that would result in the Exempt Resales not being exempt from registration under the Act. 5 7 (k) For so long as any of the Securities remain outstanding and during any period in which the Issuers are not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make available to any holder or beneficial owner of Securities in connection with any sale thereof and any prospective purchaser of such Securities from such holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act. (l) To comply with all of their agreements set forth in the Registration Rights Agreement and all agreements set forth in the representation letters of the Company to DTC relating to the approval of the Securities by DTC for "book-entry" transfer. (m) To effect the inclusion of the Securities in PORTAL and to obtain approval of the Securities by DTC for "book-entry" transfer. (n) During a period of five years following the Closing Date, to deliver without charge to the Initial Purchasers, as they may reasonably request, promptly upon their becoming available, copies of (i) all reports or other publicly available information that the Company and/or Guarantors shall mail or otherwise make available to their securityholders and (ii) all reports, financial statements and proxy or information statements filed by the Company and/or Guarantors with the Commission or any national securities exchange and such other publicly available information concerning the Company and/or Guarantors or any of their subsidiaries, including without limitation, press releases. (o) Prior to the Closing Date, to furnish to the Initial Purchasers, as soon as they have been prepared in the ordinary course by the Company and each Guarantor, copies of any unaudited interim financial statements for any period subsequent to the periods covered by the financial statements appearing in the Offering Memorandum. (p) Not to take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of any security of the Company or any of the Guarantors to facilitate the sale or resale of the Securities. Except as permitted by the Act, the Company and the Allied Guarantors will not (and will not permit the Ryder Guarantors to) distribute any (i) preliminary offering memorandum, including, without limitation, the Preliminary Offering Memorandum, (ii) offering memorandum, including, without limitation, the Offering Memorandum, or (iii) other offering material in connection with the offering and sale of the Notes. (q) To cause the Ryder Guarantors to authorize, execute and deliver this Agreement, the Registration Rights Agreement, the Guarantees and the Indenture. (r) To use their best efforts to do and perform all things required or necessary to be done and performed under this Agreement prior to the Closing Date and to satisfy all conditions precedent to the delivery of the Securities. 5. Representations and Warranties. (a) The Company and the Allied Guarantors, jointly and severally, represent and warrant to each of the Initial Purchasers that (all of such representations and warranties shall be deemed to include Ryder, and all references to the Issuers and their non-Guarantor Subsidiaries in this Section 5 shall assume that the Acquisition has been consummated as of the date hereof in accordance with the terms and conditions of the Acquisition Agreement): 6 8 (i) All of the representations and warranties of the parties to the Acquisition Agreement made in the Acquisition Agreement are true and correct as if made on and as of the date hereof and the Closing Date. (ii) The Preliminary Offering Memorandum as of its date does not, and the Offering Memorandum as of its date and as of the Closing Date does not and will not, and any supplement or amendment to them will not, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties contained in this paragraph shall not apply to statements in or omissions from the Preliminary Offering Memorandum and the Offering Memorandum (or any supplement or amendment thereto) made in reliance upon and in conformity with information relating to an Initial Purchaser furnished to the Company in writing by such Initial Purchaser expressly for use therein. No stop order preventing the use of the Preliminary Offering Memorandum or the Offering Memorandum, or any amendment or supplement thereto, or any order asserting that any of the transactions contemplated by this Agreement are subject to the registration requirements of the Act, has been issued. (iii) (A) The documents incorporated by reference in the Offering Memorandum, when they became effective or were filed with the Commission or were amended, as the case may be, did not 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; (B) the documents incorporated by reference in the Offering Memorandum when they became effective or were filed with the Commission or were amended, as the case may be, conformed in all material respects to the requirements of the Exchange Act; and (C) any further documents so filed and incorporated by reference in the Offering Memorandum or any further amendment or supplement hereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Exchange Act. (iv) Each of the Issuers and their non-Guarantor subsidiaries (A) has been duly incorporated or otherwise formed and is validly existing as a corporation or limited partnership, as the case may be, in good standing under the laws of its jurisdiction of formation; (B) has all requisite corporate or partnership power and authority, as the case may be, to carry on its business as it is currently being conducted and as described in the Offering Memorandum and to own, lease and operate its properties; and (C) is duly qualified and in good standing as a foreign corporation or limited partnership, as the case may be, authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified could reasonably be expected to (x) result, individually or in the aggregate, in a material adverse effect on the properties, business, results of operations, condition (financial or otherwise), affairs or prospects of the Issuers and their non-Guarantor subsidiaries, taken as a whole, (y) interfere with or adversely affect the issuance or marketability of the Securities pursuant hereto or (z) in any manner draw into question the validity of this Agreement or any other Operative Document or the transactions described in the Offering Memorandum under the captions "The Acquisition" and "Use of Proceeds" (any of the events set forth in clauses (x), (y) or (z), a "Material Adverse Effect"). (v) The Company has no subsidiaries other than the Allied Guarantors and the entities listed on Exhibit C (the "Allied Foreign Subsidiaries"); after giving effect to the Acquisition, the 7 9 Company will have no subsidiaries other than the Guarantors, the Allied Foreign Subsidiaries and the entities listed on Exhibit D (the "Ryder Foreign Subsidiaries"). (vi) All of the outstanding capital stock of each subsidiary (other than Allied Systems, Ltd.) of the Company is owned by the Company, free and clear of any security interest, claim, lien, limitation on voting rights or encumbrance, except for any such security interest, claim, lien, limitation on voting rights or encumbrance pursuant to the New Credit Facility; and all such securities have been duly authorized, validly issued, and are fully paid and nonassessable and were not issued in violation of any preemptive or similar rights. The Company owns, directly or through its subsidiaries, the sole general partnership interest in Allied Systems, Ltd., free and clear of any security interest, claim, lien, limitation on voting rights or encumbrance, except for any such security interest, claim, lien, limitation on voting rights or encumbrance pursuant to the New Credit Facility. The Company's general partnership interest, including the interest owned by its subsidiaries, in Allied Systems, Ltd. represents the right to 99% of the profits and losses of Allied Systems, Ltd. and the sole limited partners of Allied Systems Ltd. are subsidiaries of the Company. (vii) There are not currently any outstanding subscriptions, rights, warrants, calls, commitments of sale or options to acquire, or instruments convertible into or exchangeable for, any capital stock or other equity interest of the Company's subsidiaries. (viii) When the Securities are issued and delivered pursuant to this Agreement, none of the Securities will be of the same class (within the meaning of Rule 144A under the Act) as securities of any of the Issuers that are listed on a national securities exchange registered under Section 6 of the Exchange Act or that are quoted in a United States automated inter-dealer quotation system. (ix) Each of the Issuers has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and each of the other Operative Documents to which it is a party and to consummate the transactions contemplated hereby and thereby, including, without limitation, the corporate power and authority to issue, sell and deliver the Securities and the Exchange Securities as provided herein and therein. (x) This Agreement has been duly and validly authorized, executed and delivered by each of the Company and the Allied Guarantors and is the legal, valid and binding agreement of each of the Company and the Allied Guarantors, enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. (xi) The Indenture has been duly and validly authorized by each of the Company and the Allied Guarantors and, when duly executed and delivered by each of the Company and the Allied Guarantors, will be the legal, valid and binding obligation of each of the Company and the Allied Guarantors, enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. On the Closing Date, the Indenture will conform in all material respects to the requirements of the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission applicable to an indenture which is qualified thereunder. The Offering Memorandum contains a summary of the terms of the Indenture, which is accurate in all material respects. 8 10 (xii) The Registration Rights Agreement has been duly and validly authorized by each of the Company and the Allied Guarantors and, when duly executed and delivered by each of the Company and the Allied Guarantors, will be the legal, valid and binding obligation of each of the Company and the Allied Guarantors, enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. The Offering Memorandum contains a summary of the terms of the Registration Rights Agreement, which is accurate in all material respects. (xiii) The New Credit Facility has been duly and validly authorized by each of the Company and its subsidiaries party thereto and, when duly executed and delivered by each of the Company and such subsidiaries, will be the legal, valid and binding obligation of each of the Company and such subsidiaries, enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. The Offering Memorandum contains a summary of the terms of the New Credit Facility, which is accurate in all material respects. The Company will have at least $100.0 million of borrowings available to it under the New Credit Facility (giving effect to the borrowing base requirements of the New Credit Agreement) after the closing of the sale of Securities hereunder, the receipt by the Company of the proceeds therefore, initial borrowings under the New Credit Facility (as described in the Offering Memorandum under the caption "Capitalization") and the consummation of the Acquisition. (xiv) The Acquisition Agreement has been duly and validly authorized, executed and delivered by the Company and the Company's subsidiaries that are parties thereto and is the legal, valid and binding obligation of the Company and the Company's subsidiaries that are parties thereto, enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. The Offering Memorandum contains a summary of the terms of the Acquisition Agreement, which is accurate in all material respects. (xv) The Series A Notes have been duly and validly authorized by the Company for issuance and sale to the Initial Purchasers pursuant to this Agreement and, when issued and authenticated in accordance with the terms of the Indenture and delivered against payment therefor in accordance with the terms hereof and thereof, will be the legal, valid and binding obligations of the Company, enforceable against it in accordance with their terms and entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. The Offering Memorandum contains a summary of the terms of the Notes, which is accurate in all material respects. (xvi) The Series B Notes have been duly and validly authorized for issuance by the Company and, when issued and authenticated in accordance with the terms of the Exchange Offer and the Indenture, will be the legal, valid and binding obligations of the Company, enforceable against it in accordance with their terms and entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. 9 11 (xvii) The Guarantees of the Series A Notes have been duly and validly authorized by each of the Allied Guarantors and, when executed and delivered in accordance with the terms of the Indenture and when the Series A Notes have been issued and authenticated in accordance with the terms of the Indenture and delivered against payment therefor in accordance with the terms hereof and thereof, will be the legal, valid and binding obligations of each of the Allied Guarantors, enforceable against each of them in accordance with their terms and entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. The Offering Memorandum contains a summary of the terms of the Guarantees, which is accurate in all material respects. (xviii) The Series B Guarantees have been duly and validly authorized by each of the Allied Guarantors and, when executed and delivered in accordance with the terms of the Indenture and when the Series B Notes have been issued and authenticated in accordance with the terms of the Exchange Offer and the Indenture, will be the legal, valid and binding obligations of each of the Allied Guarantors, enforceable against each of them in accordance with their terms and entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. (xix) The statistical and market-related data included in the Offering Memorandum are based on or derived from sources which the Company believes to be reliable and accurate in all material respects. (xx) Each of the Company and its subsidiaries is not and, after giving effect to the Offering and the Acquisition, will not be, (A) in violation of its charter or bylaws: (B) in default in the performance of any bond, debenture, note, indenture, mortgage, deed of trust or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject, which singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect; or (C) in violation of any local, state, federal or foreign law, statute, ordinance, rule, regulation, requirement, judgment or court decree (including, without limitation, environmental laws, statutes, ordinances, rules, regulations, judgments or court decrees) applicable to it or any of its subsidiaries or any of its or their assets or properties (whether owned or leased), which singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Company and the Allied Guarantors, there exists no condition that, with notice, the passage of time or otherwise, would constitute a default under any such document or instrument. (xxi) None of (A) the execution, delivery or performance by any of the Issuers of this Agreement or any of the other Operative Documents to which it is a party; (B) the consummation of the Acquisition; (C) the issuance and sale of the Securities or the Exchange Securities and (D) consummation by the Issuers of the transactions described in the Offering Memorandum under the captions "The Acquisition" and "Use of Proceeds," violates, conflicts with or constitutes a breach of any of the terms or provisions of, or, after giving effect to the Acquisition, will violate, conflict with or constitute a breach of any of the terms or provisions of, or a default under (or an event that with notice or the lapse of time, or both, would constitute a default), or require consent under, or result in the imposition of a lien or encumbrance on any properties of the Company or any of its subsidiaries, or an acceleration of any indebtedness of the Company or any of its subsidiaries pursuant to, (1) the charter or bylaws of the Company or any of its 10 12 subsidiaries, (2) any bond, debenture, note, indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which any of them or their property is or may be bound, (3) any statute, rule or regulation applicable to the Company or any of its subsidiaries or any of their assets or properties or (4) any judgment, order or decree of any court or governmental agency or authority having jurisdiction over the Company or any of its subsidiaries or any of their assets or properties. No consent, approval, authorization or order of, or filing, registration, qualification, license or permit of or with, (A) any court or governmental agency, body or administrative agency or (B) any other person is required for (1) the execution, delivery and performance by any of the Issuers of this Agreement or any of the other Operative Documents to which it is a party, (2) the Acquisition or (3) the issuance and sale of the Securities, the issuance of the Exchange Securities and the transactions contemplated hereby and thereby, except such as have been or will be obtained and made on or prior to the Closing Date (or, in the case of the Registration Rights Agreement and the Exchange Securities, will be obtained and made under the Act, the Trust Indenture Act, and state securities or Blue Sky laws and regulations). (xxii) There is and, after giving effect to the Acquisition, will be (A) no action, suit, investigation or proceeding before or by any court, arbitrator or governmental agency, body or official, domestic or foreign, now pending or, to the best knowledge of the Company and the Allied Guarantors, threatened or contemplated to which the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) is or may be a party or to which the business or property of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition), is or, after giving effect to the Acquisition, may be subject; (B) no statute, rule, regulation or order that has been enacted, adopted or issued by any governmental agency or that has been proposed by any governmental body; and (C) no injunction, restraining order or order of any nature by a federal or state court or foreign court of competent jurisdiction to which the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) is or may be subject or to which the business, assets or property of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) is or may be subject, that, in the case of clauses (A), (B) and (C) above, (1) is required to be disclosed in the Preliminary Offering Memorandum and the Offering Memorandum and that is not so disclosed, or (2) could reasonably be expected to result in a Material Adverse Effect. (xxiii) No action has been taken and no statute, rule, regulation or order has been enacted, adopted or issued by any governmental agency that prevents the issuance of the Securities or the Exchange Securities or prevents or suspends the use of the Offering Memorandum; no injunction, restraining order or order of any nature by a federal or state court of competent jurisdiction has been issued that prevents the issuance of the Securities or the Exchange Securities or prevents or suspends the sale of the Securities or the Exchange Securities in any jurisdiction referred to in Section 4(e) hereof; and every request of any securities authority or agency of any jurisdiction for additional information has been complied with in all material respects. (xxiv) The Company has delivered to the Initial Purchasers true and correct copies of all documents and agreements related to the Acquisition and the New Credit Facility, including all amendments, alterations, modifications or waivers thereto and all exhibits, ancillary agreements, side-letters and schedules thereto. Any such documents delivered to the Initial Purchasers in draft form are in substantially final form and constitute the most current drafts thereof. 11 13 (xxv) There is and, after giving effect to the Acquisition, will be (A) no significant unfair labor practice complaint pending against the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) nor, to the best knowledge of the Company and the Allied Guarantors, threatened against any of them, before the National Labor Relations Board, any state or local labor relations board or any foreign labor relations board, and no significant grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) or, to the best knowledge of the Company and the Allied Guarantors, threatened against any of them; (B) no significant strike, labor dispute, slowdown or stoppage pending against the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) nor, to the best knowledge of the Company and the Allied Guarantors, threatened against the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition); and (C) to the best knowledge of the Company and the Allied Guarantors, no union representation question existing with respect to the employees of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition). To the best knowledge of the Company and the Allied Guarantors, no collective bargaining organizing activities are taking place with respect to the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition). None of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) has violated (A) any federal, state or local law or foreign law relating to discrimination in hiring, promotion or pay of employees; (B) any applicable wage or hour laws; or (C) any provision of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules and regulations thereunder, except those violations that could not reasonably be expected to have a Material Adverse Effect. (xxvi) None of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) has violated any foreign, federal, state or local law or regulation relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws") which could reasonably be expected to have a Material Adverse Effect. (xxvii) There is no alleged liability, or to the best knowledge of the Company and the Allied Guarantors, potential liability (including, without limitation, alleged or potential liability or investigatory costs, cleanup costs, governmental response costs, natural resource damages, property damages, personal injuries or penalties) of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) arising out of, based on or resulting from (a) the presence or release into the environment of any Hazardous Material (as defined) at any location, whether or not owned by the Company or such subsidiary, as the case may be, or (b) any violation or alleged violation of any Environmental Law, which alleged or potential liability is required to be disclosed in the Offering Memorandum, other than as disclosed therein, or could reasonably be expected to have a Material Adverse Effect. The term "Hazardous Material" means (i) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined by the Resource Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv) any polychlorinated biphenyl, and (v) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or substance regulated under or within the meaning of any other law relating to protection of human health or the environment or imposing liability or standards of conduct concerning any such chemical material, waste or substance. 12 14 (xxviii) Each of the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition) has and, after giving effect to the Acquisition, will have such permits, licenses, franchises and authorizations of governmental or regulatory authorities ("permits"), including, without limitation, under any applicable Environmental Laws, as are necessary to own, lease and operate their respective properties and to conduct their businesses except where the failure to have such permits could not reasonably be expected to result in a Material Adverse Effect; each of the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition) has and, after giving effect to the Acquisition, will have fulfilled and performed all of its obligations with respect to such permits and no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other material impairment of the rights of the holder of any such permit, except where the failure to fulfil such obligations or the occurrence of such event could not reasonably be expected to result in a Material Adverse Effect; and, except as described in the Offering Memorandum, such permits contain no restrictions that are materially burdensome to the Company or such subsidiary, as the case may be. (xxix) Each of the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition) has and, after giving effect to the Acquisition, will have (A) good and marketable title to all of the properties and assets described in the Offering Memorandum as owned by it, free and clear of all liens, charges, encumbrances and restrictions (except for Permitted Liens (as defined in the Indenture) and taxes not yet payable); (B) peaceful and undisturbed possession under all material leases to which any of them is a party as lessee and each of which lease is valid and binding and no default exists thereunder, except for defaults that could not reasonably be expected to have a Material Adverse Effect; (C) all licenses, certificates, permits, authorizations, approvals, franchises and other rights from, and has made all declarations and filings with, all federal, state and local authorities, all self-regulatory authorities and all courts and other tribunals (each, an "Authorization") necessary to engage in the business conducted by any of them in the manner described in the Offering Memorandum and; (D) no reason to believe that any governmental body or agency is considering limiting, suspending or revoking any such Authorization. All such Authorizations are and, after giving effect to the Acquisition, will be valid and in full force and effect and each of the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition) is in compliance in all material respects with the terms and conditions of all such Authorizations and with the rules and regulations of the regulatory authorities having jurisdiction with respect thereto. All material leases to which the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) is a party are valid and binding and no default by the Company or such subsidiary, as the case may be, has occurred and is continuing thereunder and, to the best knowledge of the Company and the Allied Guarantors, no material defaults by the landlord are existing under any such lease, except as could not reasonably be expected to have a Material Adverse Effect. (xxx) Each of the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition) owns, possesses or has and, after giving effect to the Acquisition, will have the right to employ all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, software, systems or procedures), trademarks, service marks and trade names, inventions, computer programs, technical data and information (collectively, the "Intellectual Property") presently employed by it in connection with the businesses now operated by it or that are proposed to be operated by it free and clear of and without violating any right, claimed right, 13 15 charge, encumbrance, pledge, security interest, restriction or lien of any kind of any other person, and none of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing. The use of the Intellectual Property in connection with the business and operations of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) does not infringe on the rights of any person, except as could not reasonably be expected to have a Material Adverse Effect. (xxxi) All material tax returns required to be filed by the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) in all jurisdictions have been, or will be by the Closing Date, so filed. All taxes, including withholding taxes, penalties and interest, assessments, fees and other charges due or claimed to be due from such entities or that are due and payable have been paid, other than those being contested in good faith and for which adequate reserves have been provided, those currently payable without penalty or interest or those that have been accrued in accordance with GAAP. To the knowledge of the Company and the Allied Guarantors, there are no material proposed additional tax assessments against the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition), or the assets or property of the Company or any of its subsidiaries, except those tax assessments for which adequate reserves have been established. (xxxii) None of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) is and, after giving effect to the Acquisition and the closing of the offering of the Securities and the application of the proceeds therefrom, will be an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act"). (xxxiii) There are no holders of securities of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) who, by reason of the execution by the Company and the Guarantors of this Agreement or any other Operative Document or the consummation by the Company and the Guarantors of the transactions contemplated hereby and thereby, have the right to request or demand that the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) register under the Act or analogous foreign laws and regulations securities held by them. (xxxiv) Each of the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition) maintains a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management's general or specific authorizations; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management's general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect thereto. (xxxv) Each of the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition) maintains insurance covering its properties, operations, personnel and businesses, insuring against such losses and risks as are consistent with industry practice to protect the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition) and their respective businesses. None of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) has received notice from any insurer or agent of 14 16 such insurer that substantial capital improvements or other expenditures will have to be made in order to continue such insurance. The Offering Memorandum contains a summary of the terms of all such insurance, which is accurate in all material respects. (xxxvi) None of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) has (A) taken, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of any security of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) to facilitate the sale or resale of the Securities or (B) since the date of the Preliminary Offering Memorandum (1) sold, bid for, purchased or paid any person any compensation for soliciting purchases of the Securities or (2) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition). (xxxvii) No registration under the Act of the Securities is required for the sale of the Securities to the Initial Purchasers as contemplated hereby or for the Exempt Resales assuming (A) that the purchasers who buy the Securities in the Exempt Resales are Eligible Purchasers and the Exempt Resales will be made in the manner contemplated by this Agreement and the Offering Memorandum (B) the compliance by the Initial Purchasers with their obligations under this Agreement and the accuracy of the Initial Purchasers' representations regarding the absence of general solicitation in connection with the sale of Securities to the Initial Purchasers and the Exempt Resales contained herein. No form of general solicitation or general advertising (as defined in Regulation D under the Act) was used by the Company, any of the Guarantors or any of their respective representatives (other than the Initial Purchasers, as to which the Company and the Allied Guarantors make no representation or warranty) in connection with the offer and sale of any of the Securities or in connection with Exempt Resales, including, but not limited to, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. No securities of the same class as any of the Securities or Exchange Securities have been issued and sold by the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) within the six-month period immediately prior to the date hereof. (xxxviii) Prior to the effectiveness of any Registration Statement, the Indenture is not required to be qualified under the Trust Indenture Act. (xxxix) None of the Company, the Guarantors or any of their respective affiliates or any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Company and the Allied Guarantors make no representation) has engaged or will engage in any directed selling efforts within the meaning of Regulation S with respect to any of the Securities or the Exchange Securities. (xl) The Securities offered and sold in reliance on Regulation S have been and will be offered and sold only in offshore transactions; provided that the Company and the Allied Guarantors make no representations with respect to the Initial Purchasers. (xli) The sale of the Securities pursuant to Regulation S is not part of a plan or scheme to evade the registration provisions of the Act; provided that the Company and the Allied Guarantors make no representations with respect to the Initial Purchasers. 15 17 (xlii) The Company, the Guarantors and their respective affiliates and all persons acting on their behalf (other than the Initial Purchasers, as to whom the Company and the Allied Guarantors make no representation) have complied with and will comply with the offering restrictions requirements of Regulation S in connection with the offering of the Securities outside the United States and, in connection therewith, the Preliminary Offering Memorandum and the Offering Memorandum contains or will contain the disclosure required by Rule 902(h). (xliii) Subsequent to the respective dates as of which information is given in the Offering Memorandum and up to the Closing Date, except as set forth in the Offering Memorandum, (A) none of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) has incurred any liabilities or obligations, direct or contingent, which are or, after giving effect to the Acquisition, will be material, individually or in the aggregate, to the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition), taken as a whole, nor entered into any transaction not in the ordinary course of business; (B) there has not been any change or development which, singly or in the aggregate, could reasonably be expected to result in a Material Adverse Effect; and (C) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock. (xliv) None of the execution, delivery and performance of this Agreement, the issuance and sale of the Securities, the application of the proceeds from the issuance and sale of the Securities and the consummation of the transactions contemplated thereby as set forth in the Offering Memorandum, will violate Regulations G, T, U or X promulgated by the Board of Governors of the Federal Reserve System or analogous foreign laws and regulations. (xlv) The accountants who have certified or will certify the financial statements included or to be included as part of the Offering Memorandum are independent certified public accountants within the meaning of the Act. The historical financial statements, together with related schedules and notes thereto, comply as to form in all material respects with the requirements applicable to registration statements on Form S-2 under the Act and present fairly in all material respects the financial position and results of operations of the Company and its subsidiaries, or of Ryder and its subsidiaries, as the case may be, at the dates and for the periods indicated. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods presented. The pro forma financial statements included in the Offering Memorandum have been prepared on a basis consistent with such historical statements of the Company, except for the pro forma adjustments specified therein, and give effect to assumptions made on a reasonable basis and present fairly in all material respects the historical and proposed transactions contemplated by this Agreement and the other Operative Documents; and such pro forma financial statements comply as to form in all material respects with the requirements applicable to pro forma financial statements included in registration statements on Form S-2 under the Act, except as expressly stated therein. The other financial and statistical information and data included in the Offering Memorandum, historical and pro forma, are accurately presented in all material respects and prepared on a basis consistent with the financial statements, historical and pro forma, included in the Offering Memorandum and the books and records of the Company and its subsidiaries. (xlvi) None of the Company or any of the Guarantors intends to, nor does it believe that it will, incur debts beyond its ability to pay such debts as they mature. The present fair saleable value of the assets of each of the Company and the Guarantors exceeds the amount that will be required to be paid on or in respect of its existing debts and other liabilities (including contingent 16 18 liabilities) as they become absolute and matured. The assets of each of the Company and the Guarantors do not constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Upon the issuance of the Securities and consummation of the Acquisition, the present fair saleable value of the assets of each of the Company and the Guarantors will exceed the amount that will be required to be paid on or in respect of its existing debts and other liabilities (including contingent liabilities) as they become absolute and matured. Upon the issuance of the Securities and the consummation of the Acquisition, the assets of each of the Company and the Guarantors will not constitute unreasonably small capital to carry out its business as now conducted, including the capital needs of each of the Company and the Guarantors, taking into account any anticipated capital requirements and capital availability. (xlvii) Except pursuant to this Agreement, there are no contracts, agreements or understandings between the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition) and any other person that would give rise to a valid claim against the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) or the Initial Purchasers for a brokerage commission, finder's fee or like payment in connection with the issuance, purchase and sale of the Securities. (xlviii) There exist no conditions that would constitute a default (or an event which with notice or the lapse of time, or both, would constitute a default) under any of the Operative Documents. (xlix) Each of the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition) has complied with all of the provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida statutes, and all regulations promulgated thereunder relating to doing business with the Government of Cuba or with any person or any affiliate located in Cuba. (l) Each certificate signed by any officer of the Company or any of the Guarantors and delivered to the Initial Purchasers or counsel for the Initial Purchasers shall be deemed to be a representation and warranty by the Company or such Guarantor, as the case may be, to the Initial Purchasers as to the matters covered thereby. The Company and the Allied Guarantors acknowledge that the Initial Purchasers and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Section 8 hereof, counsel for the Issuers and counsel for the Initial Purchasers, will rely upon the accuracy and truth of the foregoing representations and hereby consent to such reliance. (b) Each of the Initial Purchasers, severally and not jointly, represents, warrants and covenants to the Issuers and agrees that: (i) Such Initial Purchaser is a QIB, with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in the Securities. (ii) Such Initial Purchaser (A) is not acquiring the Securities with a view to any distribution thereof that would violate the Act or the securities laws of any state of the United States or any other applicable jurisdiction and (B) will be reoffering and reselling the Securities only to QIBs in reliance on the exemption from the registration requirements of the Act provided by Rule 144A and in offshore transactions in reliance upon Regulation S under the Act. 17 19 (iii) No form of general solicitation or general advertising (within the meaning of Regulation D under the Act) has been or will be used by such Initial Purchaser or any of its representatives in connection with the offer and sale of any of the Securities, including, but not limited to, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. (iv) In connection with the Exempt Resales, it will solicit offers to buy the Securities only from, and will offer to sell the Securities only to, Eligible Purchasers. Each of the Initial Purchasers further (A) agrees that it will offer to sell the Securities only to, and will solicit offers to buy the Securities only from (1) Eligible Purchasers that the Initial Purchasers reasonably believes are QIBs and (2) Reg S Investors and (B) that, in the case of such QIBs and such Reg S Investors, acknowledges and agrees that such Securities will not have been registered under the Act and may be resold, pledged or otherwise transferred only (x)(I) to a person whom the seller reasonably believes is a QIB purchasing for its own account or for the account of a QIB in a transaction meeting the requirements of Rule 144A, (II) in an offshore transaction (as defined in Rule 902 under the Act) meeting the requirements of Rule 904 under the Act, (III) in a transaction meeting the requirements of Rule 144 under the Act or (IV) in accordance with another exemption from the registration requirements of the Act (and based upon an opinion of counsel if the Company so requests), (y) to the Company or any of its subsidiaries, (z) pursuant to an effective registration statement under the Act and, in each case, in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction and (C) that the holder will, and each subsequent holder is required to, notify any purchaser of the security evidenced thereby of the resale restrictions set forth in (B) above. (v) Such Initial Purchaser agrees that it has offered the Securities and will offer and sell the Securities (A) as part of its distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering of the Securities pursuant hereto and the Closing Date, only in accordance with Rule 903 of Regulation S or another exemption from the registration requirements of the Act. Such Initial Purchaser agrees that, during such 40-day restricted period, it will not cause any advertisement with respect to the Securities (including any "tombstone" advertisement") to be published in any newspaper or periodical or posted in any public place and will not issue any circular relating to the Securities, except such advertisements as are permitted by and include the statements required by Regulation S. (vi) Such Initial Purchaser agrees that it has not offered or sold and will not offer or sell the Series A Notes sold pursuant hereto in reliance on Regulation S (A) as part of its distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering of the Series A Notes pursuant hereto and the Closing Date, to a U.S. person (as defined in Rule 902 of the Act) or for the account or benefit of a U.S. person (other than a distributor (as defined in Rule 902 of the Act)). (vii) Such Initial Purchaser agrees that, at or prior to confirmation of a sale of Securities by it to any distributor, dealer or person receiving a selling concession, fee or other remuneration during the 40-day restricted period referred to in Rule 903(c)(2) under the Act, it will send to such distributor, dealer or person receiving a selling concession, fee or other remuneration a confirmation or notice to substantially the following effect: 18 20 "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of your distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, except in either case in accordance with Regulation S under the Securities Act (or Rule 144A in transactions that are exempt from the registration requirements of the Securities Act), and in connection with any subsequent sale by you of the Securities covered hereby in reliance on Regulation S during the period referred to above to any distributor, dealer or person receiving a selling concession, fee or other remuneration, you must deliver a notice to substantially the foregoing effect. Terms used above have the meanings assigned to them in Regulation S." The Initial Purchasers understand that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Section 8 hereof, counsel for the Issuers and counsel for the Initial Purchasers will rely upon the accuracy and truth of the foregoing representations and hereby consents to such reliance. 6. Indemnification. (a) The Company and the Allied Guarantors, jointly and severally, agree, and will cause the Ryder Guarantors to agree (by executing the signature page attached hereto as Exhibit G hereto), to indemnify and hold harmless (i) each of the Initial Purchasers, (ii) each person, if any, who controls either of the Initial Purchasers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the respective officers, directors, partners, employees, representatives and agents of each of the Initial Purchasers or any controlling person to the fullest extent lawful, from and against any and all losses, liabilities, claims, damages and expenses whatsoever (including but not limited to reasonable attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a 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 Issuers will not be liable in any such case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information relating to either of the Initial Purchasers furnished to the Company in writing by or on behalf of such Initial Purchaser expressly for use therein. This indemnity agreement will be in addition to any liability which the Issuers may otherwise have, including under this Agreement. (b) Each of the Initial Purchasers, severally and not jointly, agrees to indemnify and hold harmless (i) the Issuers, (ii) each person, if any, who controls the Issuers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and (iii) the respective officers, 19 21 directors, partners, employees, representatives and agents of the Issuers or any controlling person, against any losses, liabilities, claims, damages and expenses whatsoever (including but not limited to reasonable attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a 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, in each case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information relating to such Initial Purchaser furnished to the Company in writing by or on behalf of such Initial Purchaser expressly for use therein; provided, however, that in no case shall either of the Initial Purchasers be liable or responsible for any amount in excess of the discounts and commissions received by such Initial Purchaser, as set forth on the cover page of the Offering Memorandum. This indemnity will be in addition to any liability which the Initial Purchasers may otherwise have, including under this Agreement. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 6 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to take charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying party or parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses of counsel shall be borne by the indemnifying parties; provided, however, that the indemnifying party under subsection (a) or (b) above shall only be liable for the legal expenses of one counsel (in addition to any local counsel) for all indemnified parties in each jurisdiction in which any claim or action is brought. Anything in this subsection to the contrary notwithstanding, an 20 22 indemnifying party shall not be liable for any settlement of any claim or action effected without its prior written consent, provided that such consent was not unreasonably withheld. 7. Contribution. In order to provide for contribution in circumstances in which the indemnification provided for in Section 6 is for any reason held to be unavailable from the Issuers or is insufficient to hold harmless a party indemnified thereunder, the Issuers, on the one hand, and each Initial Purchaser, on the other hand, shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature contemplated by such indemnification provision (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the Issuers, any contribution received by the Issuers from persons, other than the Initial Purchasers, who may also be liable for contribution, including persons who control the Issuers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the Company, the Guarantors and such Initial Purchaser may be subject, in such proportion as is appropriate to reflect the relative benefits received by the Issuers, on one hand, and such Initial Purchaser, on the other hand, from the offering of the Series A Notes or, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in Section 6, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Issuers, on one hand, and such Initial Purchaser, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Issuers, on one hand, and each Initial Purchaser, on the other hand, shall be deemed to be in the same proportion as (i) the total proceeds from the offering of Series A Notes (net of discounts but before deducting expenses) received by the Issuers and (ii) the discounts and commissions received by such Initial Purchaser, respectively, in each case as set forth in the table on the cover page of the Offering Memorandum. The relative fault of the Issuers, on one hand, and of each Initial Purchaser, on the other hand, 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 Guarantors or such Initial Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantors and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above. Notwithstanding the provisions of this Section 7, (i) in no case shall either of the Initial Purchasers be required to contribute any amount in excess of the amount by which the discounts and commissions applicable to the Series A Notes purchased by such Initial Purchaser pursuant to this Agreement exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission and (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. For purposes of this Section 7, (A) each person, if any, who controls either of the Initial Purchasers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the respective officers, directors, partners, employees, representatives and agents of each of the Initial Purchasers or any controlling person shall have the same rights to contribution as such Initial Purchaser, and (A) each person, if any, who controls the Issuers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the respective officers, directors, partners, employees, representatives and agents of the Issuers shall have the same rights to contribution as the Issuers, subject in each case to clauses (i) and (ii) of this Section 7. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim 21 23 for contribution may be made against another party or parties under this Section 7, notify such party or parties from whom contribution may be sought, but the failure to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 7 or otherwise. No party shall be liable for contribution with respect to any action or claim settled without its prior written consent, provided that such written consent was not unreasonably withheld. 8. Conditions of Initial Purchasers' Obligations. The obligations of the Initial Purchasers to purchase and pay for the Securities, as provided herein, shall be subject to the satisfaction of the following conditions: (a) All of the representations and warranties of the Company and the Allied Guarantors contained in this Agreement shall be true and correct on the date hereof and on the Closing Date (after giving effect to the Acquisition) with the same force and effect as if made on and as of the date hereof and the Closing Date, respectively. Each of the Company and the Allied Guarantors shall have performed or complied with all of the agreements herein contained and required to be performed or complied with by it at or prior to the Closing Date. (b) The Offering Memorandum shall have been printed and copies distributed to the Initial Purchasers not later than 10:00 a.m., New York City time, on the day following the date of this Agreement or at such later date and time as to which the Initial Purchasers may agree, and no stop order suspending the qualification or exemption from qualification of the Securities in any jurisdiction referred to in Section 4(e) shall have been issued and no proceeding for that purpose shall have been commenced or shall be pending or threatened. (c) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency which would, as of the Closing Date, prevent the issuance of the Securities or the consummation of the Acquisition; no action, suit or proceeding shall have been commenced and be pending against or affecting or, to the best knowledge of the Company and the Allied Guarantors, threatened against, the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) before any court or arbitrator or any governmental body, agency or official that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; and no stop order shall have been issued preventing the use of the Offering Memorandum, or any amendment or supplement thereto, or which could reasonably be expected to have a Material Adverse Effect. (d) Since the dates as of which information is given in the Offering Memorandum, (i) there shall not have been any material adverse change, or any development that is reasonably likely to result in a material adverse change, in the capital stock or the long-term debt, or material increase in the short-term debt, of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) from that set forth in the Offering Memorandum, (ii) no dividend or distribution of any kind shall have been declared, paid or made by the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) on any class of its capital stock and (iii) none of the Company or any of its subsidiaries (including subsidiaries to be acquired in the Acquisition) shall have incurred any liabilities or obligations, direct or contingent, that are or, after giving effect to the Acquisition, will be material, individually or in the aggregate, to the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition), taken as a whole, and that are required to be disclosed on a balance sheet or notes thereto in accordance with generally accepted accounting principles and 22 24 are not disclosed on the latest balance sheet or notes thereto included in the Offering Memorandum. Since the date hereof and since the dates as of which information is given in the Offering Memorandum, there shall not have occurred any material adverse change in the business, prospects, financial condition or results of operation of the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition), taken as a whole. (e) The Initial Purchasers shall have received certificates, dated the Closing Date, signed on behalf of the Issuers, in form and substance satisfactory to the Initial Purchasers, confirming, as of the Closing Date, the matters set forth in paragraphs (a), (b), (c) and (d) of this Section 8 and that, as of the Closing Date, the obligations of the Company and the Allied Guarantors to be performed hereunder on or prior thereto have been duly performed. (f) The Initial Purchasers shall have received on the Closing Date an opinion, dated the Closing Date, in form and substance satisfactory to the Initial Purchasers and counsel for the Initial Purchasers, of Troutman Sanders LLP (or local counsel or bank counsel, as appropriate), counsel for the Issuers, substantially in the form of Exhibit E hereto. (g) At the time this Agreement is executed and at the Closing Date, the Initial Purchasers shall have received from Arthur Andersen, LLP and KPMG Peat Marwick LLP, independent public accountants, dated as of the date of this Agreement and as of the Closing Date, customary comfort letters addressed to the Initial Purchasers and in form and substance satisfactory to the Initial Purchasers and counsel for the Initial Purchasers with respect to the financial statements and certain financial information of the Company and its subsidiaries, and of Ryder and its subsidiaries, contained in the Offering Memorandum and/or incorporated therein by reference. (h) The Initial Purchasers shall have received an opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, of Latham & Watkins, counsel for the Initial Purchasers, covering such matters as are customarily covered in such opinions. (i) The Initial Purchasers shall have received a certificate of the Company, dated the Closing Date, in form and substance satisfactory to the Initial Purchasers and counsel for the Initial Purchasers, as to the solvency of the Company following consummation of the Acquisition. (j) Latham & Watkins shall have been furnished with such documents, in addition to those set forth above, as they may reasonably require for the purpose of enabling them to review or pass upon the matters referred to in this Section 8 and in order to evidence the accuracy, completeness or satisfaction in all material respects of any of the representations, warranties or conditions herein contained. (k) Prior to the Closing Date, the Issuers shall have furnished to the Initial Purchasers such further information, certificates and documents as the Initial Purchasers may reasonably request. (l) The Issuers and the Trustee shall have entered into the Indenture and the Initial Purchasers shall have received counterparts, conformed as executed, thereof. (m) The Issuers shall have entered into the Registration Rights Agreement and the Initial Purchasers shall have received counterparts, conformed as executed, thereof. 23 25 (n) The Acquisition and the New Credit Facility shall be consummated prior to, or simultaneously with, the Closing of the Offering on substantially the terms described in the Offering Memorandum and the Initial Purchasers shall have received counterparts, conformed as executed, of the Acquisition Agreement and the New Credit Facility and such other documentation as they deem necessary to evidence the consummation thereof. (o) All of the opinions to be delivered by the Company and it subsidiaries (including subsidiaries to be acquired in the Acquisition) pursuant to the New Credit Facility and the Acquisition Agreement shall be addressed and delivered to the Initial Purchasers. (p) There shall not have been any announcement by any "nationally recognized statistical rating organization," as defined for purposes of Rule 463(g) under the Securities Act, that (i) it is downgrading its rating assigned to any class of securities of the Company or (ii) it is reviewing its ratings assigned to any class of securities of the Company with a view to possible downgrading, or with negative implications, or direction not determined. (q) The Securities shall have been approved for trading on PORTAL. All opinions, certificates, letters and other documents required by this Section 8 to be delivered by the Company and its subsidiaries (including subsidiaries to be acquired in the Acquisition) will be in compliance with the provisions hereof only if they are reasonably satisfactory in form and substance to the Initial Purchasers. The Company it subsidiaries (including subsidiaries to be acquired in the Acquisition) shall furnish the Initial Purchasers with such conformed copies of such opinions, certificates, letters and other documents as they shall reasonably request. 9. Initial Purchasers' Information. The Company and the Allied Guarantors acknowledge that the statements with respect to the offering of the Securities set forth in the last paragraph of the cover page and the third paragraph and the third sentence of the fourth paragraph under the caption "Plan of Distribution" in the Offering Memorandum constitute the only information relating to any of the Initial Purchasers furnished to the Company in writing by or on behalf of any of the Initial Purchasers expressly for use in the Offering Memorandum. 10. Survival of Representations and Agreements. All representations and warranties, covenants and agreements of the Initial Purchasers, the Company and the Allied Guarantors contained in this Agreement, including the agreements contained in Sections 4(f) and 11(d), the indemnity agreements contained in Section 6 and the contribution agreements contained in Section 7, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of either of the Initial Purchasers, any controlling person thereof, or by or on behalf of the Company and the Allied Guarantors or any controlling person thereof, and shall survive delivery of and payment for the Securities to and by the Initial Purchasers. The representations contained in Section 5 and the agreements contained in Sections 4(f), 6, 7 and 11(d) shall survive the termination of this Agreement, including any termination pursuant to Section 11. 11. Effective Date of Agreement; Termination. (a) This Agreement shall become effective upon execution and delivery of a counterpart hereof by each of the parties hereto. 24 26 (b) The Initial Purchasers shall have the right to terminate this Agreement at any time prior to the Closing Date by notice to the Company from the Initial Purchasers, without liability (other than with respect to Sections 6 and 7) on the Initial Purchasers' part to the Company or any of the Guarantors if, on or prior to such date, (i) the Company or any of the Guarantors shall have failed, refused or been unable to perform in any material respect any agreement on their part to be performed hereunder, (ii) any other condition to the obligations of the Initial Purchasers hereunder as provided in Section 8 is not fulfilled when and as required in any material respect, (iii) in the reasonable judgment of the Initial Purchasers, any material adverse change shall have occurred since the respective dates as of which information is given in the Offering Memorandum in the condition (financial or otherwise), business, properties, assets, liabilities, prospects, net worth, results of operations or cash flows of the Company and its subsidiaries, taken as a whole, other than as set forth in the Offering Memorandum, or (iv)(A) any domestic or international event or act or occurrence has materially disrupted, or in the opinion of the Initial Purchasers will in the immediate future materially disrupt, the market for the Company's securities or for securities in general; or (B) trading in securities generally on the New York or American Stock Exchange shall have been suspended or materially limited, or minimum or maximum prices for trading shall have been established, or maximum ranges for prices for securities shall have been required, on such exchange, or by such exchange or other regulatory body or governmental authority having jurisdiction; or (C) a banking moratorium shall have been declared by federal or state authorities, or a moratorium in foreign exchange trading by major international banks or persons shall have been declared; or (D) there is an outbreak or escalation of armed hostilities involving the United States on or after the date hereof, or if there has been a declaration by the United States of a national emergency or war, the effect of which shall be, in the Initial Purchasers' judgment, to make it inadvisable or impracticable to proceed with the offering or delivery of the Securities on the terms and in the manner contemplated in the Offering Memorandum; or (E) there shall have been such a material adverse change in general economic, political or financial conditions or if the effect of international conditions on the financial markets in the United States shall be such as, in the Initial Purchasers' judgment, makes it inadvisable or impracticable to proceed with the delivery of the Securities as contemplated hereby. (c) Any notice of termination pursuant to this Section 11 shall be by telephone or telephonic facsimile and, in either case, confirmed in writing by letter. (d) If this Agreement shall be terminated pursuant to any of the provisions hereof (otherwise than pursuant to clause (iv) of Section 11(b), in which case each party will be responsible for its own expenses), or if the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Initial Purchasers set forth herein is not satisfied or because of any refusal, inability or failure on the part of the Company or any of the Guarantors to perform any agreement herein or comply with any provision hereof, the Issuers shall reimburse the Initial Purchasers for all out-of-pocket expenses (including the reasonable fees and expenses of the Initial Purchasers' counsel), incurred by the Initial Purchasers in connection herewith. 12. Notice. All communications hereunder, except as may be otherwise specifically provided herein, shall be in writing and, if sent to the Initial Purchasers shall be mailed, delivered, telecopied and confirmed in writing or sent by a nationally recognized overnight courier service guaranteeing delivery on the next business day to Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167, Attention: Corporate Finance Department, telecopy number: (212) 272-3092, with a copy to Latham & 25 27 Watkins, 885 Third Avenue, Suite 1000, New York, New York 10022, Attention: Ian B. Blumenstein, telecopy number: (212) 751-4864; and if sent to the Company or any of the Guarantors, shall be mailed, delivered, telecopied and confirmed in writing or sent by a nationally recognized overnight courier service guaranteeing delivery on the next business day to Allied Holdings, Inc., 160 Clairemont Avenue, Suite 510, Decatur, Georgia 30030, Attention: Daniel H. Popky, telecopy number: (404) 370-4342, with a copy to Troutman Sanders LLP, 600 Peachtree Street, N.E., Atlanta, Georgia 30308-2216, Attention: Thomas M. Duffy, telecopy number: (404) 885-3900. 13. Parties. This Agreement shall inure solely to the benefit of, and shall be binding upon, the Initial Purchasers, the Company and the Allied Guarantors and the controlling persons and agents referred to in Sections 6 and 7, and their respective successors and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provision herein contained. The term "successors and assigns" shall not include a purchaser, in its capacity as such, of Securities from the Initial Purchasers. 14. CONSTRUCTION. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. TIME IS OF THE ESSENCE IN THIS AGREEMENT. 15. Captions. The captions included in this Agreement are included solely for convenience of reference and are not to be considered a part of this Agreement. 16. Counterparts. This Agreement may be executed in various counterparts which together shall constitute one and the same instrument. [Signature pages follow] 26 28 If the foregoing correctly sets forth the understanding among the Initial Purchasers, the Company and the Allied Guarantors please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among us. Very truly yours, ALLIED HOLDINGS, INC. By: --------------------------------------------- Name: Title: ALLIED AUTOMOTIVE GROUP, INC. By: --------------------------------------------- Name: Title: ALLIED INDUSTRIES INCORPORATED By: --------------------------------------------- Name: Title: HAUL RISK MANAGEMENT SERVICES, INC. By: --------------------------------------------- Name: Title: LINK INFORMATION SYSTEMS, INC. By: --------------------------------------------- Name: Title: 29 ALLIED SOUTHWOODS, INC. By: --------------------------------------------- Name: Title: AXIS GROUP, INC. By: --------------------------------------------- Name: Title: ALLIED SYSTEMS, LTD. (L.P.) BY: ALLIED AUTOMOTIVE GROUP, INC., as general partner By: --------------------------------------------- Name: Title: ALLIED, INC. By: --------------------------------------------- Name: Title: INTER MOBILE, INC. By: --------------------------------------------- Name: Title: LEGION TRANSPORTATION, INC. By: --------------------------------------------- Name: Title: 30 INNOVATIVE CAR CARRIERS, INC. By: --------------------------------------------- Name: Title: AUTOMOTIVE TRANSPORT SERVICES, INC. By: --------------------------------------------- Name: Title: AUTO HAULAWAY INC. By: --------------------------------------------- Name: Title: AUTO HAULAWAY RELEASING SERVICES (1981) LIMITED By: --------------------------------------------- Name: Title: AXIS INTERNATIONAL, INC. By: --------------------------------------------- Name: Title: AXIS TRUCK LEASING, INC. By: --------------------------------------------- Name: Title: 31 AXIS NORTH AMERICA, INC. By: --------------------------------------------- Name: Title: DECATUR DRIVER EXCHANGE COMPANY, INC. By: --------------------------------------------- Name: Title: CLAIREMONT DRIVER EXCHANGE COMPANY, INC. By: --------------------------------------------- Name: Title: KAR-TAINER INTERNATIONAL, INC. By: --------------------------------------------- Name: Title: A H ACQUISITION CORP. By: --------------------------------------------- Name: Title: CANADIAN ACQUISITION CORP. By: --------------------------------------------- Name: Title: 32 AXIS NATIONAL INCORPORATED By: --------------------------------------------- Name: Title: Accepted and agreed to as of the date first above written: BEAR, STEARNS & CO. INC. BT ALEX. BROWN INCORPORATED NATIONSBANC CAPITAL MARKETS, INC. BY: BEAR STEARNS & CO., INC. By: /s/ James B. Nish --------------------------------- Name: James B. Nish Title: Senior Managing Director 33 Ryder Guarantor Signature Page We hereby agree to be bound by the terms of the Purchase Agreement, dated as of September 19, 1997, by and among Allied Holdings, Inc., the Guarantors named on the signature page thereto and Bear, Stearns & Co., Inc., BT Alex. Brown Incorporated and NationsBanc Capital Markets, Inc. and to cooperate with Allied Holdings, Inc. and Guarantors in complying with their obligations thereunder. Dated: September 30, 1997 RC MANAGEMENT CORP. By: ----------------------------------- Name: Title: RYDER AUTOMOTIVE CARRIER SERVICES, INC. By: ----------------------------------- Name: Title: RYDER AUTOMOTIVE ACQUISITION, LLC BY: CANADIAN ACQUISITION CORP., AS MEMBER By: ----------------------------------- Name: Title: MCL RYDER TRANSPORT INC. By: ----------------------------------- Name: Title: 34 RYDER AUTOMOTIVE OPERATIONS, INC. By: ----------------------------------- Name: Title: RYDER FREIGHT BROKER, INC. By: ----------------------------------- Name: Title: QAT, INC. By: ----------------------------------- Name: Title: OSHCO, INC. By: ----------------------------------- Name: Title: TERMINAL SERVICE CO. By: ----------------------------------- Name: Title: F.J. BOUTELL DRIVEAWAY CO., INC. By: ----------------------------------- Name: Title: 35 RMX, INC. By: ----------------------------------- Name: Title: TRANSPORT SUPPORT, INC. By: ----------------------------------- Name: Title: COMMERICAL CARRIERS, INC. By: ----------------------------------- Name: Title: B&C, INC. By: ----------------------------------- Name: Title: 36 SCHEDULE I
Principal Amount Initial Purchaser of Securities - ----------------- ------------------- Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . . . . . $105,000,000 BT Alex. Brown Incorporated . . . . . . . . . . . . . . . . . . $ 30,000,000 NationsBanc Capital Markets, Inc. . . . . . . . . . . . . . . . $ 15,000,000 ------------ Total . . . . . . . . . . . . . . . . . . . . . . . . $150,000,000 ============
37 EXHIBIT A List of Allied Guarantors 1. Allied Automotive Group, Inc. 2. Allied Industries Incorporated 3. Haul Risk Management Services, Inc. 4. Link Information Systems, Inc. 5. Allied Southwoods, Inc. 6. Axis Group, Inc. 7. Allied Systems, Ltd. (L.P.) 8. Allied, Inc. 9. Inter Mobile, Inc. 10. Legion Transportation, Inc. 11. Innovative Car Carriers, Inc. 12. Automotive Transport Services, Inc. 13. Auto Haulaway Inc. 14. Auto Haulaway Releasing Services (1981) Limited 15. Axis International, Inc. 16. Axis Truck Leasing, Inc. 17. Axis North America, Inc. 18. Decatur Driver Exchange Company, Inc. 19. Clairemont Driver Exchange Company, Inc. 20. Kar-Tainer International, Inc. 21. A H Acquisition Corp. 22. Canadian Acquisition Corp. 23. Axis National Incorporated A-1 38 EXHIBIT B List of Ryder Guarantors 1. RC Management Corp. 2. Ryder Automotive Carrier Services, Inc. 3. Ryder Automotive Acquisition, LLC 4. MCL Ryder Transport Inc. 5. Ryder Automotive Operations, Inc. 6. Ryder Freight Broker, Inc. 7. QAT, Inc. 8. OSHCO, Inc. 9. Terminal Service Co. 10. F.J. Boutell Driveaway Co., Inc. 11. RMX, Inc. 12. Transport Support, Inc. 13. Commercial Carriers, Inc. 14. B&C, Inc. B-1 39 EXHIBIT C List of Allied Foreign Subsidiaries 1. AH Industries Inc. 2. Haul Insurance Limited 3. Kar-Tainer International Limited 4. Kar-Tainer International (Pty) Limited C-1 40 EXHIBIT D List of Ryder Foreign Subsidiaries None D-1 41 EXHIBIT E Form of Opinion of Troutman Sanders LLP 1. Each of the Issuers (a) is duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, (b) has all requisite corporate power and authority to carry on its business as it is currently being conducted and as described in the Offering Memorandum and to own, lease and operate its properties, and (c) is duly qualified and in good standing as a foreign corporation, authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. 2. Each of the Issuers has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and each of the other Operative Documents to which it is a party and to consummate the transactions contemplated hereby and thereby, including, without limitation, the corporate power and authority to issue, sell and deliver the Notes and to issue and deliver the Guarantees as provided herein. 3. All of the outstanding capital stock of each subsidiary of the Company is owned by the Company, free and clear of any security interest, claim, lien, limitation on voting rights or encumbrance; and all such securities have been duly authorized, validly issued, and are fully paid and nonassessable and were not issued in violation of any preemptive or similar rights. 4. This Agreement has been duly and validly authorized, executed and delivered by each of the Company and the Allied Guarantors. 5. The Registration Rights Agreement has been duly and validly authorized, executed and delivered by each of the Issuers, and is the valid and binding obligation of each of the Issuers, enforceable against each of them in accordance with its terms, except to the extent that (a) enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); and (b) the enforceability of indemnification and contribution provisions may be limited by Federal and state securities laws and the policies underlying such laws. 6. The Indenture has been duly and validly authorized, executed and delivered by each of the Issuers, and is the valid and binding obligation of each of the Issuers, enforceable against each of them in accordance with its terms (assuming the due authorization, execution and delivery of the Indenture by the Trustee), except to the extent that (a) enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); and (b) the waiver contained in Section 4.06 of the Indenture may be deemed unenforceable. 7. The New Credit Facility has been duly and validly authorized, executed and delivered by each of the Company and its subsidiaries party thereto, and is the valid and binding obligation of each of the Company and such subsidiaries, enforceable against each of them in accordance with its terms, except to the extent that (a) enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating E-1 42 to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and (b) the waiver contained in Section 25 of the New Credit Facility may be deemed unenforceable. 8. The Acquisition Agreement has been duly and validly authorized, executed and delivered by the Company, A H Acquisition Corp., Canadian Acquisition Corp. and Axis North America, Inc., and is the valid and binding obligation of the Company, A H Acquisition Corp., Canadian Acquisition Corp. and Axis North America, Inc., enforceable against its in accordance with its terms, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). 9. The Series A Notes have been duly and validly authorized and executed by the Company for issuance and sale to the Initial Purchasers pursuant to this Agreement, and, when authenticated in accordance with the terms of the Indenture and delivered against payment therefor in accordance with the terms hereof and thereof, the Series A Notes will be the valid and binding obligations of the Company, enforceable against it in accordance with their terms and entitled to the benefits of the Indenture, except to the extent that (a) enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); and (b) the waiver contained in Section 4.06 of the Indenture may be deemed unenforceable. The Offering Memorandum contains a summary of the terms of the Series A Notes, which is accurate in all material respects. 10. The Series B Notes have been duly and validly authorized for issuance by the Company, and, when issued and authenticated in accordance with the terms of the Exchange Offer and the Indenture, the Series B Notes will be the valid and binding obligations of the Company, enforceable against it in accordance with their terms and entitled to the benefits of the Indenture, except to the extent that (a) enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); and (b) the waiver contained in Section 4.06 of the Indenture may be deemed unenforceable. The Offering Memorandum contains a summary of the terms of the Series B Notes, which is accurate in all material respects. 11. The Guarantees have been duly and validly authorized and executed by each of the Guarantors, and when the Series A Notes have been issued and authenticated in accordance with the terms of the Indenture and delivered against payment therefor in accordance with the terms hereof and thereof, the Guarantees will be the valid and binding obligations of each of the Guarantors, enforceable against each of them in accordance with their terms and entitled to the benefits of the Indenture, except to the extent that (a) enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); and (b) the waiver contained in Section 4.06 of the Indenture may be deemed unenforceable. The Offering Memorandum contains a summary of the terms of the Guarantees, which is accurate in all material respects. E-2 43 12. The Series B Guarantees have been duly and validly authorized by each of the Guarantors, and when executed and delivered in accordance with the terms of the Indenture, and when the Series B Notes have been issued and authenticated in accordance with the terms of the Exchange Offer and the Indenture, the Series B Guarantees will be the valid and binding obligations of each of the Guarantors, enforceable against each of them in accordance with their terms and entitled to the benefits of the Indenture, except to the extent that (a) enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); and (b) the waiver contained in Section 4.06 of the Indenture may be deemed unenforceable. The Offering Memorandum contains a summary of the terms of the Series B Guarantees which is accurate in all material respects. 13. The Offering Memorandum contains a summary of the terms of each of the Indenture, the Registration Rights Agreement, the New Credit Facility and the Acquisition Agreement which, in each case, is accurate in all material respects. The statements under the captions "Description of Notes," "Notice to Investors" and "Plan of Distribution" in the Offering Memorandum, insofar as such statements constitute a summary of the legal matters, documents or proceedings referred to therein, present fairly in all material respects, such legal matters, documents and proceedings. 14. To the best of such counsel's knowledge, neither the Company nor any of its subsidiaries is (a) in violation of its charter or bylaws or (b) in default in the performance of any bond, debenture, note, indenture, mortgage, deed of trust or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject, which, in the case of clause (b), singly or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 15. No registration under the Act of the Securities is required for the sale of the Securities to the Initial Purchasers as contemplated hereby or for the Exempt Resales assuming (a) that each of the Initial Purchasers is a QIB, (b) that the purchasers who buy the Securities in the Exempt Resales are either QIBs or Reg S Investors, (c) the accuracy of the Initial Purchasers' representations regarding the absence of general solicitation in connection with the sale of Securities to the Initial Purchasers and the Exempt Resales contained herein and (d) the accuracy of the Company's and the Allied Guarantors' representations in Sections 5(a)(viii) and (xxxvi) (other than with respect to the first sentence). 16. Each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its date, and each amendment or supplement thereto, as of its date (except for the financial statements and related notes, the financial statement schedules and other financial and statistical data included therein or omitted therefrom, as to which no opinion need be expressed), contains the information specified in, and meets the requirements of, Rule 144A(d)(4) under the Act. 17. When the Securities are issued and delivered pursuant to this Agreement, no Securities will be of the same class (within the meaning of Rule 144A under the Act) as securities of the Company or of any of the Guarantors that are listed on a national securities exchange registered under Section 6 of the Exchange Act or that are quoted in a United States automated inter-dealer quotation system. E-3 44 18. None of (a) the execution, delivery or performance by the Company or any of the Guarantors of this Agreement or any of the other Operative Documents to which it is a party, (b) the consummation of the Acquisition, (c) the issuance and sale of the Notes and the issuance of the Guarantees and (d) consummation by the Company of the transactions described in the Offering Memorandum under the caption "Use of Proceeds," violates, conflicts with or constitutes a breach of any of the terms or provisions of, or a default under (or an event that with notice or the lapse of time, or both, would constitute a default), or requires consent under, or results in the imposition of a lien or encumbrance on any properties of the Company or any of its subsidiaries, or an acceleration of any indebtedness of the Company or any of its subsidiaries pursuant to, (i) the charter or bylaws of the Company or any of its subsidiaries, (ii) any bond, debenture, note, indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which any of them or their property is or may be bound that has been filed or incorporated by reference as an exhibit to any filing by the Company or any of its subsidiaries with the Commission, (iii) any statute, rule or regulation applicable to the Company or any its subsidiaries or any of their assets or properties or (iv) to the best of such counsel's knowledge, any judgment, order or decree of any court or governmental agency or authority having jurisdiction over the Company or any of its subsidiaries or any of their assets or properties. Assuming compliance with applicable state securities and Blue Sky laws, as to which such counsel need express no opinion, and except for the filing of a registration statement under the Act and qualification of the Indenture under the Trust Indenture Act, or in connection with the Registration Rights Agreement, no consent, approval, authorization or order of, or filing, registration, qualification, license or permit of or with, (a) any court or governmental agency, body or administrative agency or (b) any other person is required for (i) the execution, delivery and performance by the Company or any of the Guarantors of this Agreement or any of the other Operative Documents to which it is a party, (ii) the Acquisition or (iii) the issuance and sale of the Notes and the issuance of the Guarantees and the transactions contemplated hereby and thereby, except such as have been obtained and made or have been disclosed in the Offering Memorandum. 19. To the best of such counsel's knowledge, there is (a) no action, suit, investigation or proceeding before or by any court, arbitrator or governmental agency, body or official, domestic or foreign, now pending or threatened or contemplated to which the Company or any of its subsidiaries is or may be a party or to which the business or property of the Company or any of its subsidiaries, is or may be subject, (b) no statute, rule, regulation or order that has been enacted, adopted or issued by any governmental agency or that has been proposed by any governmental body and (c) no injunction, restraining order or order of any nature by a federal or state court or foreign court of competent jurisdiction to which the Company or any of its subsidiaries is or may be subject or to which the business, assets, or property of the Company or any of its subsidiaries is or may be subject, that, in the case of clauses (a), (b) and (c) above, is required to be disclosed in the Preliminary Offering Memorandum and the Offering Memorandum and that is not so disclosed. 20. None of the Company or any of its subsidiaries is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act. 21. To the best of such counsel's knowledge, there are no holders of securities of the Company or any of its subsidiaries who, by reason of the execution by the Company and the Guarantors of this Agreement or any other Operative Document or the consummation by the Company and the Guarantors of the transactions contemplated hereby and thereby, have the right E-4 45 to request or demand that the Company or any of its subsidiaries register under the Act or analogous foreign laws and regulations securities held by them. 22. To the best of such counsel's knowledge, there are not currently any outstanding subscriptions, rights, warrants, calls, commitments of sale or options to acquire, or instruments convertible into or exchangeable for, any capital stock or other equity interest of any subsidiary of the Company. 23. To the best of such counsel's knowledge, no stop order preventing the use of the Preliminary Offering Memorandum or the Offering Memorandum, or any amendment or supplement thereto, or any order asserting that any of the transactions contemplated by this Agreement are subject to the registration requirements of the Act, has been issued. 24. The documents incorporated by reference in the Offering Memorandum, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Exchange Act. 25. The Indenture complies as to form in all material respects with the requirements of the Trust Indenture Act and the rules and regulations of the Commission applicable to an indenture which is qualified thereunder. Prior to the Exchange Offer or the effectiveness of the Shelf Registration Statement, the Indenture is not required to be qualified under the Trust Indenture Act. In addition, such counsel shall state that it has participated in conferences with officers and other representatives of the Company, Ryder System, Inc. and the Guarantors, representatives of the independent certified public accountants of the Company, Ryder System, Inc. and the Guarantors and the Initial Purchasers and their representatives at which the contents of the Preliminary Offering Memorandum and the Offering Memorandum and related matters were discussed and, although it has not undertaken to investigate or verify independently, and does not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Preliminary Offering Memorandum or the Offering Memorandum (except as indicated above), on the basis of the foregoing (relying as to materiality to the extent such counsel deems appropriate upon facts provided to such counsel by officers or other representatives of the Company and the Ryder Guarantors and without independent verification of such facts), no facts have come to its attention which led it to believe that the Preliminary Offering Memorandum or the Offering Memorandum (in each case, including the documents incorporated by reference therein), as of its date or the Closing Date, contained an untrue statement of a material fact or omitted to state any 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 (except as to financial statements and related notes, the financial statement schedules and other financial and statistical data included therein). E-5 46 EXHIBIT G Form of Ryder Guarantor Signature Page We hereby agree to be bound by the terms of the Purchase Agreement, dated as of September 19, 1997, by and among Allied Holdings, Inc., the Guarantors named on the signature page thereto and Bear, Stearns & Co., Inc., BT Alex. Brown Incorporated and NationsBanc Capital Markets, Inc. and to cooperate with Allied Holdings, Inc. and the Guarantors in complying with their obligations thereunder. Dated: September 30, 1997 RC MANAGEMENT CORP. By: ---------------------------------- Name: Title: RYDER AUTOMOTIVE CARRIER SERVICES, INC. By: ---------------------------------- Name: Title: RYDER AUTOMOTIVE ACQUISITION, LLC BY: CANADIAN ACQUISITION CORP., AS MEMBER By: ---------------------------------- Name: Title: MCL RYDER TRANSPORT INC. By: ---------------------------------- Name: Title: G-1 47 RYDER AUTOMOTIVE OPERATIONS, INC. By: ---------------------------------- Name: Title: RYDER FREIGHT BROKER, INC. By: ---------------------------------- Name: Title: QAT, INC. By: ---------------------------------- Name: Title: OSHCO, INC. By: ---------------------------------- Name: Title: TERMINAL SERVICE CO. By: ---------------------------------- Name: Title: F.J. BOUTELL DRIVEAWAY CO., INC. By: ---------------------------------- Name: Title: G-2 48 RMX, INC. By: ---------------------------------- Name: Title: TRANSPORT SUPPORT, INC. By: ---------------------------------- Name: Title: COMMERCIAL CARRIERS, INC. By: ---------------------------------- Name: Title: B&C, INC. By: ---------------------------------- Name: Title: G-3 49 EXIBIT F ================================================================================ REGISTRATION RIGHTS AGREEMENT Dated as of September 30, 1997 by and among Allied Holdings, Inc., the Guarantors Named on the Signature Pages Hereto and Bear, Stearns & Co. Inc., BT Alex. Brown Incorporated NationsBanc Capital Markets, Inc. ================================================================================ 50 This Registration Rights Agreement (this "Agreement") is made and entered into as of September 30, 1997 by and among Allied Holdings, Inc., a Georgia corporation (the "Company"), the guarantors named on the signature pages hereto (collectively, the "Guarantors" and, together with the Company, the "Issuers"), and Bear, Stearns & Co., BT Alex. Brown Incorporated and NationsBanc Capital Markets, Inc. (collectively, the "Initial Purchasers"), who have agreed to purchase the Company's 85/8% Series A Senior Notes due 2007 (together with the guarantees thereof by the Guarantors, the "Series A Notes") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated September 19, 1997 (the "Purchase Agreement"), by and among the Issuers and the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Series A Notes, the Issuers have agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 3 of the Purchase Agreement. The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: Act: The Securities Act of 1933, as amended. Broker-Dealer: Any broker or dealer registered under the Exchange Act. Closing Date: The date of this Agreement. Commission: The Securities and Exchange Commission. Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Series B Notes to be issued in the Exchange Offer, (b) the maintenance of such Registration Statement as continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (c) the delivery by the Issuers to the Registrar under the Indenture of Series B Notes in the same aggregate principal amount as the aggregate principal amount of Series A Notes that were tendered by Holders thereof pursuant to the Exchange Offer. Damages Payment Date: With respect to the Series A Notes, each Interest Payment Date. Effectiveness Target Date: As defined in Section 5. Exchange Act: The Securities Exchange Act of 1934, as amended. Exchange Offer: The registration by the Issuers under the Act of the Series B Notes pursuant to the Exchange Offer Registration Statement pursuant to which the Issuers offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Series B Notes in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders. 51 Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus. Exempt Resales: The transactions in which the Initial Purchasers propose to sell the Series A Notes to (a) certain other "qualified institutional buyers," as such term is defined in Rule 144A under the Act and (b) non-U.S. persons outside the United States in reliance upon Regulation S under the Act. Holders: As defined in Section 2(b) hereof. Indenture: The Indenture, dated as of the date hereof, among the Issuers and The First National Bank of Chicago, as trustee (the "Trustee"), pursuant to which the Notes are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof. Initial Purchasers: As defined in the preamble hereto. Interest Payment Date: As defined in the Indenture and the Notes. NASD: National Association of Securities Dealers, Inc. Notes: The Series A Notes and the Series B Notes. Person: An individual, partnership, corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof. Prospectus: The prospectus included in a Registration Statement, including, without limitation, the Exchange Offer Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. Record Holder: With respect to any Damages Payment Date relating to Notes, each Person who is a Holder of Notes on the record date with respect to the Interest Payment Date on which such Damages Payment Date shall occur. Registration Default: As defined in Section 5 hereof. Registration Statement: Any registration statement of the Issuers relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. Series B Notes: The Company's 85/8% Series B Senior Notes due 2007 (together with the guarantees thereof by the Guarantors) to be issued pursuant to the Indenture (a) in the Exchange Offer or (b) pursuant to a Shelf Registration Statement, in each case, in exchange for Series A Notes. Shelf Filing Deadline: As defined in Section 4 hereof. Shelf Registration Statement: As defined in Section 4 hereof. 2 52 TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indenture. Transfer Restricted Securities: Each Note, until the earliest to occur of (a) the date on which such Note is exchanged in the Exchange Offer and entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Act, (b) the date on which such Note has been effectively registered under the Act and disposed of in accordance with a Shelf Registration Statement and (c) the date on which such Note is distributed to the public pursuant to Rule 144 under the Act or by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein). Underwritten Registration or Underwritten Offering: A registration in which securities of the Issuers are sold to an underwriter for reoffering to the public. SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT (a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities. (b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities of record. SECTION 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with), the Issuers shall (i) cause to be filed with the Commission on or prior to the 30th day after the Closing Date, the Exchange Offer Registration Statement, (ii) use their reasonable best efforts to cause such Exchange Offer Registration Statement to become effective on or prior to the 90th day after the Closing Date, (iii) in connection with the foregoing, file (A) all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause such Exchange Offer Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings in connection with the registration and qualification of the Series B Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting registration of the Series B Notes to be offered in exchange for the Transfer Restricted Securities and to permit resales of Notes held by Broker-Dealers as contemplated by Section 3(c) below. (b) The Issuers shall cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 business days after the date notice of the Exchange Offer has been mailed to Holders. The Issuers shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Notes shall be included in the Exchange Offer Registration Statement. The Issuers shall use their reasonable best efforts to cause 3 53 the Exchange Offer to be Consummated on or prior to the 30th business day after the Exchange Offer Registration Statement has become effective. (c) The Issuers shall indicate in a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement that any Broker-Dealer who holds Series A Notes that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Issuers) may exchange such Series A Notes pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with any resales of the Series B Notes received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of Distribution" section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy after the date of this Agreement. The Issuers shall use their reasonable best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) below to the extent necessary to ensure that it is available for resales of Notes acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of one year from the date on which the Exchange Offer Registration Statement is declared effective. The Issuers shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such one-year period in order to facilitate such resales. SECTION 4. SHELF REGISTRATION (a) Shelf Registration. If (i) the Issuers are not required to file an Exchange Offer Registration Statement or permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy now or hereafter existing (after the procedures set forth in Section 6(a) below have been complied with) or (ii) any Holder of Transfer Restricted Securities notifies the Company on or prior to the 20th business day following the Consummation of the Exchange Offer (A) that such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) that such Holder may not resell the Series B Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder, or (C) that such Holder is a Broker-Dealer and holds Series A Notes acquired directly from the Issuers or one of their affiliates, then the Issuers shall: (x) Use their reasonable best efforts to file a shelf registration statement with the Commission pursuant to Rule 415 under the Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the "Shelf Registration Statement") on or prior to the earliest to occur of (1) the 30th day after the date on which the Issuers determine that they are not required to file the Exchange Offer Registration Statement and (2) the 30th day after the date on which the Company receives notice from a Holder of Transfer Restricted 4 54 Securities as contemplated by clause (ii) above (such earliest date being the "Shelf Filing Deadline"), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and (y) Cause such Shelf Registration Statement to be declared effective by the Commission on or prior to the 60th day after the Shelf Filing Deadline. The Issuers shall use their best efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Notes by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years following the Closing Date. (b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 business days after receipt of a request therefor, such information as the Issuers may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder shall have used its best efforts to provide all such reasonably requested information. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Issuers all information required to be disclosed in order to make the information previously furnished to the Issuers by such Holder not misleading. SECTION 5. LIQUIDATED DAMAGES If (a) any of the Registration Statements required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (b) any of such Registration Statements has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the "Effectiveness Target Date"), (c) the Exchange Offer has not been Consummated within 30 business days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (d) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared effective (each such event referred to in clauses (a) through (d), a "Registration Default"), the Issuers hereby jointly and severally agree to pay Liquidated Damages to each Holder of Transfer Restricted Securities with respect to the first 90-day period immediately following the occurrence of the first Registration Default, in an amount equal to $.05 per week per $1,000 principal amount of Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues. The amount of the Liquidated Damages shall increase by an additional $.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal amount of Transfer Restricted Securities. All accrued Liquidated Damages shall be paid by the Issuers on each Damages Payment Date to Record Holders by wire transfer of immediately available funds or by federal funds check and to Holders of Certificated Securities by wire transfers to the accounts specified 5 55 by them or by mailing checks to their registered addresses if no such accounts have been specified on each Damages Payment Date, as provided in the Indenture. Following the cure of all Registration Defaults relating to any particular Transfer Restricted Securities, the accrual of Liquidated Damages with respect to such Transfer Restricted Securities will cease. All obligations of the Issuers set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full. SECTION 6. REGISTRATION PROCEDURES (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Issuers shall comply with all of the provisions of Section 6(c) below, shall use their reasonable best efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions: (i) If in the reasonable opinion of counsel to the Issuers there is a question as to whether the Exchange Offer is permitted by applicable law, the Issuers hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Issuers to Consummate an Exchange Offer for such Series A Notes. Each of the Issuers hereby agrees to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. Each of the Issuers hereby agrees, however, to (A) participate in telephonic conferences with the Commission, (B) deliver to the Commission staff an analysis prepared by counsel to the Issuers setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursue a resolution (which need not be favorable) by the Commission staff of such submission. (ii) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Issuers, prior to the Consummation thereof, a written representation to the Issuers (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of any Issuer, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Series B Notes to be issued in the Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Issuers'preparations for the Exchange Offer. Each Holder, by its acceptance of Series A Notes, shall be deemed to have acknowledged and agreed that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Series B Notes 6 56 obtained by such Holder in exchange for Series A Notes acquired by such Holder directly from the Issuers. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Issuers shall provide a supplemental letter to the Commission (A) stating that the Issuers are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any no-action letter obtained pursuant to clause (i) above and (B) including a representation that none of the Issuers has entered into any arrangement or understanding with any Person to distribute the Series B Notes to be received in the Exchange Offer and that, to the best of the Issuers' information and belief, each Holder participating in the Exchange Offer is acquiring the Series B Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Series B Notes received in the Exchange Offer. (b) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Issuers shall comply with all the provisions of Section 6(c) below and shall use their reasonable best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto the Issuers will as expeditiously as possible prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof. (c) General Provisions. In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Notes by Broker-Dealers), the Issuers shall: (i) use their reasonable best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements (including, if required by the Act or any regulation thereunder, financial statements of the Guarantors) for the period specified in Section 3 or 4 hereof, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Issuers shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use their reasonable best efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter; (ii) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; 7 57 (iii) advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Issuers shall use their reasonable best efforts to promptly obtain the withdrawal or lifting of such order; (iv) furnish to each of the selling Holders and each of the underwriter(s), if any, (all of whom shall be deemed to have acknowledged the confidentiality of the information contained in the foregoing documents) before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders and underwriter(s), if any, for a period of at least five business days, and the Issuers will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which a selling Holder of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object within five business days after the receipt thereof. A selling Holder or underwriter, if any, shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission or fails to comply with the applicable requirements of the Act; (v) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the selling Holders and to the underwriter(s), if any, make the Issuers' representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such selling Holders or underwriter(s), if any, reasonably may request; (vi) make available at reasonable times for inspection by the selling Holders, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney or accountant retained by such selling Holders or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of the Issuers and cause the Issuers' officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement subsequent to the filing thereof and prior to its effectiveness; 8 58 (vii) if requested by any selling Holders or the underwriter(s), if any, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Issuers are notified of the matters to be included in such Prospectus supplement or post-effective amendment; (viii) in the case of a Shelf Registration Statement, cause the Transfer Restricted Securities covered by the Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Notes covered thereby or the underwriter(s), if any; (ix) furnish to each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Issuers hereby consent to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; provided, that such use of the Prospectus and any amendment or supplement thereto and such offering and sale conforms to the "Plan of Distribution" section contained in the Prospectus and complies with this Agreement and all applicable laws and regulations; (xi) enter into such agreements (including an underwriting agreement), and make such representations and warranties, and take all such other customary actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Shelf Registration Statement contemplated by this Agreement, all to such extent as may be requested by the Initial Purchasers or by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Shelf Registration Statement contemplated by this Agreement; and whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, the Issuers shall: (A) furnish to each of the Initial Purchasers, each selling Holder and each underwriter, if any, in such substance and scope as they may request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the effectiveness of the Shelf Registration Statement: (1) a certificate, dated the date of effectiveness of the Shelf Registration Statement, signed by (x) an authorized executive officer and (y) a principal financial or accounting officer of each of the Issuers, confirming, as of the date thereof, the matters set forth in paragraphs (a), (b), (c) and (d) of Section 8 of the Purchase Agreement and such other matters as such parties may reasonably request; 9 59 (2) an opinion, dated the date of effectiveness of the Shelf Registration Statement, of counsel for the Issuers, covering the matters set forth in paragraphs (1) through (25) of Exhibit E to the Purchase Agreement and such other matters as such parties may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Issuers, representatives of the independent public accountants for the Issuers, the Initial Purchasers' representatives and the Initial Purchasers' counsel in connection with the preparation of such Registration Statement and the related Prospectus and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to a large extent upon facts provided to such counsel by officers and other representatives of the Issuers and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated as of the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, from the Issuers' independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters by underwriters in connection with primary underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 8 of the Purchase Agreement, without exception; (B) set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof (and any other customary indemnification provisions and procedures that any underwriters may reasonably request) with respect to all parties to be indemnified pursuant to said Section; and (C) deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Issuers pursuant to this clause (xi), if any. If at any time the representations and warranties of the Issuers contemplated in clause (A)(1) above cease to be true and correct, the Issuers shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing; (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the 10 60 registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders or underwriter(s) may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided, however, that none of the Issuers shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) shall issue, upon the request of any Holder of Series A Notes covered by the Shelf Registration Statement, Series B Notes, having an aggregate principal amount equal to the aggregate principal amount of Series A Notes surrendered to the Issuers by such Holder in exchange therefor or being sold by such Holder; such Series B Notes to be registered in the name of such Holder or in the name of the purchaser(s) of such Notes, as the case may be; in return, the Series A Notes held by such Holder shall be surrendered to the Issuers for cancellation; (xiv) cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two business days prior to any sale of Transfer Restricted Securities made by such underwriter(s); (xv) use their best efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (viii) above; (xvi) if any fact or event contemplated by clause (c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (xvii) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of the Registration Statement and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depositary Trust Company; (xviii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter") that is required to be retained in accordance with the rules and regulations of the NASD, and use its reasonable best efforts to cause such Registration Statement to become effective and approved by such governmental agencies or authorities as may be necessary to enable the Holders selling Transfer Restricted Securities to consummate the disposition of such Transfer Restricted Securities; 11 61 (xix) otherwise use their reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement; (xx) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use their reasonable best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; (xxi) cause all Transfer Restricted Securities covered by the Registration Statement to be listed on each securities exchange on which similar securities issued by the Issuers are then listed if requested by the Holders of a majority in aggregate principal amount of Series A Notes or the managing underwriter(s), if any; and (xxii) provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Issuers of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will keep such notice confidential and forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing (the "Advice") by the Issuers that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Issuers, each Holder will deliver to the Issuers (at the Issuers' expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event the Issuers shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or shall have received the Advice. SECTION 7. REGISTRATION EXPENSES (a) All expenses incident to the Issuers' performance of or compliance with this Agreement will be borne by the Issuers, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchasers or Holder with the NASD (and, if applicable, the fees and expenses of any "qualified independent underwriter" and its counsel that may be required by the rules and regulations of the NASD)); (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities 12 62 laws; (iii) all expenses of printing (including printing certificates for the Series B Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Issuers and, subject to Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Issuers (including the expenses of any special audit and comfort letters required by or incident to such performance). The Issuers will, in any event, bear their internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Issuers. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Issuers will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities being tendered in the Exchange Offer and/or resold pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Latham & Watkins or such other counsel as may be chosen by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. SECTION 8. INDEMNIFICATION (a) The Issuers, jointly and severally, agree to indemnify and hold harmless (i) each Holder, (ii) each person, if any, who controls any Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the respective officers, directors, partners, employees, representatives and agents of each Holder or any controlling person to the fullest extent lawful, from and against any and all losses, liabilities, claims, damages and expenses whatsoever (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a 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 Issuers will not be liable in any such case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information relating to any Holder furnished to the Issuers in writing by or on behalf of such Holder expressly for use therein. This indemnity agreement will be in addition to any liability which the Issuers may otherwise have, including, under this Agreement. (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless (i) the Issuers, (ii) each person, if any, who controls the Issuers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) each person, if any, who controls any Issuer, against any 13 63 losses, liabilities, claims, damages and expenses whatsoever (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a 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, in each case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information relating to any Holder furnished to the Issuers in writing by or on behalf of such Holder expressly for use therein; provided, however, that in no case shall any Holder be liable or responsible for any amount in excess of the dollar amount of the proceeds received by such Holder upon the sale of the Notes giving rise to such indemnification obligation. This indemnity will be in addition to any liability which any Holder may otherwise have, including under this Agreement. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to take charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying party or parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses of counsel shall be borne by the indemnifying parties; provided, however, that the indemnifying party under subsection (a) or (b) above shall only be liable for the legal expenses of one counsel (in addition to any local counsel) for all indemnified parties in each jurisdiction in which any claim or action is brought. Anything in this subsection to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its prior written consent; provided, however, that such consent was not unreasonably withheld. (d) In order to provide for contribution in circumstances in which the indemnification provided for in this Section 8 is for any reason held to be unavailable from the Issuers or is insufficient to hold harmless a party indemnified hereunder, the Issuers, on the one hand, and each Holder, on the other hand, shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature 14 64 contemplated by such indemnification provision (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the Issuers, any contribution received by the Issuers from persons, other than the Holders, who may also be liable for contribution, including persons who control the Issuers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the Issuers and such Holder may be subject, in such proportion as is appropriate to reflect the relative benefits received by the Issuers, on one hand, and such Holder, on the other hand, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in this Section 8, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Issuers, on the one hand, and such Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Issuers, on one hand, and each Holder, on the other hand, shall be deemed to be in the same proportion as (i) the total proceeds from the offering of the Notes (net of discounts but before deducting expenses) received by the Issuers and (ii) the total proceeds received by such Holder upon the sale of the Notes giving rise to such indemnification obligation. The relative fault of the Issuers, on the one hand, and of each Holder, on the other hand, 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 Issuers or such Holder and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Issuers and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above. Notwithstanding the provisions of this Section 8(d), (i) in no case shall any Holder be required to contribute any amount in excess of the dollar amount by which the proceeds received by such Holder upon the sale of the Notes exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission and (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. For purposes of this Section 8(d), (A) each person, if any, who controls any Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the respective officers, directors, partners, employees, representatives and agents of each Holder or any controlling person shall have the same rights to contribution as such Holder, and each person, if any, who controls the Issuers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as the Issuers, subject in each case to clauses (i) and (ii) of this Section 8(d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 8(d), notify such party or parties from whom contribution may be sought, but the failure to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 8(d) or otherwise. No party shall be liable for contribution with respect to any action or claim settled without its prior written consent; provided, however, that such written consent was not unreasonably withheld. SECTION 9. RULE 144A The Issuers hereby agree with each Holder, for so long as (i) the Company is not subject to the reporting requirements of Section 13 or 15 of the Exchange Act and (ii) any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities 15 65 in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lockup letters and other documents required under the terms of such underwriting arrangements. SECTION 11. SELECTION OF UNDERWRITERS The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided, that such investment bankers and managers must be reasonably satisfactory to the Issuers. SECTION 12. MISCELLANEOUS (a) Remedies. The Issuers agree that monetary damages (including the Liquidated Damages contemplated hereby) would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Issuers will not, on or after the date of this Agreement, enter into any agreement with respect to their respective securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. None of the Issuers has previously entered into any agreement granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Issuers' securities under any agreement in effect on the date hereof. (c) Adjustments Affecting the Notes. None of the Issuers will take any action with respect to the Notes that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer. (d) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Issuers have obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may be given 16 66 by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered. (e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and (ii) if to the any of the Issuers: Allied Holdings, Inc. 160 Clairemont Avenue Decatur, Georgia 30030 Telecopy No.: (404) 370-4206 Attention: Daniel H. Popky With copies to: Troutman Sanders LLP 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Telecopy No.: (404) 885-3900 Attention: Thomas M. Duffy All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (I) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. 17 67 (j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement, together with the other Operative Documents (as defined in the Purchase Agreement), is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Issuers with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. [signature pages follow] 18 68 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ALLIED HOLDINGS, INC. By: ------------------------- Name: Title: ALLIED AUTOMOTIVE GROUP, INC. By: ------------------------- Name: Title: ALLIED INDUSTRIES INCORPORATED By: ------------------------- Name: Title: HAUL RISK MANAGEMENT SERVICES, INC. By: ------------------------- Name: Title: LINK INFORMATION SYSTEMS, INC. By: ------------------------- Name: Title: ALLIED SOUTHWOODS, INC. By: ------------------------- Name: Title: S-1 69 AXIS GROUP, INC. By: ------------------------- Name: Title: ALLIED SYSTEMS, LTD. (L.P.) BY: ALLIED AUTOMOTIVE GROUP, INC., as general partner By: ------------------------- Name: Title: ALLIED, INC. By: ------------------------- Name: Title: INTER MOBILE, INC. By: ------------------------- Name: Title: LEGION TRANSPORTATION, INC. By: ------------------------- Name: Title: INNOVATIVE CAR CARRIERS, INC. By: ------------------------- Name: Title: S-2 70 AUTOMOTIVE TRANSPORT SERVICES, INC. By: ------------------------- Name: Title: AUTO HAULAWAY INC. By: ------------------------- Name: Title: AUTO HAULAWAY RELEASING SERVICES (1981) LIMITED By: ------------------------- Name: Title: AXIS INTERNATIONAL, INC. By: ------------------------- Name: Title: AXIS TRUCK LEASING, INC. By: ------------------------- Name: Title: AXIS NORTH AMERICA, INC. By: ------------------------- Name: Title: S-3 71 DECATUR DRIVER EXCHANGE COMPANY, INC. By: ------------------------- Name: Title: CLAIREMONT DRIVER EXCHANGE COMPANY, INC. By: ------------------------- Name: Title: KAR-TAINER INTERNATIONAL, INC. By: ------------------------- Name: Title: A H ACQUISITION CORP. By: ------------------------- Name: Title: CANADIAN ACQUISITION CORP. By: ------------------------- Name: Title: AXIS NATIONAL INCORPORATED By: ------------------------- Name: Title: S-4 72 RC MANAGEMENT CORP. By: ------------------------- Name: Title: RYDER AUTOMOTIVE CARRIER SERVICES, INC. By: ------------------------- Name: Title: RYDER AUTOMOTIVE ACQUISITION, LLC BY: CANADIAN ACQUISITION CORP., as member By: ------------------------- Name: Title: MCL RYDER TRANSPORT INC. By: ------------------------- Name: Title: RYDER AUTOMOTIVE OPERATIONS, INC. By: ------------------------- Name: Title: RYDER FREIGHT BROKER, INC. By: ------------------------- Name: Title: S-5 73 QAT, INC. By: ------------------------- Name: Title: OSHCO, INC. By: ------------------------- Name: Title: TERMINAL SERVICE CO. By: ------------------------- Name: Title: F.J. BOUTELL DRIVEAWAY CO., INC. By: ------------------------- Name: Title: RMX, INC. By: ------------------------- Name: Title: TRANSPORT SUPPORT, INC. By: ------------------------- Name: Title: S-6 74 COMMERCIAL CARRIERS, INC. By: ------------------------- Name: Title: B&C, INC. By: ------------------------- Name: Title: BEAR, STEARNS & CO. INC. BT ALEX. BROWN INCORPORATED NATIONSBANC CAPITAL MARKETS, INC. BY: BEAR, STEARNS & CO. INC. By: ------------------------- Name: Title: S-7 EX-4.4 4 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 4.4 Execution Version ================================================================================ REGISTRATION RIGHTS AGREEMENT Dated as of September 30, 1997 by and among Allied Holdings, Inc., the Guarantors Named on the Signature Pages Hereto and Bear, Stearns & Co. Inc., BT Alex. Brown Incorporated NationsBanc Capital Markets, Inc. ================================================================================ 2 This Registration Rights Agreement (this "Agreement") is made and entered into as of September 30, 1997 by and among Allied Holdings, Inc., a Georgia corporation (the "Company"), the guarantors named on the signature pages hereto (collectively, the "Guarantors" and, together with the Company, the "Issuers"), and Bear, Stearns & Co., BT Alex. Brown Incorporated and NationsBanc Capital Markets, Inc. (collectively, the "Initial Purchasers"), who have agreed to purchase the Company's 8 5/8% Series A Senior Notes due 2007 (together with the guarantees thereof by the Guarantors, the "Series A Notes") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated September 19, 1997 (the "Purchase Agreement"), by and among the Issuers and the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Series A Notes, the Issuers have agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 3 of the Purchase Agreement. The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: Act: The Securities Act of 1933, as amended. Broker-Dealer: Any broker or dealer registered under the Exchange Act. Closing Date: The date of this Agreement. Commission: The Securities and Exchange Commission. Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Series B Notes to be issued in the Exchange Offer, (b) the maintenance of such Registration Statement as continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (c) the delivery by the Issuers to the Registrar under the Indenture of Series B Notes in the same aggregate principal amount as the aggregate principal amount of Series A Notes that were tendered by Holders thereof pursuant to the Exchange Offer. Damages Payment Date: With respect to the Series A Notes, each Interest Payment Date. Effectiveness Target Date: As defined in Section 5. Exchange Act: The Securities Exchange Act of 1934, as amended. Exchange Offer: The registration by the Issuers under the Act of the Series B Notes pursuant to the Exchange Offer Registration Statement pursuant to which the Issuers offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Series B Notes in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders. 3 Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus. Exempt Resales: The transactions in which the Initial Purchasers propose to sell the Series A Notes to (a) certain other "qualified institutional buyers," as such term is defined in Rule 144A under the Act and (b) non-U.S. persons outside the United States in reliance upon Regulation S under the Act. Holders: As defined in Section 2(b) hereof. Indenture: The Indenture, dated as of the date hereof, among the Issuers and The First National Bank of Chicago, as trustee (the "Trustee"), pursuant to which the Notes are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof. Initial Purchasers: As defined in the preamble hereto. Interest Payment Date: As defined in the Indenture and the Notes. NASD: National Association of Securities Dealers, Inc. Notes: The Series A Notes and the Series B Notes. Person: An individual, partnership, corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof. Prospectus: The prospectus included in a Registration Statement, including, without limitation, the Exchange Offer Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. Record Holder: With respect to any Damages Payment Date relating to Notes, each Person who is a Holder of Notes on the record date with respect to the Interest Payment Date on which such Damages Payment Date shall occur. Registration Default: As defined in Section 5 hereof. Registration Statement: Any registration statement of the Issuers relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. Series B Notes: The Company's 8 5/8% Series B Senior Notes due 2007 (together with the guarantees thereof by the Guarantors) to be issued pursuant to the Indenture (a) in the Exchange Offer or (b) pursuant to a Shelf Registration Statement, in each case, in exchange for Series A Notes. Shelf Filing Deadline: As defined in Section 4 hereof. Shelf Registration Statement: As defined in Section 4 hereof. 2 4 TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indenture. Transfer Restricted Securities: Each Note, until the earliest to occur of (a) the date on which such Note is exchanged in the Exchange Offer and entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Act, (b) the date on which such Note has been effectively registered under the Act and disposed of in accordance with a Shelf Registration Statement and (c) the date on which such Note is distributed to the public pursuant to Rule 144 under the Act or by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein). Underwritten Registration or Underwritten Offering: A registration in which securities of the Issuers are sold to an underwriter for reoffering to the public. SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT (a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities. (b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities of record. SECTION 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with), the Issuers shall (i) cause to be filed with the Commission on or prior to the 30th day after the Closing Date, the Exchange Offer Registration Statement, (ii) use their reasonable best efforts to cause such Exchange Offer Registration Statement to become effective on or prior to the 90th day after the Closing Date, (iii) in connection with the foregoing, file (A) all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause such Exchange Offer Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings in connection with the registration and qualification of the Series B Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting registration of the Series B Notes to be offered in exchange for the Transfer Restricted Securities and to permit resales of Notes held by Broker-Dealers as contemplated by Section 3(c) below. (b) The Issuers shall cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 business days after the date notice of the Exchange Offer has been mailed to Holders. The Issuers shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Notes shall be included in the Exchange Offer Registration Statement. The Issuers shall use their reasonable best efforts to cause 3 5 the Exchange Offer to be Consummated on or prior to the 30th business day after the Exchange Offer Registration Statement has become effective. (c) The Issuers shall indicate in a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement that any Broker-Dealer who holds Series A Notes that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Issuers) may exchange such Series A Notes pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with any resales of the Series B Notes received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of Distribution" section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy after the date of this Agreement. The Issuers shall use their reasonable best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) below to the extent necessary to ensure that it is available for resales of Notes acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of one year from the date on which the Exchange Offer Registration Statement is declared effective. The Issuers shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such one-year period in order to facilitate such resales. SECTION 4. SHELF REGISTRATION (a) Shelf Registration. If (i) the Issuers are not required to file an Exchange Offer Registration Statement or permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy now or hereafter existing (after the procedures set forth in Section 6(a) below have been complied with) or (ii) any Holder of Transfer Restricted Securities notifies the Company on or prior to the 20th business day following the Consummation of the Exchange Offer (A) that such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) that such Holder may not resell the Series B Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder, or (C) that such Holder is a Broker-Dealer and holds Series A Notes acquired directly from the Issuers or one of their affiliates, then the Issuers shall: (x) Use their reasonable best efforts to file a shelf registration statement with the Commission pursuant to Rule 415 under the Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the "Shelf Registration Statement") on or prior to the earliest to occur of (1) the 30th day after the date on which the Issuers determine that they are not required to file the Exchange Offer Registration Statement and (2) the 30th day after the date on which the Company receives notice from a Holder of Transfer Restricted 4 6 Securities as contemplated by clause (ii) above (such earliest date being the "Shelf Filing Deadline"), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and (y) Cause such Shelf Registration Statement to be declared effective by the Commission on or prior to the 60th day after the Shelf Filing Deadline. The Issuers shall use their best efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Notes by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years following the Closing Date. (b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 business days after receipt of a request therefor, such information as the Issuers may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder shall have used its best efforts to provide all such reasonably requested information. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Issuers all information required to be disclosed in order to make the information previously furnished to the Issuers by such Holder not misleading. SECTION 5. LIQUIDATED DAMAGES If (a) any of the Registration Statements required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (b) any of such Registration Statements has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the "Effectiveness Target Date"), (c) the Exchange Offer has not been Consummated within 30 business days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (d) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared effective (each such event referred to in clauses (a) through (d), a "Registration Default"), the Issuers hereby jointly and severally agree to pay Liquidated Damages to each Holder of Transfer Restricted Securities with respect to the first 90-day period immediately following the occurrence of the first Registration Default, in an amount equal to $.05 per week per $1,000 principal amount of Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues. The amount of the Liquidated Damages shall increase by an additional $.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal amount of Transfer Restricted Securities. All accrued Liquidated Damages shall be paid by the Issuers on each Damages Payment Date to Record Holders by wire transfer of immediately available funds or by federal funds check and to Holders of Certificated Securities by wire transfers to the accounts specified 5 7 by them or by mailing checks to their registered addresses if no such accounts have been specified on each Damages Payment Date, as provided in the Indenture. Following the cure of all Registration Defaults relating to any particular Transfer Restricted Securities, the accrual of Liquidated Damages with respect to such Transfer Restricted Securities will cease. All obligations of the Issuers set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full. SECTION 6. REGISTRATION PROCEDURES (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Issuers shall comply with all of the provisions of Section 6(c) below, shall use their reasonable best efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions: (i) If in the reasonable opinion of counsel to the Issuers there is a question as to whether the Exchange Offer is permitted by applicable law, the Issuers hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Issuers to Consummate an Exchange Offer for such Series A Notes. Each of the Issuers hereby agrees to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. Each of the Issuers hereby agrees, however, to (A) participate in telephonic conferences with the Commission, (B) deliver to the Commission staff an analysis prepared by counsel to the Issuers setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursue a resolution (which need not be favorable) by the Commission staff of such submission. (ii) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Issuers, prior to the Consummation thereof, a written representation to the Issuers (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of any Issuer, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Series B Notes to be issued in the Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Issuers' preparations for the Exchange Offer. Each Holder, by its acceptance of Series A Notes, shall be deemed to have acknowledged and agreed that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Series B Notes 6 8 obtained by such Holder in exchange for Series A Notes acquired by such Holder directly from the Issuers. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Issuers shall provide a supplemental letter to the Commission (A) stating that the Issuers are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any no-action letter obtained pursuant to clause (i) above and (B) including a representation that none of the Issuers has entered into any arrangement or understanding with any Person to distribute the Series B Notes to be received in the Exchange Offer and that, to the best of the Issuers' information and belief, each Holder participating in the Exchange Offer is acquiring the Series B Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Series B Notes received in the Exchange Offer. (b) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Issuers shall comply with all the provisions of Section 6(c) below and shall use their reasonable best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto the Issuers will as expeditiously as possible prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof. (c) General Provisions. In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Notes by Broker-Dealers), the Issuers shall: (i) use their reasonable best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements (including, if required by the Act or any regulation thereunder, financial statements of the Guarantors) for the period specified in Section 3 or 4 hereof, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Issuers shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use their reasonable best efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter; (ii) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; 7 9 (iii) advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Issuers shall use their reasonable best efforts to promptly obtain the withdrawal or lifting of such order; (iv) furnish to each of the selling Holders and each of the underwriter(s), if any, (all of whom shall be deemed to have acknowledged the confidentiality of the information contained in the foregoing documents) before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders and underwriter(s), if any, for a period of at least five business days, and the Issuers will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which a selling Holder of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object within five business days after the receipt thereof. A selling Holder or underwriter, if any, shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission or fails to comply with the applicable requirements of the Act; (v) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the selling Holders and to the underwriter(s), if any, make the Issuers' representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such selling Holders or underwriter(s), if any, reasonably may request; (vi) make available at reasonable times for inspection by the selling Holders, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney or accountant retained by such selling Holders or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of the Issuers and cause the Issuers' officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement subsequent to the filing thereof and prior to its effectiveness; 8 10 (vii) if requested by any selling Holders or the underwriter(s), if any, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Issuers are notified of the matters to be included in such Prospectus supplement or post-effective amendment; (viii) in the case of a Shelf Registration Statement, cause the Transfer Restricted Securities covered by the Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Notes covered thereby or the underwriter(s), if any; (ix) furnish to each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Issuers hereby consent to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; provided, that such use of the Prospectus and any amendment or supplement thereto and such offering and sale conforms to the "Plan of Distribution" section contained in the Prospectus and complies with this Agreement and all applicable laws and regulations; (xi) enter into such agreements (including an underwriting agreement), and make such representations and warranties, and take all such other customary actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Shelf Registration Statement contemplated by this Agreement, all to such extent as may be requested by the Initial Purchasers or by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Shelf Registration Statement contemplated by this Agreement; and whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, the Issuers shall: (A) furnish to each of the Initial Purchasers, each selling Holder and each underwriter, if any, in such substance and scope as they may request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the effectiveness of the Shelf Registration Statement: (1) a certificate, dated the date of effectiveness of the Shelf Registration Statement, signed by (x) an authorized executive officer and (y) a principal financial or accounting officer of each of the Issuers, confirming, as of the date thereof, the matters set forth in paragraphs (a), (b), (c) and (d) of Section 8 of the Purchase Agreement and such other matters as such parties may reasonably request; 9 11 (2) an opinion, dated the date of effectiveness of the Shelf Registration Statement, of counsel for the Issuers, covering the matters set forth in paragraphs (1) through (25) of Exhibit E to the Purchase Agreement and such other matters as such parties may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Issuers, representatives of the independent public accountants for the Issuers, the Initial Purchasers' representatives and the Initial Purchasers' counsel in connection with the preparation of such Registration Statement and the related Prospectus and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to a large extent upon facts provided to such counsel by officers and other representatives of the Issuers and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated as of the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, from the Issuers' independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters by underwriters in connection with primary underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 8 of the Purchase Agreement, without exception; (B) set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof (and any other customary indemnification provisions and procedures that any underwriters may reasonably request) with respect to all parties to be indemnified pursuant to said Section; and (C) deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Issuers pursuant to this clause (xi), if any. If at any time the representations and warranties of the Issuers contemplated in clause (A)(1) above cease to be true and correct, the Issuers shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing; (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the 10 12 registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders or underwriter(s) may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided, however, that none of the Issuers shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) shall issue, upon the request of any Holder of Series A Notes covered by the Shelf Registration Statement, Series B Notes, having an aggregate principal amount equal to the aggregate principal amount of Series A Notes surrendered to the Issuers by such Holder in exchange therefor or being sold by such Holder; such Series B Notes to be registered in the name of such Holder or in the name of the purchaser(s) of such Notes, as the case may be; in return, the Series A Notes held by such Holder shall be surrendered to the Issuers for cancellation; (xiv) cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two business days prior to any sale of Transfer Restricted Securities made by such underwriter(s); (xv) use their best efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (viii) above; (xvi) if any fact or event contemplated by clause (c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (xvii) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of the Registration Statement and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depositary Trust Company; (xviii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter") that is required to be retained in accordance with the rules and regulations of the NASD, and use its reasonable best efforts to cause such Registration Statement to become effective and approved by such governmental agencies or authorities as may be necessary to enable the Holders selling Transfer Restricted Securities to consummate the disposition of such Transfer Restricted Securities; 11 13 (xix) otherwise use their reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement; (xx) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use their reasonable best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; (xxi) cause all Transfer Restricted Securities covered by the Registration Statement to be listed on each securities exchange on which similar securities issued by the Issuers are then listed if requested by the Holders of a majority in aggregate principal amount of Series A Notes or the managing underwriter(s), if any; and (xxii) provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Issuers of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will keep such notice confidential and forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing (the "Advice") by the Issuers that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Issuers, each Holder will deliver to the Issuers (at the Issuers' expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event the Issuers shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or shall have received the Advice. SECTION 7. REGISTRATION EXPENSES (a) All expenses incident to the Issuers' performance of or compliance with this Agreement will be borne by the Issuers, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchasers or Holder with the NASD (and, if applicable, the fees and expenses of any "qualified independent underwriter" and its counsel that may be required by the rules and regulations of the NASD)); (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities 12 14 laws; (iii) all expenses of printing (including printing certificates for the Series B Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Issuers and, subject to Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Issuers (including the expenses of any special audit and comfort letters required by or incident to such performance). The Issuers will, in any event, bear their internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Issuers. (b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Issuers will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities being tendered in the Exchange Offer and/or resold pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Latham & Watkins or such other counsel as may be chosen by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. SECTION 8. INDEMNIFICATION (a) The Issuers, jointly and severally, agree to indemnify and hold harmless (i) each Holder, (ii) each person, if any, who controls any Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the respective officers, directors, partners, employees, representatives and agents of each Holder or any controlling person to the fullest extent lawful, from and against any and all losses, liabilities, claims, damages and expenses whatsoever (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a 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 Issuers will not be liable in any such case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information relating to any Holder furnished to the Issuers in writing by or on behalf of such Holder expressly for use therein. This indemnity agreement will be in addition to any liability which the Issuers may otherwise have, including, under this Agreement. (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless (i) the Issuers, (ii) each person, if any, who controls the Issuers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) each person, if any, who controls any Issuer, against any 13 15 losses, liabilities, claims, damages and expenses whatsoever (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a 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, in each case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with information relating to any Holder furnished to the Issuers in writing by or on behalf of such Holder expressly for use therein; provided, however, that in no case shall any Holder be liable or responsible for any amount in excess of the dollar amount of the proceeds received by such Holder upon the sale of the Notes giving rise to such indemnification obligation. This indemnity will be in addition to any liability which any Holder may otherwise have, including under this Agreement. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to take charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying party or parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses of counsel shall be borne by the indemnifying parties; provided, however, that the indemnifying party under subsection (a) or (b) above shall only be liable for the legal expenses of one counsel (in addition to any local counsel) for all indemnified parties in each jurisdiction in which any claim or action is brought. Anything in this subsection to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its prior written consent; provided, however, that such consent was not unreasonably withheld. (d) In order to provide for contribution in circumstances in which the indemnification provided for in this Section 8 is for any reason held to be unavailable from the Issuers or is insufficient to hold harmless a party indemnified hereunder, the Issuers, on the one hand, and each Holder, on the other hand, shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature 14 16 contemplated by such indemnification provision (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the Issuers, any contribution received by the Issuers from persons, other than the Holders, who may also be liable for contribution, including persons who control the Issuers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the Issuers and such Holder may be subject, in such proportion as is appropriate to reflect the relative benefits received by the Issuers, on one hand, and such Holder, on the other hand, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in this Section 8, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Issuers, on the one hand, and such Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Issuers, on one hand, and each Holder, on the other hand, shall be deemed to be in the same proportion as (i) the total proceeds from the offering of the Notes (net of discounts but before deducting expenses) received by the Issuers and (ii) the total proceeds received by such Holder upon the sale of the Notes giving rise to such indemnification obligation. The relative fault of the Issuers, on the one hand, and of each Holder, on the other hand, 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 Issuers or such Holder and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Issuers and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above. Notwithstanding the provisions of this Section 8(d), (i) in no case shall any Holder be required to contribute any amount in excess of the dollar amount by which the proceeds received by such Holder upon the sale of the Notes exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission and (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. For purposes of this Section 8(d), (A) each person, if any, who controls any Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the respective officers, directors, partners, employees, representatives and agents of each Holder or any controlling person shall have the same rights to contribution as such Holder, and each person, if any, who controls the Issuers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as the Issuers, subject in each case to clauses (i) and (ii) of this Section 8(d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 8(d), notify such party or parties from whom contribution may be sought, but the failure to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 8(d) or otherwise. No party shall be liable for contribution with respect to any action or claim settled without its prior written consent; provided, however, that such written consent was not unreasonably withheld. SECTION 9. RULE 144A The Issuers hereby agree with each Holder, for so long as (i) the Company is not subject to the reporting requirements of Section 13 or 15 of the Exchange Act and (ii) any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities 15 17 in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements. SECTION 11. SELECTION OF UNDERWRITERS The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided, that such investment bankers and managers must be reasonably satisfactory to the Issuers. SECTION 12. MISCELLANEOUS (a) Remedies. The Issuers agree that monetary damages (including the Liquidated Damages contemplated hereby) would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Issuers will not, on or after the date of this Agreement, enter into any agreement with respect to their respective securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. None of the Issuers has previously entered into any agreement granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Issuers' securities under any agreement in effect on the date hereof. (c) Adjustments Affecting the Notes. None of the Issuers will take any action with respect to the Notes that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer. (d) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Issuers have obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may be given 16 18 by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered. (e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and (ii) if to the any of the Issuers: Allied Holdings, Inc. 160 Clairemont Avenue Decatur, Georgia 30030 Telecopy No.: (404) 370-4206 Attention: Daniel H. Popky With copies to: Troutman Sanders LLP 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Telecopy No.: (404) 885-3900 Attention: Thomas M. Duffy All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. 17 19 (j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement, together with the other Operative Documents (as defined in the Purchase Agreement), is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Issuers with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. [signature pages follow] 18 20 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ALLIED HOLDINGS, INC. By: --------------------------------------------- Name: Title: ALLIED AUTOMOTIVE GROUP, INC. By: --------------------------------------------- Name: Title: ALLIED INDUSTRIES INCORPORATED By: --------------------------------------------- Name: Title: HAUL RISK MANAGEMENT SERVICES, INC. By: --------------------------------------------- Name: Title: LINK INFORMATION SYSTEMS, INC. By: --------------------------------------------- Name: Title: ALLIED SOUTHWOODS, INC. By: --------------------------------------------- Name: Title: S-1 21 AXIS GROUP, INC. By: --------------------------------------------- Name: Title: ALLIED SYSTEMS, LTD. (L.P.) BY: ALLIED AUTOMOTIVE GROUP, INC., as general partner By: --------------------------------------------- Name: Title: ALLIED, INC. By: --------------------------------------------- Name: Title: INTER MOBILE, INC. By: --------------------------------------------- Name: Title: LEGION TRANSPORTATION, INC. By: --------------------------------------------- Name: Title: INNOVATIVE CAR CARRIERS, INC. By: --------------------------------------------- Name: Title: S-2 22 AUTOMOTIVE TRANSPORT SERVICES, INC. By: --------------------------------------------- Name: Title: AUTO HAULAWAY INC. By: --------------------------------------------- Name: Title: AUTO HAULAWAY RELEASING SERVICES (1981) LIMITED By: --------------------------------------------- Name: Title: AXIS INTERNATIONAL, INC. By: --------------------------------------------- Name: Title: AXIS TRUCK LEASING, INC. By: --------------------------------------------- Name: Title: AXIS NORTH AMERICA, INC. By: --------------------------------------------- Name: Title: S-3 23 DECATUR DRIVER EXCHANGE COMPANY, INC. By: --------------------------------------------- Name: Title: CLAIREMONT DRIVER EXCHANGE COMPANY, INC. By: --------------------------------------------- Name: Title: KAR-TAINER INTERNATIONAL, INC. By: --------------------------------------------- Name: Title: A H ACQUISITION CORP. By: --------------------------------------------- Name: Title: CANADIAN ACQUISITION CORP. By: --------------------------------------------- Name: Title: AXIS NATIONAL INCORPORATED By: --------------------------------------------- Name: Title: S-4 24 RC MANAGEMENT CORP. By: --------------------------------------------- Name: Title: RYDER AUTOMOTIVE CARRIER SERVICES, INC. By: --------------------------------------------- Name: Title: RYDER AUTOMOTIVE ACQUISITION, LLC BY: CANADIAN ACQUISITION CORP., as member By: --------------------------------------------- Name: Title: MCL RYDER TRANSPORT INC. By: --------------------------------------------- Name: Title: RYDER AUTOMOTIVE OPERATIONS, INC. By: --------------------------------------------- Name: Title: RYDER FREIGHT BROKER, INC. By: --------------------------------------------- Name: Title: S-5 25 QAT, INC. By: --------------------------------------------- Name: Title: OSHCO, INC. By: --------------------------------------------- Name: Title: TERMINAL SERVICE CO. By: --------------------------------------------- Name: Title: F.J. BOUTELL DRIVEAWAY CO., INC. By: --------------------------------------------- Name: Title: RMX, INC. By: --------------------------------------------- Name: Title: TRANSPORT SUPPORT, INC. By: --------------------------------------------- Name: Title: S-6 26 COMMERCIAL CARRIERS, INC. By: --------------------------------------------- Name: Title: B&C, INC. By: --------------------------------------------- Name: Title: BEAR, STEARNS & CO. INC. BT ALEX. BROWN INCORPORATED NATIONSBANC CAPITAL MARKETS, INC. BY: BEAR, STEARNS & CO. INC. By: ------------------------ Name: Title: S-7 27 COMMERCIAL CARRIERS, INC. By: --------------------------------------------- Name: Title: B&C, INC. By: --------------------------------------------- Name: Title: BEAR, STEARNS & CO. INC. BT ALEX. BROWN INCORPORATED NATIONSBANC CAPITAL MARKETS, INC. BY: BEAR, STEARNS & CO. INC. By: /s/ JBM ------------------------ Name: Title: S-7 EX-4.5 5 REVOLVING CREDIT AGREEMENT 1 EXHIBIT 4.5 $230,000,000 REVOLVING CREDIT AGREEMENT among ALLIED HOLDINGS, INC. and AUTO HAULAWAY INC. and The Lending Institutions Listed on Schedule 1.1 hereto and BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT, and ABN AMRO BANK N.V., AS DOCUMENTATION AGENT and THE FIRST NATIONAL BANK OF CHICAGO, AS CO-AGENT and NATIONSBANK, N.A., AS CO-AGENT and BANCBOSTON SECURITIES INC., AS ARRANGER dated as of September 30, 1997 2 TABLE OF CONTENTS
Section PAGE - -------- ---- Section 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2. THE CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 2.1. Commitment to Lend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 2.1.1. Domestic Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 2.1.2. Canadian Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . 28 Section 2.1.3. Limitation on Borrowings . . . . . . . . . . . . . . . . . . . . . . . . 28 Section 2.2. Termination; Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 29 Section 2.3. Reallocation of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Section 2.4. The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Section 2.5. Interest on Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 2.6. Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 2.7. Interest Rate Conversion Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 2.8. Optional Prepayments of Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . 35 Section 2.9. Mandatory Prepayments of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 2.10. Funds for Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Section 2.11. Maturity of the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Section 2.12. The Domestic Swing Line Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Section 2.13. The Canadian Swing Line Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Section 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Section 3.1. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Section 3.2. Effects of Drawings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Section 3.3. Letter of Credit Loan Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . 45 Section 3.4. Obligations of the Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Section 4. BANKERS' ACCEPTANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Section 4.1. Acceptance and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Section 4.2. Refunding Bankers' Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Section 4.3. Acceptance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Section 4.4 Circumstances Making Bankers' Acceptances Unavailable . . . . . . . . . . . . . . . . . 51 Section 5. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 5.1. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 5.2. Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Section 5.3. Closing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Section 5.4. Administrative Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Section 6. CERTAIN GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Section 6.1. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
3 -ii- Section 6.2. Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Section 6.3. Interest Rate Upon Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Section 6.4. Interest Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Section 6.5. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Section 6.6. Additional Costs, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Section 6.7. Bank Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 6.8. Payments to be Free of Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 6.9. Inability to Determine Eurodollar Rate . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 6.10. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 6.11. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Section 6.12. Currency of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Section 6.13. Currency Fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Section 6.14. Replacement of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Section 7. SECURITY AND GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Section 8. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 8.1. Existence and Good Standing, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 8.2. Power; Consents; Absence of Conflict with Other Agreements . . . . . . . . . . . . . . 61 Section 8.3. Binding Effect of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Section 8.4. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Section 8.5. Financial Statements and Projections . . . . . . . . . . . . . . . . . . . . . . . . . 63 Section 8.6. No Material Changes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 8.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Section 8.8. No Materially Adverse Contracts, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 65 Section 8.9. Compliance with Other Instruments, Laws, Etc. . . . . . . . . . . . . . . . . . . . . . 66 Section 8.10. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Section 8.11. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Section 8.12. Location of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 8.13. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 8.14. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Section 8.15. Title and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Section 8.16. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Section 8.17. Holding Company and Investment Company Acts . . . . . . . . . . . . . . . . . . . . . . 69 Section 8.18. Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 8.19. Operating Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 8.20. Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 8.21. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 8.22. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Section 8.23. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 8.24. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 8.25. Subordinated Debt Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 8.26. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 8.27. Perfection of Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
4 -iii- Section 8.28. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 8.29. Acquisition Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 8.30. Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Section 9. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Section 9.1. Delivery of Loan Documents; Payment of Fees . . . . . . . . . . . . . . . . . . . . . . 74 Section 9.2. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Section 9.3. Performance; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 9.4. Requisite Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 9.5. Proceedings and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 9.6. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 9.7. Banking Law Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 9.8. Delivery of Charter and Other Documents . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 9.9. Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 9.10. Perfection Certificates and UCC Search Results . . . . . . . . . . . . . . . . . . . . 76 Section 9.11. Balance Sheet; Compliance Certificate; Borrowing Base Certificate . . . . . . . . . . . 76 Section 9.12. Senior Notes; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 9.13. Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 9.14. Concerning the ACD Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 9.15. Satisfactory Completion of Due Diligence; Etc. . . . . . . . . . . . . . . . . . . . . 77 Section 9.16. Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Section 9.17. Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Section 9.18. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Section 9.19. No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Section 9.20. Capital Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Section 9.21. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Section 9.22. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Section 9.23. Other Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Section 9.24. Solvency Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Section 9.25. Payoff Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Section 10. CONDITIONS OF SUBSEQUENT BORROWINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Section 10.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Section 10.2. Performance; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Section 11. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Section 11.1. Punctual Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Section 11.2. Maintenance of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Section 11.3. Records and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Section 11.4. Financial Statements, Certificates and Information . . . . . . . . . . . . . . . . . . 81 Section 11.5. Business and Legal Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Section 11.6. Compliance with Laws, Contracts, Licenses and Permits . . . . . . . . . . . . . . . . . 81 Section 11.7. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Section 11.8. Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
5 -iv- Section 11.9. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Section 11.10. Inspection of Properties and Books . . . . . . . . . . . . . . . . . . . . . . . . 84 Section 11.11. Title and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Section 11.12. Notice of Material Claims and Litigation . . . . . . . . . . . . . . . . . . . . . 85 Section 11.13. Funding of Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Section 11.14. Copies of Pension Plan Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Section 11.15. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Section 11.16. Payment of Pension Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Section 11.17. Operating Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Section 11.18. Environmental Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Section 11.19. Line of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Section 11.20. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Section 11.21. Commercial Finance Examinations . . . . . . . . . . . . . . . . . . . . . . . . . 87 Section 12. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Section 12.1. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Section 12.2. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Section 12.3. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Section 12.4. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Section 12.5. Merger, Consolidation or Sale of Assets; Acquisitions . . . . . . . . . . . . . . 93 Section 12.6. No Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Section 12.7. Leases; Leases with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Section 12.8. Consolidated Cash Flow Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Section 12.9. Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Section 12.10. Funded Debt to EBITDA Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Section 12.11. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Section 12.12. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Section 12.13. Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Section 12.14. Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Section 12.15. ACD Acquisition Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Section 12.16. Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Section 13. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Section 13.1. Events of Default and Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Section 13.2. Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 Section 14. NOTICE AND WAIVERS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 Section 14.1. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 Section 14.2. Waivers of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Section 15. REMEDIES ON DEFAULT, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Section 15.1. Rights of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Section 15.2. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Section 15.3. Distribution of Collateral Proceeds . . . . . . . . . . . . . . . . . . . . . . . 105
6 -v- Section 16. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Section 16.1. Sharing of Information with Section 20 Subsidiary . . . . . . . . . . . . . . . . . . . 106 Section 16.2. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Section 16.3. Prior Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Section 16.4. Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Section 17. THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Section 17.1. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Section 17.2. Employees and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Section 17.3. No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Section 17.4. No Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Section 17.5. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Section 17.6. Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Section 17.7. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Section 17.8. Agents as Banks; Documentation Agent; Co-Agents . . . . . . . . . . . . . . . . . . . . 110 Section 17.9. Resignation; Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Section 17.10.Notification of Defaults and Events of Default . . . . . . . . . . . . . . . . . . . . 111 Section 18. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Section 18.1. Conditions to Assignment by Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 Section 18.2. Certain Representations and Warranties; Limitations; Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 Section 18.3. Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Section 18.4. New Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Section 18.5. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Section 18.6. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Section 18.7. Assignee or Participant Affiliated with the Borrower . . . . . . . . . . . . . . . . . 114 Section 18.8. Miscellaneous Assignment Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Section 18.9. Assignment by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Section 19. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Section 20. SURVIVAL OF COVENANTS, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Section 21. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Section 22. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Section 23. ENTIRE AGREEMENT, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Section 24. CONSENTS, AMENDMENTS, WAIVERS, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Section 25. WAIVER AND RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Section 26. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
7 -iv- Section 27. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Section 28. CANADIAN GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Section 29. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Section 30. WITHHOLDING TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Section 31. PARI PASSU TREATMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
8 -vii- LIST OF EXHIBITS AND SCHEDULES
Exhibits: -------- Exhibit A-1 Form of Domestic Revolving Credit Note Exhibit A-2 Form of Canadian Revolving Credit Note Exhibit A-3 Form of Domestic Swing Line Note Exhibit A-4 Form of Canadian Swing Line Note Exhibit B Form of Intercompany Note Exhibit C Form of Reimbursement Agreement Exhibit D Form of Loan Request Exhibit E-1 Form of Opinion of Borrower's Counsel Exhibit E-2 Form of Opinion of Borrower's Canadian Counsel Exhibit F Form of Compliance Certificate Exhibit G Form of Borrowing Base Certificate Exhibit H Form of Guaranty Exhibit I Form of Assignment and Acceptance Exhibit J Form of Bankers' Acceptance Notice Exhibit K Form of Solvency Certificate
Schedules: ---------- Schedule 1.1 Banks; Commitments; Commitment Percentages; Domestic Lending Offices; Eurodollar Lending Offices Schedule 1.2 Depreciation Schedule Schedule 1.3 Management Group Schedule 1.4 Existing Letters of Credit Schedule 8.1 Qualifications to do Business Schedule 8.2 Conflicts Schedule 8.5(a) Financial Statements Schedule 8.6 Changes Schedule 8.7 Litigation Schedule 8.10 Taxes Schedule 8.12 Chief Executive Offices Schedule 8.13 Business Schedule 8.15 Re-registrations Schedule 8.16(a) Subsidiaries of the Borrower Schedule 8.16(b) Subsidiaries of the Borrower's Subsidiaries Schedule 8.18 Certain Transactions Schedule 8.19(a) Operating Rights Schedule 8.19(b) Canadian Operating Authorizations Schedule 8.20 Material Contracts
9 -viii- Schedule 8.21 Hazardous Substances Schedule 8.24 Insurance Schedule 8.27 Perfection of Security Interest Schedule 8.28 Bank Accounts Schedule 12.1 Existing Indebtedness Schedule 12.2 Existing Liens Schedule 12.3 Existing Investments
10 REVOLVING CREDIT AGREEMENT This REVOLVING CREDIT AGREEMENT, dated as of September 30, 1997, is among ALLIED HOLDINGS, INC. (the "Borrower"), a Georgia corporation having its principal place of business at 160 Clairemont Avenue, Suite 510, Decatur, Georgia 30030, AUTO HAULAWAY INC., a corporation organized under the laws of Ontario, having its principal place of business at 4320 Harvester Road, Burlington, Ontario L7L 5S4 (together with its successors, the "Canadian Borrower"), BANKBOSTON, N.A. ("BKB") and the other lending institutions identified as Banks herein, BKB, as administrative agent for the Banks (the "Administrative Agent"), ABN AMRO BANK, N.V., as Documentation Agent (the "Documentation Agent"), THE FIRST NATIONAL BANK OF CHICAGO, as co-agent ("FNBC") and NATIONSBANK, N.A. (together with FNBC, the "Co-Agents"). Section 1. DEFINITIONS. (a) The following terms shall have the meanings assigned to them below in this Section 1 or in the provisions of this Agreement or the Exhibits and the Schedules hereto referred to below: "AAGI" - Allied Automotive Group, Inc., a Georgia corporation and a wholly-owned Subsidiary of the Borrower. "Acceptance Fee" - see Section 4.3. "ACD" - collectively, Ryder Automotive Carrier Services, Inc., RC Management Corp., Ryder Automotive Acquisition LLC and each of their subsidiaries. "ACD Acquisition" - the acquisition by (i) AH Acquisition Corp. of one hundred percent (100%) of the capital stock of Ryder Automotive Carrier Services, Inc.; (ii) Axis National Incorporated of one hundred percent (100%) of the capital stock of RC Management Corp., Terminal Service Co. and OSHCO, Inc.; and (iii) Canadian Acquisition Corp. of one hundred percent (100%) of the equity interests of Ryder Automotive Acquisition LLC, pursuant to the ACD Acquisition Documents. "ACD Acquisition Documents" - the Acquisition Agreement, together with all schedules thereto, dated as of August 20, 1997, among the Borrower, AH Acquisition Corp., Canadian Acquisition Corp., Axis National Incorporated and Ryder System, Inc., and each of the related Allied/Ryder Restrictive Covenant Agreement, Intellectual Property License Agreement, ILM Technology Agreement, Cooperation and Preservation Agreement, Transitional Agreement and License and Joint Defense and Cooperation Agreement, each dated as of September 30, 1997, each in the form delivered to the Administrative Agent on or prior to the Closing Date. "Adjustment Date" - the first day of the month immediately following the month in which a Compliance Certificate is delivered by the Borrower pursuant to Section 11.4(e) hereof. 11 -2- "Administrative Agent" - see the preamble. "Administrative Agent's Fee" - as defined in the Fee Letter. "Administrative Agent's Special Counsel" - Bingham, Dana & Gould LLP, or such other counsel as may be approved by the Administrative Agent. "Affected Bank" - see Section 6.14. "Affiliate" - any Person that would be considered to be an affiliate of another Person under Rule 144(a) of the Rules and Regulations of the Securities and Exchange Commission, as in effect on the date hereof, if such other Person were issuing securities. "Agents" - the Administrative Agent and the Canadian Agent. "Agreement" - this Revolving Credit Agreement, with all Exhibits and Schedules hereto, as originally executed, or if this Revolving Credit Agreement is amended, restated or supplemented from time to time, as so amended, restated or supplemented. "AH" - AH Industries Inc., an Alberta corporation and a wholly-owned Subsidiary of the Borrower. "Allied Systems" - Allied Systems, Ltd. (L.P.), a Georgia limited partnership of which AAGI is the managing general partner and of which any one or more of the Borrower or its wholly-owned Subsidiaries which is a Guarantor is a general partner. "Applicable Acceptance Fee Rate" - at any time, the rate per annum equal to the Applicable Margin with respect to Eurodollar Rate Loans. "Applicable BA Discount Rate" - with respect to any Bankers' Acceptance being purchased by a Canadian Bank on any day, the average Bankers' Acceptance discount rate for the term of such Bankers' Acceptance as quoted on Reuters Service Page CDOR at or about 10:00 a.m. (Toronto, Ontario time) on such day. "Applicable Margin" - for each period commencing on an Adjustment Date through the date immediately preceding the next Adjustment Date (each a "Rate Adjustment Period"), the Applicable Margin shall be the applicable percentage set forth below with respect to the Borrower's Funded Debt Ratio, as determined at the end of the fiscal quarter of the Borrower and its Subsidiaries ending immediately prior to the applicable Rate Adjustment Period: 12 -3-
EURODOLLAR RATE LOANS AND LETTER OF LEVEL FUNDED DEBT RATIO BASE RATE LOANS CREDIT FEES COMMITMENT FEE I Greater than or equal to 3.50 to 1.00 1.00% 2.00% 0.375% II Less than 3.50 to 1.00 and greater 0.75% 1.75% 0.375% than or equal to 3.00 to 1.00 III Less than 3.00 to 1.00 and greater 0.50% 1.50% 0.375% than or equal to 2.75 to 1.00 IV Less than 2.75 to 1.00 and greater 0.25% 1.25% 0.25% than or equal to 2.50 to 1.00 V Less than 2.50 to 1.00 0% 1.00% 0.25%
Notwithstanding the foregoing, (a) subject to clause (c) hereof, for the period commencing on the Closing Date through the end of the month in which the quarterly compliance certificate for the fiscal quarter ending March 31, 1998 is delivered pursuant to Section 11.4(e) hereof, the Applicable Margin shall be that percentage corresponding to Level II in the table above; (b) if the Borrower fails to deliver any Compliance Certificate pursuant to Section 11.4(e) hereof, then for the period commencing on the first day of the month immediately following the date such Compliance Certificate was due through the date immediately preceding the Adjustment Date that occurs immediately following the date on which such Compliance Certificate is delivered, the Applicable Margin shall be that percentage corresponding to Level I in the table above; and (c) in the event that the Borrower shall, at any time, receive Net Cash Proceeds from the sale of equity securities in an amount in excess of $20,000,000, then the Borrower may deliver a pro forma Compliance Certificate to the Administrative Agent and the Banks, based on the most recently ended fiscal quarter for which financial statements have been prepared and giving effect to such issuance of equity securities, and the Applicable Margin shall be subject to adjustment as of the first day of the calendar month immediately succeeding the date such Compliance Certificate is delivered to the Administrative Agent and the Banks. "Arranger" - BancBoston Securities, Inc.. "Assignment and Acceptance" - see Section 18 hereof. "Assignment of Acquisition Documents" - the Collateral Assignment of Acquisition Documents, dated as of the date hereof, among the Borrower, AH Acquisition Corp., Canadian Acquisition Corp., Axis National Incorporated and the Administrative Agent. "BA Discount Proceeds" - with respect to any Bankers' Acceptance to be accepted and purchased by a Canadian Bank, an amount (rounded to the nearest whole Canadian cent, and with one-half of one Canadian cent being rounded up) calculated on such day by multiplying (a) the face amount of such Bankers' Acceptance times (b) the quotient equal to (such quotient being rounded up or down to the nearest fifth decimal place and .000005 being rounded up) (i) one divided by (ii) the sum of (A) one plus (B) the product of (1) the Applicable BA Discount Rate 13 -4- (expressed as a decimal) applicable to such Bankers' Acceptance times (2) the quotient equal to (aa) the number of days remaining in the term of such Bankers' Acceptance divided by (bb) 365. "Balance Sheet Date" - December 31, 1996. "Bankers' Acceptance" - a bill of exchange denominated in Canadian Dollars drawn on, and accepted by, a Canadian Bank pursuant to Section 4 hereof. "Bankers' Acceptance Notice" - see Section 4.1. "Banks" - collectively, the Domestic Banks, the Canadian Banks, the Swing Line Banks and the Letter of Credit Bank. "Base Rate Loans" - collectively, the Canadian Base Rate Loans and the Domestic Base Rate Loans. "BKB" - see the preamble. "Borrower" - see the preamble. "Borrowing" - a borrowing hereunder consisting of the making of a Revolving Credit Loan, a Swing Line Loan, the issuance of a Letter of Credit or the purchase and acceptance of a Bankers' Acceptance. "Borrowing Base Amount" - as at any date of determination, an amount, determined by the Administrative Agent by reference to the most recent Borrowing Base Certificate, which is equal to the sum of (a) 80% of the Net Receivables Value, plus (b) 80% of the Net Equipment Value of all Borrowing Base Equipment. For purposes of determining the Borrowing Base Amount (i) the Net Equipment Value of any Borrowing Base Equipment acquired in connection with the ACD Acquisition or a Permitted Acquisition shall be determined on a historical basis in accordance with Generally Accepted Accounting Principles without regard to any purchase accounting adjustments until an appraisal of such Borrowing Base Equipment reasonably satisfactory to the Administrative Agent in all respects supporting a different Net Equipment Value of such Borrowing Base Equipment has been delivered and a write-up in the net book value of such Borrowing Base Equipment shall have been effected in accordance with Generally Accepted Accounting Principles, and (ii) assets which are valued in Canadian Dollars shall be converted to a value in United States Dollars at an exchange rate of $0.75 United States Dollars for each Canadian Dollar, provided that if the actual exchange rate on the date of any Borrowing Base Certificate (as quoted in The Wall Street Journal) equals or exceeds $0.80 United States Dollars for each Canadian Dollar or is less than or equal to $0.70 United States Dollars for each Canadian Dollar, then such assets shall be valued on such date using the actual exchange rate in effect for such date. "Borrowing Base Certificate" - see Section 11.4(e) hereof. 14 -5- "Borrowing Base Equipment" - Motor Vehicle Equipment in which the Borrower or any of the Guarantors has title and in which the Administrative Agent has a first priority perfected lien and security interest or, as to Motor Vehicle Equipment of any Person acquired pursuant to a Permitted Acquisition, with respect to which all Indebtedness secured by such Motor Vehicle Equipment has been repaid in full in connection with such Permitted Acquisition and arrangements reasonably satisfactory to the Administrative Agent in all respects have been made for the termination of record of all liens on and security interests in such Motor Vehicle Equipment and all steps have been taken to perfect a first priority lien and security interest in favor of the Administrative Agent. "Business Day" - when used in connection with (a) a Domestic Loan, a Domestic Business Day; (b) a Eurodollar Rate Loan, a Eurodollar Business Day; and (c) a Canadian Revolving Credit Loan or a Bankers' Acceptance, a Canadian Business Day. "Canadian Agent" - the Canadian Bank that shall have agreed, pursuant to Section 2.3 hereof, at the request of the Borrower and the Canadian Borrower and with the consent of the Administrative Agent, which consent will not be unreasonably withheld or delayed, to act as Canadian Agent hereunder. "Canadian Banks" - the financial institutions or banks resident in Canada (each of which must be a Qualifying Bank) that shall have agreed, pursuant to Section 2.3 hereof, at the request of the Borrower and the Canadian Borrower and with the consent of the Administrative Agent, which consent will not be unreasonably withheld or delayed, to make Canadian Revolving Credit Loans to the Canadian Borrower and to purchase and accept Bankers' Acceptances, as evidenced by such Bank having a positive figure beside its name in the column titled "Canadian Commitment" on Schedule 1.1 hereto, as such Schedule may be updated from time to time. "Canadian Base Rate" - (a) with respect to a Canadian Swing Line Loan, the greater of (i) the annual rate of interest announced from time to time by the Canadian Swing Line Bank as its prime commercial rate then in effect for determining interest rates for commercial loans made in Canadian Dollars by the Canadian Swing Line Bank in Canada and (ii) the average rate for 30 day Canadian Dollar bankers' acceptances as quoted on Reuters Screen CDOR Page at 10:00 a.m. (Toronto time) on the Drawdown Date thereof plus 0.75% per annum and (b) with respect to a Canadian Revolving Credit Loan, the greater of (i) the annual rate of interest announced from time to time by the Canadian Agent as its prime commercial rate then in effect for determining interest rates for commercial loans made in Canadian Dollars by the Canadian Agent in Canada and (ii) the average rate for 30 day Canadian Dollar bankers' acceptances as quoted on Reuters Screen CDOR Page at 10:00 a.m. (Toronto time) on the Drawdown Date thereof plus 0.75% per annum. "Canadian Base Rate Loans" - Canadian Loans bearing interest calculated by reference to the Canadian Base Rate. "Canadian Borrower" - see preamble. 15 -6- "Canadian Business Day" - any day other than a Saturday, Sunday, or any day on which banking institutions in Toronto, Ontario, Canada, Boston, Massachusetts or New York, New York are authorized or required by law to be closed. "Canadian Commitment" - with respect to each Canadian Bank, the amount set forth on Schedule 1.1 hereto (as such Schedule may be updated from time to time) as the amount of such Canadian Bank's commitment to make Canadian Revolving Credit Loans to and to accept Bankers' Acceptances for, the Canadian Borrower, as the same may be reduced or increased from time to time, pursuant to Section Section 2.2, 2.3 or 2.9 hereof; or if such commitment is terminated pursuant to Section Section 2.2 or 13.2 hereof, zero. "Canadian Commitment Fee" - see Section 5.1 hereof. "Canadian Commitment Percentage" - with respect to each Canadian Bank, the percentage set forth on Schedule 1.1 hereto, as such Schedule may be updated from time to time, as such Canadian Bank's percentage of the Total Canadian Commitment. "Canadian Dollar Equivalent" - with respect to an amount of U.S. Dollars on any date, the amount of Canadian Dollars that may be purchased with such amount of U.S. Dollars at the Exchange Rate with respect to U.S. Dollars on such date. "C$ or Canadian Dollars" - dollars in lawful currency of Canada. "Canadian Facility Effective Date" - see Section 2.3 hereof. "Canadian Guaranty" - the guaranty by the Borrower set forth in Section 28 hereof of the Canadian Borrower's obligations in respect of Canadian Swing Line Loans, Canadian Revolving Credit Loans and Bankers' Acceptances. "Canadian Loans" - collectively, the Canadian Revolving Credit Loans and the Canadian Swing Line Loans. "Canadian Plans" - see Section 8.11 hereof. "Canadian Revolving Credit Loan(s)" - collectively, revolving credit loans made to the Canadian Borrower by the Canadian Banks pursuant to Section 2.1.2 hereof. "Canadian Revolving Credit Note" - see Section 2.4. "Canadian Security Documents" - collectively, (i) the several General Security Agreements, each dated as of the date hereof, entered into between, respectively, the Canadian Borrower and the other Canadian Subsidiaries (other than AH) and the Administrative Agent, (ii) the several Hypothec on Movables agreements, each dated as of the date hereof, entered into between, respectively, the Canadian Borrower and the other Canadian Subsidiaries (other than AH) and the Administrative Agent, (iii) the several Debenture agreements, each dated as of the 16 -7- date hereof, entered into between, respectively, the Canadian Borrower and the other Canadian Subsidiaries (other than AH) and the Administrative Agent, and (iv) the several Assignment of Book Debts agreements, each dated as of the date hereof, entered into between, respectively, the Canadian Borrower and the other Canadian Subsidiaries (other than AH) and the Administrative Agent. "Canadian Subsidiaries" - each Subsidiary (direct and indirect, existing on the date hereof or acquired or formed hereafter in accordance with the provisions hereof) of the Borrower which is incorporated under the laws of Canada or a political subdivision thereof. "Canadian Swing Line Bank" - The Bank of Nova Scotia. "Canadian Swing Line Loan" - any loan made by the Canadian Swing Line Bank pursuant to Section 2.13 hereof. "Canadian Swing Line Note" - see Section 2.13 hereof. "Capital Assets" - fixed assets, both tangible (such as land, buildings, fixtures, machinery and equipment) and intangible (such as patents, trademarks, copyrights, franchises and goodwill), provided that capital assets shall not include any Investment permitted pursuant to Section 12.3 hereof or any item customarily charged directly to expense or depreciated over a useful life of 12 months or less in accordance with Generally Accepted Accounting Principles. "Capital Expenditures" - for any period, amounts paid or Indebtedness (including, without limitation, Indebtedness in respect of Operating Lease Obligations (determined at the time of each initiation or extension of each Rental Agreement), other than Operating Lease Obligations arising from the lease of the Borrower's headquarters at 160 Clairemont Avenue, Decatur, Georgia 30030) incurred or assumed by the Borrower or any of its Subsidiaries or for which any of such Persons becomes liable in connection with the purchase or lease by the Borrower or any of its Subsidiaries of Capital Assets during such period, but not including the aggregate of all amounts paid (whether in cash, stock or a combination thereof), all Indebtedness assumed by the Borrower or any of its Subsidiaries in connection with the ACD Acquisition or a Permitted Acquisition and any fees, expenses and transaction costs incurred in connection with the ACD Acquisition or such Permitted Acquisition which would be required to be capitalized in accordance with Generally Accepted Accounting Principles. "CERCLA" - see Section 8.21 hereof. "Closing Date" - see Section 9 hereof. "Co-Agent(s)" - see the preamble. "Collateral" - all of the property rights and interests of the Borrower and its Subsidiaries that are, or are intended pursuant to this Agreement and the Security Documents to be, subject to the security interests created by the Security Documents. 17 -8- "Commercial Finance Examination" - an examination by employees, agents or consultants of the Administrative Agent of the assets of the Borrower and its Subsidiaries which, without limiting the generality of the foregoing, may include a review of the Borrower's books and records and the books and records of the Borrower's Subsidiaries. "Commitment(s)" - with respect to any Bank, its Domestic Commitment and/or Canadian Commitment. "Commitment Fee" - the Domestic Commitment Fee and/or the Canadian Commitment Fee. "Commitment Percentage" - with respect to each Bank, the percentage set forth beside its name on Schedule 1.1 hereto, as such Bank's percentage of the Total Commitment. "Compliance Certificate" - see Section 11.4(e) hereof. "Consolidated" or "consolidated" - with reference to any term used in this Agreement, the relevant figures for the Borrower and its Subsidiaries on a consolidated basis determined in accordance with Generally Accepted Accounting Principles. "Consolidated Cash Flow" - for any fiscal period of the Borrower, an amount equal to the remainder of (a) Consolidated EBITDA for such period, minus (b) Capital Expenditures of the Borrower and its Subsidiaries during such period, provided that for purposes of calculating the Consolidated Cash Flow Ratio for any period, there shall be deducted from the actual amount of Capital Expenditures for such period an amount equal to the aggregate amount of Net Cash Proceeds received by the Borrower and its Subsidiaries from the sale of Capital Assets during such period. "Consolidated Cash Flow Ratio" - for any period, the ratio of (a) the Consolidated Cash Flow for such period to (b) the aggregate amount of Consolidated Interest Charges for such period, each as determined in accordance with Generally Accepted Accounting Principles. "Consolidated EBITDA" - for any fiscal period of the Borrower, an amount equal to the sum of (a) Consolidated Net Income for such period, plus (b) interest expense of the Borrower and its Subsidiaries for such period, plus (c) without duplication, all prepayment penalties, make-whole amounts and similar prepayment fees incurred in connection with any repayment, prepayment, redemption, retirement, or repurchase of the Subordinated Debt or the Senior Notes pursuant to Section Section 12.13 or 12.14, to the extent such costs are paid from the proceeds of the sale of equity securities used to repay such Subordinated Debt or Senior Notes, as the case may be, plus (d) the aggregate amount of income tax expense of the Borrower and its Subsidiaries deducted in the calculation of Consolidated Net Income for such period, plus (e) the aggregate amount of consolidated depreciation and amortization of the Borrower and its Subsidiaries deducted in the calculation of Consolidated Net Income for such period, minus (f) to the extent included in the calculation of Consolidated Net Income for such period, interest income of the Borrower and its 18 -9- Subsidiaries for such period, minus (g) with respect to any income of a non-wholly-owned Subsidiary which is included in the calculation of Consolidated Net Income, and to the extent so included, if the ability of such Subsidiary to distribute all or a portion of such income to the Borrower or a Guarantor is restricted (whether by contract, law, constitutive document or otherwise) an amount equal to the amount of income so restricted, minus (h) to the extent included in the calculation of Consolidated Net Income for such period, income of any Person which is not a Subsidiary of the Borrower for such period to the extent such income has not actually been distributed to the Borrower or a Guarantor, plus (i) to the extent deducted in the calculation of Consolidated Net Income for such period, the aggregate amount of severance and other cash expenses incurred by the Borrower and its Subsidiaries in connection with or resulting from the ACD Acquisition within 365 days of the Closing Date which have been offset by a commensurate reduction in the cash component of the purchase price payable by the Borrower and its Subsidiaries in connection with the ACD Acquisition; provided that such cash expenses shall have been approved by the Administrative Agent, plus (j) without duplication, to the extent deducted in the calculation of Consolidated Net Income for such period, the aggregate amount of severance and other cash expenses incurred by the Borrower and its Subsidiaries in connection with or resulting from the ACD Acquisition within 365 days of the Closing Date; provided that (i) such cash expenses shall have been approved by the Administrative Agent and (ii) the amount of cash expenses added pursuant to this clause (j) shall not exceed $2,500,000. "Consolidated Funded Indebtedness" - as at any date of determination, an amount equal to the sum (without duplication) of (a) the aggregate amount of Indebtedness of the Borrower and its Subsidiaries determined on a consolidated basis, related to the borrowing of money or in respect of capitalized leases, plus (b) the Maximum Drawing Amount of all Letters of Credit and any other letters of credit outstanding (other than the Haul Insurance L/Cs so long as such letters of credit are not guaranteed by the Borrower or any of its other Subsidiaries), plus (c) all Indebtedness guaranteed by the Borrower and its Subsidiaries, less (d) the amount of cash and cash equivalents (other than cash or cash equivalents of Non-Guarantor Subsidiaries, including, without limitation, Haul Insurance) reflected on the consolidated balance sheet of the Borrower and its Subsidiaries as at such date in excess of $3,000,000, in each case as determined in accordance with Generally Accepted Accounting Principles. "Consolidated Interest Charges" - for any fiscal period, the remainder of (a) the consolidated expenses of the Borrower and its Subsidiaries paid or accrued for such period for interest (including the finance charges applicable to capitalized leases) on Indebtedness (including the current portion thereof), as determined in accordance with Generally Accepted Accounting Principles, minus (b) non-cash interest expense of the Borrower and its Subsidiaries accrued during such period, minus (c) interest income of the Borrower and its Subsidiaries during such period, minus (d) to the extent included in the calculation of interest expense for such period, all prepayment penalties, make-whole amounts and similar prepayment fees incurred in connection with any repayment, prepayment, redemption, retirement, or repurchase of the Subordinated Debt or the Senior Notes pursuant to Section Section 12.13 or 12.14, to the extent such costs are paid from the proceeds of the sale of equity securities used to repay such Subordinated Debt or Senior Notes, as the case may be. 19 -10- "Consolidated Net Income" - the consolidated net income of the Borrower and its Subsidiaries for any period as determined in accordance with Generally Accepted Accounting Principles. "Consolidated Net Worth" - with respect to the Borrower and its Subsidiaries, the remainder of (a) all assets of the Borrower and its Subsidiaries on a consolidated basis which are properly classified as assets in accordance with Generally Accepted Accounting Principles, minus (b) all liabilities of the Borrower and its Subsidiaries on a consolidated basis which are properly classified as liabilities in accordance with Generally Accepted Accounting Principles. For purposes of the calculation of Consolidated Net Worth hereunder there shall be disregarded (i) the foreign currency translation adjustment component of shareholders' equity made in accordance with Financial Accounting Standards Board Statement No. 52 and (ii) any adjustments to shareholders' equity as a result of any unrealized gains or losses resulting from hedging obligations in accordance with Financial Accounting Standards Board Statement No. 80. "Conversion Request" - a notice given by the Borrower or the Canadian Borrower to the appropriate Agent of the Borrower's or the Canadian Borrower's election to convert or continue a Loan in accordance with Section 2.7 hereof. "Consolidated Revenues" - for any fiscal period, the consolidated revenues of the Borrower and its Subsidiaries as determined in accordance with Generally Accepted Accounting Principles. "Default(s)" - see Section 13.1 hereof. "Delinquent Bank" - see Section 17.5 hereof. "Distribution" - the declaration or payment of any dividend on or in respect of any shares of any class of capital stock of any Person, other than dividends payable solely in shares of common stock of such Person; the purchase, redemption, or other retirement of any shares of any class of capital stock of any Person, directly or indirectly through a Subsidiary of such Person or otherwise; the return of capital by any Person to its shareholders as such; or any other distribution on or in respect of any shares of any class of capital stock of any Person. "Documentation Agent" - see preamble. "Dollar Equivalent" - with respect to an amount of Canadian Dollars on any date, the amount of U.S. Dollars that may be purchased with such amount of Canadian Dollars at the Exchange Rate applicable to Canadian Dollars on such date. "Domestic Bank(s)" - the Banks that shall have agreed to make Domestic Loans to the Borrower and to participate in the risk associated with Canadian Swing Line Loans and Letters of Credit, as evidenced by such Bank having a positive figure beside its name in the column titled "Domestic Commitment" on Schedule 1.1 hereto, as such Schedule may be updated from time to time. 20 -11- "Domestic Base Rate" - for any day, a fluctuating rate per annum (rounded upwards, if necessary, to the next 1/8 of 1%) equal to the greater of (a) the rate of interest announced from time to time by the Administrative Agent at its Head Office as its "base rate", as in effect on such day, or (b) the Federal Funds Effective Rate in effect on such day plus 1/2%. "Federal Funds Effective Rate" shall mean, for any day, a fluctuating interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. For purposes of this Agreement, any change in the Domestic Base Rate due to a change in the Administrative Agent's "base rate" or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Administrative Agent's "base rate" or the Federal Funds Effective Rate, as applicable. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including, without limitation, the inability or failure of the Administrative Agent to obtain sufficient bids or publications in accordance with the terms hereof, the Domestic Base Rate shall be the Administrative Agent's "base rate" as in effect at the applicable time until the circumstances giving rise to such inability no longer exist. "Domestic Base Rate Loans" - Domestic Loans bearing interest calculated by reference to the Domestic Base Rate. "Domestic Business Day" - any day other than Saturday, Sunday, or any day on which banking institutions in Boston, Massachusetts or New York, New York are authorized or required by law to be closed. "Domestic Commitment" - with respect to each Domestic Bank, the amount set forth on Schedule 1.1 hereto (as such Schedule may be updated from time to time) as the amount of such Domestic Bank's commitment to make Domestic Loans to the Borrower and to participate in the risk associated with Canadian Swing Line Loans and Letters of Credit, as the same may be reduced or increased from time to time, pursuant to Section Section 2.2, 2.3 or 2.9 hereof; or if such commitment is terminated pursuant to Section Section 2.2 or 13.2 hereof, zero. "Domestic Commitment Fee" - see Section 5.1 hereof. "Domestic Commitment Percentage" - with respect to each Domestic Bank, the percentage set forth on Schedule 1.1 hereto, as such Schedule may be updated from time to time, as such Domestic Bank's percentage of the Total Domestic Commitment. "Domestic Eurodollar Rate" - for any Interest Period with respect to a Domestic Eurodollar Rate Loan, the rate of interest equal to (a) the rate per annum at which the Administrative Agent's Eurodollar Lending Office is offered Dollar deposits two Eurodollar 21 -12- Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations of such Eurodollar Lending Office are customarily conducted, for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to the amount of the Domestic Eurodollar Rate Loan to which such Interest Period applies, divided by (b) a number equal to 1.00 minus the Eurocurrency Reserve Rate. "Domestic Eurodollar Rate Loans" - Domestic Revolving Credit Loans bearing interest calculated by reference to the Domestic Eurodollar Rate. "Domestic Lending Office" - initially, the office of each Bank designated as such in Schedule 1.1 attached hereto; thereafter such other office of such Bank, if any, that will be making or maintaining Base Rate Loans. "Domestic Loans" - collectively, the Domestic Revolving Credit Loans and the Domestic Swing Line Loans. "Domestic Revolving Credit Loan(s)" - collectively, revolving credit loans made to the Borrower by the Domestic Banks pursuant to Section 2.1.1 hereof. "Domestic Revolving Credit Note" - see Section 2.4. "Domestic Subsidiaries" - each Subsidiary (direct and indirect, existing on the date hereof or acquired or formed hereafter in accordance with the provisions hereof) of the Borrower which is incorporated under the laws of a State of the United States of America. "Domestic Swing Line Bank" - BKB. "Domestic Swing Line Loan" - any Loan made by the Domestic Swing Line Bank pursuant to Section 2.12 hereof. "Domestic Swing Line Note" - see Section 2.12 hereof. "Drawdown Date" - the date on which any Revolving Credit Loan or Swing Line Loan is made or is to be made, and the date on which any Revolving Credit Loan is converted or continued in accordance with Section 2.7 hereof. "Eligible Assignee" - any Qualifying Bank that is (a) a commercial bank organized under the laws of the United States or any State thereof or the District of Columbia or the laws of Canada, and having total assets in excess of $1,000,000,000; (b) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof or the District of Columbia, and having a net worth of at least $100,000,000, calculated in accordance with Generally Accepted Accounting Principles; (c) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, and having total 22 -13- assets in excess of $1,000,000,000, provided that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD; (d) the central bank of any country which is a member of the OECD; or (e) if, but only if, any Event of Default has occurred and is continuing, any other bank, insurance company, commercial finance company or other financial institution approved by the Administrative Agent, such approval not to be unreasonably withheld. "Environmental Laws" - see Section 8.21 hereof. "ERISA" - the Employees Retirement Income Security Act of 1974, as amended from time to time. "Eurocurrency Reserve Rate" - for any day with respect to a Domestic Eurodollar Rate Loan, the maximum rate (expressed as a decimal) at which any lender which is a member bank of the Federal Reserve System with deposits exceeding $5,000,000,000 would be required by law to maintain reserves under Regulation D of the Board of Governors of the Federal Reserve System (or any successor or similar regulations relating to such reserve requirements) against "Eurocurrency Liabilities" (as that term is used in Regulation D), if such liabilities were outstanding. "Eurodollar Business Day" - any day on which commercial banks are open for international business (including dealings in Dollar deposits) in London or such other eurodollar interbank market as may be selected by the Administrative Agent in its sole discretion acting in good faith, in the case of Domestic Eurodollar Rate Loans. "Eurodollar Lending Office" - initially, the office of each Bank designated as such in Schedule 1.1 attached hereto; thereafter, such other office of such Bank, if any, that shall be making or maintaining Eurodollar Rate Loans. "Eurodollar Rate Loans" - the Domestic Eurodollar Rate Loans. "Event(s) of Default" - see Section 13.1 hereof. "Exchange Rate" - on any day (a) with respect to Canadian Dollars in relation to U.S. Dollars, the spot rate as quoted by the Canadian Swing Line Bank as its noon spot rate at which U.S. Dollars are generally offered on such day for Canadian Dollars at such time and (b) with respect to U.S. Dollars in relation to Canadian Dollars, the spot rate as quoted by the Administrative Agent as its noon spot rate at which Canadian Dollars are generally offered on such day at such time for U.S. Dollars. "Existing Letters of Credit" - the letters of credit outstanding on the Closing Date and listed on Schedule 1.4 attached hereto. "Fee Letter" - that certain Fee Letter, dated as of July 18, 1997, between the Borrower and the Administrative Agent, as the same may be amended and in effect from time to time. 23 -14- "Foreign Subsidiaries" - each Subsidiary (direct and indirect, existing on the date hereof or acquired or formed hereafter in accordance with the provisions hereof) of the Borrower which is incorporated under the laws of a jurisdiction other than a State of the United States of America. "Fronting Fee" - see Section 5.2. "Funded Debt Ratio" - with respect to the Borrower and its Subsidiaries, as at any date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for the period of the four (4) consecutive fiscal quarters of the Borrower then ending. "Generally Accepted Accounting Principles"- (i) when used in Section 12 hereof, whether directly or indirectly through reference to a capitalized term used therein, means (A) principles that are consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and (B) to the extent consistent with such principles, the accounting practice of the Borrower and its Subsidiaries reflected in the financial statements for the year ended on the Balance Sheet Date, (ii) when used in general, other than as provided above, means principles that are (A) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time, and (B) consistently applied with past financial statements of the Borrower and its Subsidiaries adopting the same principles, provided that in each case referred to in this definition of "generally accepted accounting principles" a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in generally accepted accounting principles) as to financial statements in which such principles have been properly applied. "Guaranteed Obligations" - see Section 28(a). "Guaranteed Pension Plan" - any pension plan (other than a Multiemployer Plan) maintained by the Borrower or any entity treated as a single employer with the Borrower pursuant to Section 414(b) or (c) of the Internal Revenue Code of 1986, as amended (a "Related Entity"), or to which any of them contributes, with respect to which the Borrower or any Related Entity is required to pay plan termination insurance premiums to the Pension Benefit Guaranty Corporation. "Guarantor(s)" - collectively, all of and, individually, each of, the Borrower's Subsidiaries which have executed and delivered a Guaranty or which have, from and after the Closing Date, executed and delivered a guaranty pursuant to the terms of Section 7(c) hereof. "Guaranties, Guaranty" - see Section 7(b) hereof. "Haul Insurance" - Haul Insurance Limited, a Cayman Islands corporation doing business as an insurance company regulated by the laws of the Cayman Islands. 24 -15- "Haul Insurance L/Cs" - letters of credit issued for the account of Haul Insurance. "Hazardous Substances" - see Section 8.21 hereof. "Head Office" - when used in connection with (a) the Administrative Agent, the Administrative Agent's head office located in Boston, Massachusetts, or at such other location as the Administrative Agent may designate from time to time and (b) the Canadian Agent, such location as the Canadian Agent may designate from time to time. "Indebtedness" - all obligations, contingent and otherwise, which in accordance with Generally Accepted Accounting Principles should be classified upon the obligor's balance sheet as liabilities, or to which reference should be made by footnotes thereto, including, without limitation, in any event and whether or not so classified: (a) all debt and similar monetary obligations, whether direct or indirect; (b) all liabilities secured by any mortgage, pledge, security interest, lien, charge, or other encumbrance existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; and (c) all guarantees, endorsements and other contingent obligations, whether direct or indirect, in respect of Indebtedness of others, including any obligation to supply funds to or in any manner to invest in, directly or indirectly, the debtor, to purchase Indebtedness, or to assure the owner of Indebtedness against loss, through an agreement to purchase goods, supplies, or services for the purpose of enabling the debtor to make payment of the Indebtedness held by such owner or otherwise, and the obligations to reimburse the issuer in respect of any letters of credit. "Independent Accountant(s)" - a firm of independent public accountants selected by the Board of Directors of the Borrower, which is "independent" as that term is defined in Rule 2-01 of Regulation S-X promulgated by the Securities and Exchange Commission. "Ineligible Securities" - securities which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1993 (12 U.S.C. Section 24, Seventh), as amended. "Intercompany Note" - a demand note in the form of Exhibit B attached hereto issued by a Guarantor to the order of the Borrower or to the order of AH and, in the case of each demand note payable to the Borrower, unless endorsed to AH, pledged by the Borrower to the Administrative Agent, for the benefit of the Banks, pursuant to the Pledge Agreement. "Interest Payment Date" - (a) as to any Base Rate Loan, the last day of the calendar quarter which includes the Drawdown Date thereof; and (b) as to any Eurodollar Rate Loan in respect of which the Interest Period is (i) three (3) months or less, the last day of such Interest Period and (ii) more than three (3) months, the date that is three (3) months from the first day of such Interest Period and, in addition, the last day of such Interest Period. "Interest Period" - with respect to each Revolving Credit Loan, (a) initially, the period commencing on the Drawdown Date of such Loan through the last day of one of the periods set 25 -16- forth below, as selected by the Borrower in a Loan Request (A) for any Base Rate Loan the last day of the calendar quarter; and (B) for any Eurodollar Rate Loan, 1, 2, 3, or 6 months; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Revolving Credit Loan through the last day of one of the periods set forth above, as selected by the Borrower in a Conversion Request; provided that all of the foregoing provisions relating to Interest Periods are subject to the following: (i) if any Interest Period with respect to a Eurodollar Rate Loan would otherwise end on a day that is not a Eurodollar Business Day, that Interest Period shall be extended to the next succeeding Eurodollar Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Eurodollar Business Day; (ii) if any Interest Period with respect to a Base Rate Loan would end on a day that is not a Business Day, that Interest Period shall end on the next succeeding Business Day; (iii) if the Borrower shall fail to give notice as provided in Section 2.6 hereof, the Borrower shall be deemed to have requested a conversion of the affected Eurodollar Rate Loan to a Base Rate Loan and the continuance of all Base Rate Loans as Base Rate Loans on the last day of the then current Interest Period with respect thereto; (iv) any Interest Period relating to any Eurodollar Rate Loan that begins on the last Eurodollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Eurodollar Business Day of a calendar month; and (v) any Interest Period relating to any Loan that would otherwise extend beyond the Maturity Date shall end on the Maturity Date. "Investments" - the aggregate of all expenditures made and all liabilities incurred (contingently or otherwise) for the acquisition of stock (except redemptions or repurchases by a corporation of any shares of its capital stock) or Indebtedness of, or for loans, advances, capital contributions or transfers of property to, or in respect of any guarantees (or other commitments as described under Indebtedness), or obligations of, any Person (including, without limitation, a joint venture or partnership), except transfers or deliveries made against receipt of full value in cash or made in the ordinary course of business. In determining the aggregate amount of Investments outstanding at any particular time, (a) the amount of any Investment represented by a guarantee shall be taken at not less than the aggregate amount of the obligations guaranteed and still outstanding, (b) there shall be included as an Investment all interest accrued with respect to Indebtedness constituting an Investment unless and until such interest is paid, (c) there shall be deducted in respect of each such Investment any amount received as a return of capital, (d) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, except that accrued interest included as 26 -17- provided in the foregoing clause (b) may be deducted when paid, and (e) there shall not be deducted from the aggregate amount of Investments any decrease in the value thereof. "Letter(s) of Credit" - standby letters of credit issued by the Letter of Credit Bank from time to time for the account of the Borrower, including, without limitation, the Existing Letters of Credit. "Letter of Credit Bank" - BKB. "Letter of Credit Fee" - see Section 5.2 hereof. "Loan Documents" - collectively, this Agreement, the Notes, the Security Documents, the Reimbursement Agreements, the Fee Letter, and any other instruments or documents required to be delivered pursuant hereto or thereto, in each case as amended, restated, modified or supplemented and in effect from time to time. "Loan Request" - see Section 2.6 hereof. "Loan(s)" - individually, a Revolving Credit Loan or a Swing Line Loan and collectively, the Revolving Credit Loans and the Swing Line Loans. "Majority Banks" - as of any date, Banks holding at least 51% of the outstanding principal amount of the Notes on such date; and if no such principal is outstanding, Banks whose Commitment Percentages add up to at least 51%. "Management Group" - collectively, those Persons (individually, a "Management Person") listed on Schedule 1.3 attached hereto and each successor or assignee of a Management Person's interest in the Borrower if such successor or assignee is also a member of the Permitted Management Class. As used herein, "Permitted Management Class" means (i) each Management Person's spouse, descendants and spouses of his or her descendants, and any trust for the benefit of any one or more of the foregoing; (ii) any corporation, partnership or limited liability company in which one or more members of the Management Group owns, directly or indirectly, fifty-one percent (51%) or more of the voting equity of such entity; and (iii) any charitable entity which is exempt from federal income tax, to which contributions are deductible for federal income tax, to which contributions are not subject to federal gift tax and to which one or more members of the Management Group contribute at least twenty-five percent (25%) of the annual contributions received by such charitable entity and as to which members of the Management Group and their spouses and descendants constitute the majority of the trustees and have voting control over such entities. "Maturity Date" - September 30, 2002. 27 -18- "Maximum Canadian Swing Line Loan Amount" - see Section 2.13. "Maximum Domestic Swing Line Loan Amount" - see Section 2.12. "Maximum Drawing Amount" - on the date as of which the maximum drawing amount is to be determined, the aggregate of the maximum amounts which the beneficiaries may draw from time to time under Letters of Credit issued for the account of the Borrower pursuant to Section 3.1 hereof. "Motor Vehicle Equipment" - all trucks, trailers, tractors, service vehicles, automobiles, tires, and all related equipment and accessions, and all prepaid tire inventory, with respect to which the Borrower or any of its Subsidiaries now or hereafter has full and unencumbered title (except for liens permitted under Section Section 12.2 (a) and (d) hereof), which are used or usable by the Borrower and its Subsidiaries in their business operations. "Multiemployer Plan" - a pension plan as defined in Section 3(37) of ERISA to which the Borrower or any Related Entity contributes. "Net Cash Proceeds" - if from a sale of assets or of equity by the Borrower or any of its Subsidiaries, the cash proceeds received from such sale, net of all costs of sale (other than taxes), underwriting or brokerage costs, and if from the incurrence of Indebtedness, the cash proceeds received from such incurrence of Indebtedness, net of all costs thereof incurred and fees and all expenses payable in connection therewith. "Net Equipment Value" - with respect to either Borrowing Base Equipment or Motor Vehicle Equipment, an aggregate amount equal to the net book value of such equipment, as determined in accordance with Generally Accepted Accounting Principles applied on a basis consistent with the consolidated balance sheet of the Borrower and its Subsidiaries as of the Balance Sheet Date and as reported on each Compliance Certificate delivered to the Banks pursuant to Section 11.4(e) hereof. All such equipment shall be depreciated no more slowly and to a residual value no greater than that resulting from the applicable method of depreciation set forth on Schedule 1.2 attached hereto. "Net Receivables Value" - the net amount of Receivables outstanding, as determined in accordance with Generally Accepted Accounting Principles, after deducting from the aggregate face amount of Receivables all payments, adjustments, offsetting accounts payable of a material nature owed to account debtors, and all credits applicable thereto. "Non-Guarantor Subsidiaries" - each Subsidiary (direct and indirect) of the Borrower which has not delivered a Guaranty of the Obligations pursuant to Section 7 hereof. "Note Record" - the grid attached to a Note, or the continuation of such grid, or any other similar record, including computer records, maintained by any Bank with respect to any Loan referred to in such Note. 28 -19- "Notes" - collectively, the Revolving Credit Notes, the Domestic Swing Line Note and the Canadian Swing Line Note. "Obligations" - all indebtedness, obligations and liabilities of the Borrower and the Canadian Borrower to the Agents and the Banks, existing on the date of this Agreement or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, arising or incurred (i) under this Agreement, (ii) in respect of Loans made, Letters of Credit, Bankers' Acceptances and the Notes or other instruments at any time evidencing any thereof and (iii) in respect of any foreign exchange or derivative arrangements entered into among the Borrower and/or the Canadian Borrower and any Agent or Bank. "Officer's Certificate" - a certificate signed by the President, the Treasurer, the Chief Financial Officer, the Senior Vice President or the Assistant Treasurer of the Person on whose behalf the certificate is executed. "Operating Lease Obligations" - at any time an amount equal to the aggregate of all obligations under Rental Agreements that (a) have an initial term of one year or longer and (b) call for annual rental or lease payments of $10,000 or more, in each case calculated as an amount equal to the lesser of (i) the net present value (calculated at a discount rate of 10%) of the minimum future rental payments due over the term of all such Rental Agreements which may not be terminated, or (ii) the minimum cost to terminate (including rental payments applicable to any notice periods) any such Rental Agreements which may be terminated. "Partnership Agreement" - the Agreement of Limited Partnership of Allied Systems, as such Agreement of Limited Partnership is in effect from time to time. "Partnership Certificate" - the Certificate of Limited Partnership of Allied Systems filed in either the Office of the Secretary of State of the State of Georgia or the office of the Clerk of DeKalb County, as required by law, on June 7, 1988, as such Certificate of Limited Partnership is in effect from time to time. "Patent Security Agreements" - collectively, the several Patent Collateral Assignment and Security Agreements, each dated as of the date hereof, between, respectively, the Borrower, certain other Subsidiaries party thereto and the Administrative Agent, and each other Patent Collateral Assignment and Security Agreement executed after the date hereof pursuant to which the Borrower or any of its Subsidiaries grants a security interest in its patents and related rights to the Administrative Agent, for the benefit of the Banks. "Pension Benefit Guaranty Corporation" - the Pension Benefit Guaranty Corporation created by Section 4002 of ERISA and any successor entities having similar responsibilities. "Permitted Acquisition" - see Section 12.5(e) hereof. 29 -20- "Permitted Liens" - mortgages, liens, charges, security interests or other encumbrances on any real or personal property which are permitted pursuant to Section 12.2 hereof. "Person" - any individual, corporation, partnership, trust, unincorporated association, joint stock company, limited liability company or other legal entity or organization and any government or agency or political subdivision thereof. "Pledge Agreement" - the Pledge Agreement, dated as of the date hereof, between the Borrower and the Administrative Agent. "Pro Forma Basis" - (a) in connection with any proposed Permitted Acquisition after the Closing Date, the calculation of compliance with the financial covenants described in Section 12.5(e) hereof by the Borrower and its Subsidiaries (including the Person to be acquired) with reference to the audited historical financial results of such Person and the Borrower and its Subsidiaries for the applicable Test Period after giving effect on a pro forma basis to such Permitted Acquisition in the manner described in (i), (ii) and (iii) below; and, following a Permitted Acquisition, the calculation of compliance with the financial covenant set forth in Section 12.10 for the fiscal quarter in which such Permitted Acquisition occurred and each of the three fiscal quarters immediately following such Permitted Acquisition with reference to the audited historical financial results of the Person so acquired and the Borrower and its Subsidiaries for the applicable Test Period after giving effect on a pro forma basis to such Permitted Acquisition in the manner described in (i), (ii) and (iii) below: (i) all Indebtedness (whether under this Agreement or otherwise) and any other balance sheet adjustments incurred or made in connection with the Permitted Acquisition shall be deemed to have been incurred or made on the first day of the Test Period, and all Indebtedness of the Person acquired or to be acquired in such Permitted Acquisition which was or will have been repaid in connection with the consummation of the Permitted Acquisition shall be deemed to have been repaid concurrently with the incurrence of the Indebtedness incurred in connection with the Permitted Acquisition; (ii) all Indebtedness assumed to have been incurred pursuant to the preceding clause (i) shall be deemed to have borne interest at the sum of (a) the arithmetic mean of (x) the Eurodollar Rate for Eurodollar Rate Loans having an Interest Period of one month in effect on the first day of the Test Period and (y) the Eurodollar Rate for Eurodollar Rate Loans having an Interest Period of one month in effect on the last day of the Test Period plus (b) the Applicable Margin then in effect (after giving effect to the Permitted Acquisition on a Pro Forma Basis); and (iii) other reasonable cost savings, expenses and other income statement or operating statement adjustments which are attributable to the change in ownership and/or management resulting from such Permitted Acquisition as may be approved by the Administrative Agent in writing (which approval shall not be unreasonably withheld) shall be deemed to have been realized on the first day of the Test Period; and 30 -21- (b) in connection with any Investment pursuant to Section 12.3(g) after the Closing Date, the calculation of compliance with Section 12.10 hereof by the Borrower and its Subsidiaries after giving effect on a pro forma basis to any Indebtedness incurred in connection with such Investment. "Qualifying Bank" - with respect to (a) any Domestic Bank, a bank or other financial institution that is incorporated or organized under the laws of the United States of America or a state thereof or the District of Columbia or that is exempt from deduction or withholding of United States federal income taxes; and (b) any Canadian Bank, a bank or other financial institution which is resident in Canada and which is named in Schedule I or Schedule II to the Bank Act (Canada). "Rate Adjustment Period" - see Applicable Margin. "RCRA" - see Section 8.21 hereof. "Reallocation" - a transfer of a portion of the Total Domestic Commitment to the Total Canadian Commitment or a transfer of all or a portion of the Total Canadian Commitments to the Total Domestic Commitment in accordance with Section 2.3 hereof. "Receivables" - trade accounts receivable of the Borrower and any of the Guarantors (as entered on the books of the Borrower and its Subsidiaries in accordance with Generally Accepted Accounting Principles, after eliminating all intercompany receivables), (a) which have arisen with respect to sales of products or services of the Borrower or any of the Guarantors, (b) which have not been outstanding for more than 90 days past the invoice date, (c) in which the Administrative Agent has a valid and perfected first priority security interest, (d) that, unless the Administrative Agent otherwise agrees, are payable in either United States Dollars or Canadian Dollars, (e) that, unless the Administrative Agent otherwise agrees, are payable from an office in either the United States of America or Canada, (f) that the Borrower reasonably and in good faith determines to be collectible, and (g) that are not subject to any pledge, restriction, security interest or other lien or encumbrance, other than the security interest in favor of the Administrative Agent. "Refunding Bankers' Acceptance" - see Section 4.2. "Register" - see Section 18.3 hereof. "Reimbursement Agreements" - the applications made and agreements entered into between the Letter of Credit Bank and the Borrower relating to Letters of Credit, substantially in the form of Exhibit C attached hereto, as the same are in effect from time to time. "Related Entity" - see Guaranteed Pension Plan. "Rental Agreements" - rental agreements or leases of real or personal property, other than (a) capitalized lease obligations, (b) obligations which can be terminated by the giving of notice without liability to such Person or its Subsidiaries in excess of the liability for rent due as 31 -22- of the date such notice is given and under which no penalty or premium is paid as a result of any such termination, and (c) with respect to the Borrower and any of its Subsidiaries, obligations to brokers or owner-operators of vehicles used in connection with such Person's business. "Replacement Bank" - see Section 6.14. "Reset Date" - see Section 6.13. "Revolving Credit Loans" - collectively, the Canadian Revolving Credit Loans and the Domestic Revolving Credit Loans. "Revolving Credit Notes" - collectively, the Canadian Revolving Credit Notes and the Domestic Revolving Credit Notes. "SARA" - see Section 8.21 hereof. "Sale-Leaseback" - see Section 12.6 hereof. "Section 20 Subsidiary" - a Subsidiary of the bank holding company controlling any Bank, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities. "Secured Property Indebtedness" - (a) with respect to the Borrower and its Subsidiaries, all Indebtedness (other than Operating Lease Obligations) which is secured by any security interest, mortgage, charge, deed of trust, or other similar lien on any non-current tangible property used by the Borrower and its Subsidiaries in their business operations, including, without limitation, Motor Vehicle Equipment and Indebtedness with respect to capitalized leases of Motor Vehicle Equipment; provided that in each case such Indebtedness was incurred in connection with the purchase or lease of such property or Motor Vehicle Equipment by such Person and (b) all such secured Indebtedness of any Person acquired in a Permitted Acquisition; provided that such Indebtedness was not incurred by such Person in contemplation of or in connection with such Permitted Acquisition. "Security Agreement" - the Security Agreement, dated as of the date hereof, among the Borrower, each of the Domestic Subsidiaries and the Administrative Agent. "Security Documents" - the Assignment of Acquisition Documents, the Pledge Agreement, the Stock Pledge Agreement, the Security Agreement, the Canadian Security Documents, the Guaranties, the Trademark Security Agreements, the Patent Security Agreements, each of the guaranties delivered pursuant to Section 7(c) hereof, and any other instruments and documents delivered pursuant thereto, in each case as amended and in effect from time to time. 32 -23- "Senior Note Indenture" - the Indenture, dated as of September 30, 1997, between the Borrower and The First National Bank of Chicago, as Trustee, in the form delivered to the Administrative Agent on or prior to the Closing Date. "Senior Notes" - the 8-5/8% Series A and Series B Senior Notes Due 2007, in the aggregate original principal amount of $150,000,000, issued by the Borrower pursuant to the Senior Note Indenture, in the form delivered to the Administrative Agent on or prior to the Closing Date. "Stock Pledge Agreement" - the Securities Pledge Agreement, dated as of the date hereof, among the Borrower, the Administrative Agent and the Subsidiaries of the Borrower party thereto, as the same may be amended and in effect from time to time. "Subordinated Debt" - the unsecured Indebtedness of the Borrower and certain of its Subsidiaries under the Subordinated Debt Documents. "Subordinated Debt Documents" - the Note Purchase Agreement dated as of January 15, 1996 executed and delivered by the Borrower to The Northwestern Mutual Life Insurance Company, the John Hancock Mutual Life Insurance Company, and Barnett & Co., the unsecured 12% Senior Subordinated Notes due February 1, 2003 issued thereunder, the Subordinated Guaranty Agreements in favor of the holders of such notes executed and delivered by certain Subsidiaries of the Borrower in connection therewith (the "Subordinated Guaranty Agreements") and all other documents issued and/or delivered in connection therewith, each of which documents and instruments shall be in the form delivered to the Administrative Agent prior to the Closing Date. "Subordinated Guaranty Agreements" - see the definition of Subordinated Debt Documents. "Subsidiary" - in relation to any particular Person, any corporation, association or other business entity, a majority (by number of votes) of the outstanding voting stock or other comparable equity interest of which is at the time owned or controlled by such Person, or by one or more subsidiaries of such Person or by such Person and one or more subsidiaries of such Person and which property would be included in such Person's consolidated balance sheet. All Subsidiaries of the Borrower are listed on Schedule 8.16(a) and Schedule 8.16(b) attached hereto, as such Schedules may be updated from time to time in accordance with the provisions hereof. "Swing Line Banks" - collectively, the Domestic Swing Line Bank and the Canadian Swing Line Bank. "Swing Line Loans" - collectively, the Domestic Swing Line Loans and the Canadian Swing Line Loans. 33 -24- "Swing Line Loan Maturity Date" - with respect to any Swing Line Loan, the date specified by the Borrower or the Canadian Borrower, as applicable, in the Loan Request relating thereto as the maturity date of such Swing Line Loan. "Test Period" - (a) in connection with the calculation of financial covenant compliance on a Pro Forma Basis as required by Section 12.5(e) with respect to any proposed Permitted Acquisition, the period of four fiscal quarters most recently ended prior to such Permitted Acquisition for which financial information is available, and (b) in connection with the calculation of the financial covenant set forth in Section 12.10 hereof following any Permitted Acquisition, the period of all fiscal quarters (and any portion of a fiscal quarter) prior to the date of such Permitted Acquisition included in the calculation of such financial covenant. "Total Canadian Commitment" - the sum of the Canadian Commitments of the Canadian Banks, as in effect from time to time. "Total Commitment" - the sum of the Total Canadian Commitment and the Total Domestic Commitment, each as in effect from time to time; provided that such sum shall not exceed $230,000,000. As of the date hereof, the Total Commitment is $230,000,000. "Total Commitment Percentage" - with respect to each Bank, the percentage set forth next to such Bank on Schedule 1.1 hereto, as such Schedule may be updated from time to time, as such Bank's percentage of the Total Commitment. "Total Domestic Commitment" - the sum of the Domestic Commitments of the Domestic Banks, as in effect from time to time. "Trademark Security Agreements" - collectively, the several Trademark Collateral Security and Pledge Agreements, each dated as of the date hereof, between, respectively, the Borrower, certain other Subsidiaries party thereto and the Administrative Agent, and each other Trademark Collateral Security and Pledge Agreement executed after the date hereof pursuant to which the Borrower or any of its Subsidiaries grants a security interest in its trademarks and related rights to the Administrative Agent, for the benefit of the Banks. "Type" - as to any Loan, its nature as a Base Rate Loan or a Eurodollar Rate Loan. "Uniform Act" - the Revised Uniform Limited Partnership Act of the State of Georgia, as such act may be amended and in effect from time to time. (b) All terms of an accounting character not specifically defined herein shall have the meanings assigned thereto by Generally Accepted Accounting Principles. All terms not specifically defined herein which are defined in the Uniform Commercial Code as in effect in the Commonwealth of Massachusetts shall have the same meanings herein as therein. Each reference herein to a particular Person (including, without limitation, the Agents or any Bank) shall include a reference to such Person's successors and permitted assigns. The words "herein", 34 -25- "hereof", "hereunder" and words of like import shall refer to this Agreement as a whole and not to any particular Section or subdivision of this Agreement. SECTION 2. THE CREDIT FACILITIES. SECTION 2.1. COMMITMENT TO LEND. SECTION 2.1.1. DOMESTIC LOANS. Subject to the terms and conditions set forth in this Agreement, each of the Domestic Banks severally agrees to lend to the Borrower and the Borrower may borrow, repay, and reborrow from time to time from the Closing Date until the Maturity Date, upon notice by the Borrower to the Administrative Agent given in accordance with this Section 2, such sums in Dollars as are equal to such Domestic Bank's Domestic Commitment Percentage of the Domestic Revolving Credit Loan requested by the Borrower in such notice; provided that the sum of (a) the aggregate principal amount of all Domestic Revolving Credit Loans outstanding plus (b) the aggregate principal amount of all Domestic Swing Line Loans outstanding plus (c) the Dollar Equivalent of the aggregate principal amount of all Canadian Swing Line Loans outstanding plus (d) the aggregate Maximum Drawing Amount of all Letters of Credit outstanding shall not, at any time and after giving effect to all amounts requested, exceed the Total Domestic Commitment. In addition to the foregoing, each of the Domestic Banks will, from the Closing Date until the Maturity Date, and regardless of whether the conditions set forth in Section Section 9 and 10 are satisfied, make Domestic Revolving Credit Loans to the Borrower solely for the purposes of (i) repaying Swing Line Loans pursuant to Section Section 2.12 and 2.13 hereof or (ii) repaying Indebtedness of the Borrower to the Domestic Banks in respect of drawings under Letters of Credit pursuant to Section 3.2 hereof. Sections 2.12 and 2.13 hereof shall govern the Borrower's obligations with respect to Swing Line Loans, and Section 3.2 hereof shall govern the Borrower's obligations with respect to drawings under Letters of Credit. SECTION 2.1.2. CANADIAN REVOLVING CREDIT LOANS. Subject to the terms and conditions set forth in this Agreement (including, without limitation, Section 2.3 hereof), each of the Canadian Banks severally agrees to lend to the Canadian Borrower in Canadian Dollars, and the Canadian Borrower may borrow, repay, and reborrow from time to time in Canadian Dollars from the Canadian Facility Effective Date until the Maturity Date, upon notice by the Canadian Borrower to the Canadian Agent given in accordance with this Section 2, such sums in Canadian Dollars as are equal to such Bank's Canadian Commitment Percentage of the Canadian Revolving Credit Loan requested by the Canadian Borrower in such notice; provided that the sum of (a) the Dollar Equivalent of the aggregate principal amount of the Canadian Revolving Credit Loans outstanding, plus (b) the Dollar Equivalent of the aggregate face amount of Bankers' Acceptances then outstanding shall not, at any time and after giving effect to all amounts requested, exceed the Total Canadian Commitment. SECTION 2.1.3. LIMITATION ON BORROWINGS. Notwithstanding any other provision of this Agreement, no Bank shall have any obligation to make any Loan, issue, renew or extend any Letter of Credit, or purchase or accept any Bankers' Acceptance if, after giving effect to such 35 -26- Borrowing, the sum of (a) the aggregate principal amount of all Domestic Revolving Credit Loans outstanding plus (b) the aggregate principal amount of all Domestic Swing Line Loans outstanding plus (c) the aggregate Maximum Drawing Amount of all Letters of Credit outstanding plus (d) the Dollar Equivalent of the aggregate principal amount of all Canadian Revolving Credit Loans outstanding plus (e) the Dollar Equivalent of all Canadian Swing Line Loans outstanding plus (f) the Dollar Equivalent of the aggregate face amount of Bankers' Acceptances outstanding exceeds the lesser of (i) the Borrowing Base Amount and (ii) the Total Commitment. SECTION 2.2. TERMINATION, REDUCTION OF COMMITMENTS. (a) The Borrower may at any time prior to the Maturity Date, terminate the Total Commitment in full by giving three Business Days' prior written notice thereof to the Banks. A termination of the Total Commitment shall be accompanied by the repayment in full of the Revolving Credit Loans, the Swing Line Loans and the cash collateralization of the Bankers' Acceptances then outstanding, the payment in full of all interest and fees due hereunder, and the deposit with the Administrative Agent of cash collateral in an amount equal to the Maximum Drawing Amount of all Letters of Credit then outstanding pursuant to cash collateral arrangements in form and substance satisfactory to the Administrative Agent. (b) The Borrower may at any time prior to the Maturity Date, reduce the unused portion of the Total Commitment in part in integral multiples of $5,000,000 by giving three Business Days' prior written notice thereof to the Banks. Each such reduction shall be made pro rata (i) among each Bank according to such Bank's Total Commitment and Total Commitment Percentage (such that each Bank will have the same Total Commitment Percentage both before and after such reduction) and (ii) between the Total Domestic Commitment and the Total Canadian Commitment. Notwithstanding the foregoing, (i) at no time shall the Total Domestic Commitment be reduced to an amount less than the sum of the Maximum Domestic Swing Line Loan Amount plus the Maximum Canadian Swing Line Loan Amount plus the aggregate Maximum Drawing Amount of all Letters of Credit then outstanding. (c) Each reduction of the Total Commitment shall be accompanied by (i) the payment by the Borrower to the Administrative Agent of the amount, if any, by which the sum of the aggregate unpaid principal amount of the Domestic Revolving Credit Loans plus the aggregate unpaid principal amount of all Domestic Swing Line Loans outstanding plus the Dollar Equivalent of the aggregate unpaid principal amount of all Canadian Swing Line Loans outstanding plus the Maximum Drawing Amount of all Letters of Credit outstanding exceeds the then reduced Total Domestic Commitment and (ii) the payment by the Canadian Borrower to the Canadian Agent of the amount, if any, by which the sum of the Dollar Equivalent of the aggregate unpaid principal amount of the Canadian Revolving Credit Loans outstanding plus the Dollar Equivalent of the aggregate face amount of Bankers' Acceptances then outstanding exceeds the then reduced Total Canadian Commitment. (d) As an alternative to depositing cash collateral under the circumstances described in the foregoing paragraph (a), and under Section 2.9 hereof, the Borrower may deliver to the 36 -27- Administrative Agent letters of credit issued by banks which are acceptable to the Domestic Banks in their reasonable discretion which will reimburse the Domestic Banks for all amounts payable by the Domestic Banks under and with respect to the outstanding Letters of Credit, provided that such back-up letters of credit contain terms and conditions which are satisfactory to the Domestic Banks in all respects in their reasonable business judgment, to allow the Domestic Banks to be reimbursed in the event a Letter of Credit is drawn. (e) In addition, upon any such termination or reduction, (i) the Borrower shall pay to the Administrative Agent, for the pro rata accounts of the Domestic Banks, the full amount of the accrued and unpaid Domestic Commitment Fee on the amount of the Total Domestic Commitment so reduced or, as the case may be, terminated and (ii) the Canadian Borrower shall pay to the Canadian Agent, for the pro rata accounts of the Canadian Banks, the full amount of the accrued and unpaid Canadian Commitment Fee on the amount of the Total Canadian Commitment so reduced or, as the case may be, terminated. (f) Subject to Section 6.11 hereof, any such termination or reduction may be effected by the Borrower without penalty. Without conflict with the provisions of Section 2.3 hereof, no termination or reduction of the Total Commitment, the Total Domestic Commitment or the Total Canadian Commitment shall be subject to reinstatement. (g) Promptly after the effectiveness of any partial reduction in the Total Commitment pursuant to this Section 2.2, the Administrative Agent shall distribute to each Bank an updated Schedule 1.1 hereto reflecting such reduction. SECTION 2.3. REALLOCATION OF COMMITMENTS. (a) As of the Closing Date, the Total Canadian Commitment is $0, there are no Canadian Banks, there is no Canadian Agent, and no Bank has any obligation to make, and neither the Borrower nor the Canadian Borrower may request, Canadian Revolving Credit Loans and no Bank has any obligation to purchase or accept Bankers' Acceptances. Subject to the conditions hereinafter set forth, the Borrower and the Canadian Borrower shall have the right from time to time upon twenty (20) Business Days prior written notice to each of the Agents to (i) increase the Total Canadian Commitment to an aggregate amount not more than the Canadian Dollar Equivalent of $40,000,000 by reducing and reallocating by an equivalent amount a portion of the Total Domestic Commitment to the Total Canadian Commitment (the date that the first such increase in the Total Canadian Commitment is effective referred to herein as the "Canadian Facility Effective Date") and (ii) increase the Total Domestic Commitment (to the extent a portion of the same has been previously reallocated to the Total Canadian Commitment) by reducing and reallocating by an equivalent amount all or a portion of the Total Canadian Commitment to the Total Domestic Commitment. (b) The effectiveness of the initial Reallocation pursuant to Section 2.3 shall be subject to the following conditions: 37 -28- (i) One or more Domestic Banks who are Qualifying Banks or Canadian Banks who are Qualifying Banks shall have agreed, at the request of the Borrower, to transfer all or a portion of their Domestic Commitments to the Canadian Commitments and become Canadian Banks who shall make Canadian Revolving Credit Loans to, and purchase and accept Bankers' Acceptances for the account of, the Canadian Borrower. (ii) The Borrower and the Canadian Borrower, with the prior approval of the Administrative Agent, which approval shall not be unreasonably withheld or delayed, shall have appointed one such Canadian Bank to be, and one such Canadian Bank shall have agreed to act as, the Canadian Agent, and such Canadian Agent, if not already a party hereto, shall become a party to this Credit Agreement. (iii) The Borrower and the Canadian Borrower shall have provided the Administrative Agent and the Banks with forty-five (45) days prior written notice of their intent to reallocate a portion of the Total Domestic Commitment (it being understood that such forty-five (45) day notice shall include, and shall not be in addition to, the twenty (20) Business Day notice required under Section 2.3(a) and Section 2.3(c)(i)). (iv) The Borrower and the Canadian Borrower shall have delivered to each Bank which shall have become a Canadian Bank as a result of such Reallocation a Canadian Revolving Credit Note, in accordance with Section 2.4 hereof. (c) Each Reallocation shall also be subject to the following additional conditions: (i) The Borrower and the Canadian Borrower shall have provided the Administrative Agent and the Banks with twenty (20) days prior written notice of their intent to reallocate a portion of the Total Domestic Commitment or the Total Canadian Commitment. (ii) The increase in the Total Canadian Commitment, if any, shall be offset by a corresponding and equivalent reduction in the Total Domestic Commitment and the increase in the Total Domestic Commitment, if any, shall be offset by a corresponding and equivalent reduction in the Total Canadian Commitment, such that the Total Commitment in effect immediately before a Reallocation shall be equal to the Total Commitment immediately after, and after giving effect to, a Reallocation. (iii) No Reallocation shall increase (A) the Total Domestic Commitment in excess of $230,000,000, (B) the Total Canadian Commitment in excess of the Canadian Dollar Equivalent of $40,000,000 or (C) the Total Commitment in excess of $230,000,000. (iv) No Reallocation shall, without the prior consent of the Bank affected thereby, result in (A) any Domestic Bank having a positive Canadian Commitment if such Domestic Bank, or its affiliate, did not have such positive Canadian Commitment immediately prior to such Reallocation or (B) any increase in the Total Commitment of any Bank and its affiliates. 38 -29- (v) Subject to Section 2.3(c)(v), each Reallocation shall be made pro rata among the Banks whose Commitments are being reallocated from one type of Commitment to another, but shall not cause the Commitments of any other Banks to change. (vi) In no event shall (A) the Total Domestic Commitment be reduced to an amount less than the sum of (1) the aggregate amount of all Domestic Revolving Credit Loans then outstanding, plus (2) the aggregate amount of Domestic Swing Line Loans then outstanding, plus (3) the aggregate Maximum Drawing Amount of all Letters of Credit then outstanding, plus (4) the Dollar Equivalent of the aggregate amount of Canadian Swing Line Loans then outstanding or (B) the Total Canadian Commitment be reduced to an amount less than the sum of (1) the Dollar Equivalent of the aggregate amount of Canadian Revolving Credit Loans outstanding plus (2) the Dollar Equivalent of the aggregate face amount of all Bankers' Acceptances then outstanding. (vii) There shall not be more than one (1) Reallocation in any fiscal quarter of the Borrower. (viii) Each Reallocation shall be effective as of the end of a fiscal quarter of the Borrower. (d) The Administrative Agent shall, promptly upon the effectiveness of each Reallocation, distribute to each Bank an updated Schedule 1.1 hereto, reflecting the changes in the respective Commitments of the Banks. SECTION 2.4. THE NOTES. (a) The Domestic Revolving Credit Loans shall be evidenced by separate promissory notes of the Borrower in substantially the form of Exhibit A-1 hereto (each, a "Domestic Revolving Credit Note"), dated as of the Closing Date and completed with appropriate insertions. One Domestic Revolving Credit Note shall be payable to the order of each Domestic Bank in an amount equal to its Total Commitment, and shall represent the obligation of the Borrower to pay such Domestic Bank such principal amount or, if less, the outstanding principal amount of all Domestic Revolving Credit Loans made by such Domestic Bank, plus interest accrued thereon, as set forth herein. (b) The Canadian Revolving Credit Loans shall be evidenced by separate promissory notes of the Canadian Borrower in substantially the form of Exhibit A-2 hereto (each, a "Canadian Revolving Credit Note"), dated as of the Canadian Facility Effective Date and completed with appropriate insertions. One Canadian Revolving Credit Note shall be payable to the order of each Canadian Bank in an amount equal to its Canadian Commitment, and shall represent the obligation of the Canadian Borrower to pay such Canadian Bank such principal amount or, if less, the outstanding principal amount of all Canadian Revolving Credit Loans made by such Canadian Bank, plus interest accrued thereon, as set forth herein. 39 -30- (c) Each of the Borrower and the Canadian Borrower irrevocably authorizes each Bank to make, or cause to be made, in connection with a Drawdown Date of any Revolving Credit Loan and at the time of receipt of any payment of principal on any Note, an appropriate notation on such Bank's records or on the schedule attached to such Bank's Note, or a continuation of such schedule attached thereto, reflecting the making of such Loan or the receipt of such payment (as the case may be). Each Bank may, prior to any transfer of any Note, endorse on the reverse side thereof the outstanding principal amount of the Loans evidenced thereby. The outstanding amount of the Loans set forth on such Bank's records shall be prima facie evidence of the principal amount thereof owing and unpaid to such Bank, but the failure to record, or any error in so recording, any such amount shall not limit or otherwise affect the obligations of the Borrower or the Canadian Borrower hereunder or under such Notes to make payments of principal of or interest on any such Notes when due. SECTION 2.5. INTEREST ON REVOLVING CREDIT LOANS. Except as provided in Section 6.3 hereof: (a) Each Domestic Revolving Credit Loan shall bear interest at the rate per annum equal to (i) the Domestic Base Rate plus the Applicable Margin on all Domestic Base Rate Loans and (ii) the Domestic Eurodollar Rate plus the Applicable Margin on all Domestic Eurodollar Rate Loans. (b) Each Canadian Revolving Credit Loan shall bear interest at the rate per annum equal to the Canadian Base Rate plus the Applicable Margin on all Canadian Base Rate Loans. (c) The Borrower and the Canadian Borrower promise to pay interest on the Revolving Credit Loans made to such Person on each Interest Payment Date with respect thereto. Each of the Borrower and the Canadian Borrower authorizes the Administrative Agent and the Canadian Agent, as applicable, to charge and subtract from its account maintained with such Agent on each day on which interest is due and payable under this Agreement an amount equal to the interest then due and payable, and to apply such amount to pay such interest. The Administrative Agent and the Canadian Agent shall notify the Borrower and the Canadian Borrower, respectively, of the amount of such deduction at such time as statements of account are customarily given to such Person. SECTION 2.6. PROCEDURE FOR BORROWING. The Borrower shall give to the Administrative Agent and the Canadian Borrower shall give the Canadian Agent written notice (with a copy to the Administrative Agent) in the form of Exhibit D attached hereto (or telephonic notice confirmed in a writing in such form) of each Revolving Credit Loan requested hereunder (a "Loan Request") no less than (a) one (1) Business Day prior to the proposed Drawdown Date of any Base Rate Loan (other than a Swing Line Loan), and (b) three (3) Eurodollar Business Days prior to the proposed Drawdown Date of any Eurodollar Rate Loan. Each such notice shall specify (i) the principal amount of the Revolving Credit Loan requested, (ii) the proposed Drawdown Date of such Revolving Credit Loan, (iii) the Interest Period for such Revolving Credit Loan, and (iv) the Type of such Revolving Credit Loan. Promptly upon receipt of any such notice, the Administrative Agent shall notify each of the Domestic Banks and the Canadian Agent shall notify each of the Canadian Banks thereof. Each Loan Request shall be irrevocable and binding 40 -31- on the Borrower or, as the case may be, the Canadian Borrower, and shall obligate the Borrower or the Canadian Borrower to accept the Revolving Credit Loan requested from such Banks on the proposed Drawdown Date. Each Loan Request with respect to Domestic Revolving Credit Loans shall be in an aggregate amount of at least $2,000,000. Each Loan Request with respect to Canadian Revolving Credit Loans shall be in an aggregate amount of at least C$1,000,000. Upon satisfaction of the applicable conditions set forth in this Agreement, on the proposed Drawdown Date such Agent shall credit the funds to the Borrower's or the Canadian Borrower's account maintained with such Agent at its Head Office. SECTION 2.7. INTEREST RATE CONVERSION OPTIONS. (a) The Borrower or the Canadian Borrower may elect from time to time to convert any outstanding Revolving Credit Loan to a Loan of another Type, provided that (i) with respect to any such conversion of a Eurodollar Rate Loan to a Base Rate Loan, the Borrower shall give the Administrative Agent and the Canadian Borrower shall give the Canadian Agent (with a copy to the Administrative Agent) at least one (1) Business Day prior written notice of such election; (ii) with respect to any such conversion of a Base Rate Loan to a Eurodollar Rate Loan, the Borrower shall give the Administrative Agent and the Canadian Borrower shall give the Canadian Agent (with a copy to the Administrative Agent) at least three (3) Eurodollar Business Days' prior written notice of such election; (iii) with respect to any such conversion of a Eurodollar Rate Loan into a Base Rate Loan, such conversion shall only be made on the last day of the Interest Period with respect thereto, and (iv) no Base Rate Loan may be converted into a Eurodollar Rate Loan when any Default or Event of Default has occurred and is continuing. On the date on which such conversion is being made each Bank affected thereby shall take such action as is necessary to transfer its portion of such Loans to its Domestic Lending Office or its Eurodollar Lending Office, as the case may be. Any outstanding Revolving Credit Loans of any Type may be converted into a Revolving Credit Loan of another Type as provided herein, provided that any partial conversion shall be in an aggregate principal amount of at least $2,000,000 with respect to Domestic Revolving Credit Loans and C$1,000,000 with respect to Canadian Revolving Credit Loans. Each Conversion Request relating to the conversion of a Base Rate Loan to a Eurodollar Rate Loan shall be irrevocable by the Borrower and the Canadian Borrower. (b) Any Revolving Credit Loan of any Type may be continued as a Revolving Credit Loan of the same Type upon the expiration of an Interest Period with respect thereto by compliance by the Borrower and the Canadian Borrower with the notice provisions contained in Section 2.7(a) hereof; provided that no Eurodollar Rate Loan may be continued as such when any Default or Event of Default has occurred and is continuing, but shall be automatically converted to a Base Rate Loan on the last day of the first Interest Period relating thereto ending during the continuance of any Default or Event of Default of which officers of the Administrative Agent or the Canadian Agent active upon the Borrower's or the Canadian Borrower's account have actual knowledge. The Administrative Agent and the Canadian Agent shall notify the Banks promptly when any such automatic conversion contemplated by this Section 2.7(b) is scheduled to occur. 41 -32- (c) Any conversion to or from Eurodollar Rate Loans shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of all Eurodollar Rate Loans having the same Interest Period shall not be less than $2,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to Domestic Revolving Credit Loans or C$1,000,000 or a whole multiple of C$500,000 in excess thereof with respect to Canadian Revolving Credit Loans. No more than twelve (12) Eurodollar Rate Loans with different interest periods shall be outstanding at one time. SECTION 2.8. OPTIONAL PREPAYMENTS OF REVOLVING CREDIT LOANS. The Borrower shall have the right, at its election, to repay the outstanding amount of the Domestic Revolving Credit Loans and the Canadian Borrower shall have the right, at its election, to repay the outstanding amount of the Canadian Revolving Credit Loans, as a whole or in part, at any time without penalty or premium, provided that any full or partial prepayment of the outstanding amount of any Eurodollar Rate Loans pursuant to this Section 2.8 may be made only on the last day of the Interest Period relating thereto. The Borrower shall give the Administrative Agent and the Canadian Borrower shall give the Canadian Agent (with a copy to the Administrative Agent), in each case no later than 12:00 noon (local time for such Agent) at least one (1) Business Day prior written notice of any proposed prepayment pursuant to this Section 2.8 of Revolving Credit Loans, specifying the proposed date of prepayment of Revolving Credit Loans and the principal amount to be prepaid. Each such partial prepayment of the Revolving Credit Loans shall be in the minimum principal amount of $2,000,000 or a larger integral multiple of $1,000,000 with respect to Domestic Revolving Credit Loans or C$1,000,000 or a larger multiple of C$500,000 with respect to Canadian Revolving Credit Loans, shall be accompanied by the payment of accrued interest on the principal prepaid to the date of prepayment and shall be applied, in the absence of instruction by the Borrower or the Canadian Borrower, first to the principal of Base Rate Loans and then to the principal of Eurodollar Rate Loans. Each partial prepayment shall be allocated among the Banks, in proportion, as nearly as practicable, to the respective unpaid principal amount of each Bank's Note, with adjustments to the extent practicable to equalize any prior repayments not exactly in proportion. Subject to the borrowing limitations set forth in Section 2.1 hereof, amounts prepaid prior to the Maturity Date may be reborrowed. SECTION 2.9. MANDATORY PREPAYMENTS OF LOANS. (a) DOMESTIC FACILITY. If at any time the sum of the aggregate principal amount of the Domestic Revolving Credit Loans outstanding plus the aggregate principal amount of the Domestic Swing Line Loans outstanding plus the Dollar Equivalent of the aggregate principal amount of the Canadian Swing Line Loans outstanding plus the aggregate Maximum Drawing Amount of all Letters of Credit outstanding exceeds the lesser of (i) the Total Domestic Commitment in effect from time to time or (ii) the remainder of (A) the Borrowing Base Amount then in effect minus (B) the Dollar Equivalent of the aggregate principal amount of the Canadian Revolving Credit Loans outstanding minus (C) the Dollar Equivalent of the aggregate face amount of Bankers' Acceptances then outstanding, whether due to a reduction of the Total Domestic Commitment or as a result of currency exchange fluctuations, or otherwise, then the Borrower shall immediately pay the amount of such excess to the Administrative Agent, for the benefit of the Domestic Banks, together with all interest accrued on such principal amounts of 42 -33- the Domestic Revolving Credit Loans and/or Swing Line Loans prepaid, for application first to the pro rata payment of Domestic Swing Line Loans and Canadian Swing Line Loans outstanding, second to the payment of any Domestic Revolving Credit Loans outstanding, and third to be held by the Letter of Credit Bank as cash collateral for all Letters of Credit outstanding; provided that if after repaying all Swing Line Loans and Domestic Revolving Credit Loans, the aggregate Maximum Drawing Amount of all Letters of Credit outstanding exceeds the lesser of the Total Domestic Commitment then in effect or the Borrowing Base Amount then in effect, the Borrower shall, subject to Section 2.2 hereof, deposit with the Administrative Agent, in pledge, cash or other readily marketable securities acceptable to the Administrative Agent pursuant to pledge agreements acceptable to the Administrative Agent such that the aggregate amount of collateral so pledged is at least equal to the amount of such excess. (b) CANADIAN FACILITY. If at any time the sum of the Dollar Equivalent of the aggregate principal amount of the Canadian Revolving Credit Loans outstanding plus the Dollar Equivalent of the aggregate face amount of Bankers' Acceptances outstanding exceeds the lesser of (i) the Total Canadian Commitment in effect from time to time or (ii) the remainder of (A) Borrowing Base Amount then in effect minus (B) the aggregate principal amount of the Domestic Revolving Credit Loans outstanding minus (C) the aggregate principal amount of the Domestic Swing Line Loans outstanding minus (D) the Dollar Equivalent of the aggregate principal amount of the Canadian Swing Line Loans outstanding minus (E) the aggregate Maximum Drawing Amount of all Letters of Credit, whether due to a reduction of the Total Canadian Commitment or as a result of currency exchange fluctuations, or otherwise, then the Canadian Borrower shall immediately pay the amount of such excess to the Canadian Agent, for the benefit of the Canadian Banks, together with all interest accrued on such principal amounts of the Canadian Revolving Credit Loans prepaid, for application first to the payment of any Canadian Revolving Credit Loans outstanding, and second to be held by the Canadian Agent as cash collateral for all Banker's Acceptances outstanding; provided that if after repaying all Canadian Revolving Credit Loans, the Dollar Equivalent of the aggregate face amount of Bankers' Acceptances outstanding exceeds the lesser of the Total Canadian Commitment then in effect or the Borrowing Base Amount then in effect, the Canadian Borrower shall, subject to Section 2.2 hereof, deposit with the Canadian Agent, in pledge, cash or other readily marketable securities acceptable to the Canadian Agent pursuant to pledge agreements acceptable to the Canadian Agent such that the aggregate amount of collateral so pledged is at least equal to the amount of such excess. (c) MANDATORY REPAYMENTS FROM ASSET SALES. In the event that the Borrower or any of its Subsidiaries shall sell any of their assets or group of related assets (other than assets sold pursuant to Section Section 12.5(c) or (d)), whether by sale of assets or stock, for consideration with a value in excess of $2,500,000 in any one calendar year, where such asset sale is either permitted pursuant to Section 12.5 or is previously consented to in writing by the Administrative Agent, then, immediately upon the receipt thereof, the Borrower shall repay the Obligations in an amount equal to the amount of the net cash proceeds of such asset sale (after taxes calculated at the effective book tax rate in accordance with Generally Accepted Accounting Principles) in excess of $2,500,000, such repayment of the Obligations to be in the manner set forth in Section 2.9(a). Simultaneously with any such required repayment, the Total Commitment shall be automatically 43 -34- and permanently reduced by an amount equal to the amount of Obligations so repaid or required to be repaid. (d) MANDATORY PREPAYMENTS FROM NEW EQUITY. In the event that the Borrower or any of its Subsidiaries shall, after the first anniversary of the Closing Date, sell or issue any shares of their stock, options or warrants for the purchase of its stock or other equity or equity instruments (other than (i) stock, warrants and options awarded to employees and directors pursuant to incentive compensation plans operated by such Persons and (ii) equity and equity instruments issued to the Borrower or any of its Subsidiaries) in an aggregate amount of Net Cash Proceeds for all such sales after the first anniversary of the Closing Date, in excess of $20,000,000, then, immediately upon the receipt thereof, the Borrower shall, or shall cause such Subsidiary to, repay the Obligations in an amount equal to fifty percent (50%) of the Net Cash Proceeds of such sale or issuance of new equity in excess of $20,000,000, such repayment of the Obligations to be in the manner set forth in Section 2.9(a). Simultaneously with any such required repayment, the Total Commitment shall be automatically and permanently reduced by an amount equal to the amount of Obligations so repaid or required to be repaid. Section 2.10. FUNDS FOR LOANS. Not later than 12:00 noon (local time for each Agent) on the proposed Drawdown Date of a Revolving Credit Loan each of the Domestic Banks will make available to the Administrative Agent and each of the Canadian Banks will make available to the Canadian Agent, at such Agent's Head Office, in immediately available funds, the amount of its Commitment Percentage of the amount of the requested Revolving Credit Loan. Upon receipt from each Bank of such amount (or upon fulfillment of the conditions precedent to the making of a Domestic Swing Line Loan pursuant to Section 2.12 or a Canadian Swing Line Loan pursuant to Section 2.13, as applicable), and upon the satisfaction of the other conditions set forth therein, to the extent applicable, the Administrative Agent will make available to the Borrower the aggregate amount of such Loans made available by the Domestic Banks, the Canadian Agent will make available to the Canadian Borrower the aggregate amount of such Loans made available by the Canadian Banks, the Domestic Swing Line Bank shall make available to the Borrower the aggregate amount of funds otherwise available under Section 2.12, if any, and the Canadian Swing Line Bank will make available to the Canadian Borrower the aggregate amount of funds otherwise available under Section 2.13, if any, in each case, not later than 3:00 p.m. (local time for such Agent or such Bank). The failure or refusal of any Bank to make available to such Agent at the aforesaid time and place on any Drawdown Date the amount of its Commitment Percentage of the requested Revolving Credit Loan shall not relieve any other Bank from its several obligations hereunder to make available to such Agent the amount of such Bank's Commitment Percentage of any requested Revolving Credit Loan. Section 2.11. MATURITY OF THE LOANS. The Loans shall be due and payable on the Maturity Date. The Borrower irrevocably promises to pay to the Administrative Agent, for the pro rata accounts of the Domestic Banks, the outstanding amount of all Domestic Revolving Credit Loans and Domestic Swing Line Loans outstanding on the Maturity Date. The Canadian Borrower irrevocably promises to pay to (i) the Canadian Agent, for the pro rata accounts of the Canadian Banks, the aggregate amount of all Canadian Revolving Credit Loans and Bankers' Acceptances outstanding on the Maturity Date and (ii) the Canadian Swing Line Bank the 44 -35- outstanding amount of all Canadian Swing Line Loans outstanding on the Maturity Date. All such payments shall be made together with any and all accrued and unpaid interest thereon, the accrued and unpaid Commitment Fees with respect thereto, and any Letter of Credit Fees, Fronting Fees and other fees and other amounts owing hereunder. Section 2.12. THE DOMESTIC SWING LINE LOANS. (a) Subject to the terms and conditions hereinafter set forth, upon notice by the Borrower made to the Domestic Swing Line Bank in accordance with Section 2.12(b) hereof, the Domestic Swing Line Bank agrees to lend to the Borrower Domestic Swing Line Loans on any Business Day from the Closing Date until the Maturity Date in an aggregate principal amount not to exceed $10,000,000 (the "Maximum Domestic Swing Line Loan Amount"). Each Domestic Swing Line Loan shall be in a minimum amount equal to $1,000 or an integral multiple thereof. Notwithstanding any other provisions of this Agreement and in addition to the limit set forth above, at no time shall the aggregate principal amount of all outstanding Domestic Swing Line Loans plus the Dollar Equivalent of the aggregate principal amount of all Canadian Swing Line Loans outstanding exceed the Total Domestic Commitment then in effect minus the sum of (i) the aggregate principal amount of all Domestic Revolving Credit Loans outstanding and (ii) the aggregate Maximum Drawing Amount of all Letters of Credit outstanding; provided however that subject to the limitations set forth in this Section 2.12(a) from time to time the sum of the aggregate outstanding Domestic Swing Line Loans plus all outstanding Revolving Credit Loans made by BKB plus the Maximum Drawing Amount of all Letters of Credit issued by BKB as Letter of Credit Issuing Bank may exceed BKB's Commitment Percentage of the Total Domestic Commitment then in effect. (b) NOTICE OF BORROWING. When the Borrower desires the Domestic Swing Line Bank to make a Domestic Swing Line Loan, it shall send to the Administrative Agent and the Domestic Swing Line Bank a Loan Request, which shall set forth the principal amount of the proposed Domestic Swing Line Loan and the Swing Line Loan Maturity Date relating thereto, which shall in no event be later than the Maturity Date. Each such Loan Request must be received by the Domestic Swing Line Bank not later than 12:00 p.m. (Boston time) on the date of the proposed borrowing. Each Loan Request shall be irrevocable and binding on the Borrower and shall obligate the Borrower to borrow the Domestic Swing Line Loan from the Domestic Swing Line Bank on the proposed Drawdown Date thereof. Upon satisfaction of the applicable conditions set forth in this Agreement, on the proposed Drawdown Date the Domestic Swing Line Bank shall make the Domestic Swing Line Loan available to the Borrower no later than 3:00 p.m. (Boston time) on the proposed Drawdown Date by crediting the amount of the Domestic Swing Line Loan to the Borrower's account maintained with the Administrative Agent at the Head Office; provided that the Domestic Swing Line Bank shall not advance any Domestic Swing Line Loans after it has received notice from any Bank that a Default or Event of Default has occurred and stating that no new Domestic Swing Line Loans are to be made until such Default or Event of Default has been cured or waived in accordance with the provisions of this Agreement. The Domestic Swing Line Bank shall not be obligated to make any Domestic Swing Line Loans at any time when any Bank is a Delinquent Bank unless the Domestic Swing Line Bank has entered into arrangements satisfactory to it to eliminate the Domestic Swing Line Bank's risk with respect to such Delinquent Bank, including by cash collateralizing such 45 -36- Delinquent Bank's Commitment Percentage of the outstanding Domestic Swing Line Loans and any such additional Domestic Swing Line Loans to be made. (c) INTEREST ON DOMESTIC SWING LINE LOANS. Each Domestic Swing Line Loan shall be a Base Rate Loan and, except as otherwise provided in Section 6.3 hereof, shall bear interest from the Drawdown Date thereof until repaid in full at the rate per annum equal to the Domestic Base Rate plus the Applicable Margin, which shall be paid quarterly in arrears on the last day of each calendar quarter. (d) REPAYMENT OF DOMESTIC SWING LINE LOANS. The Borrower shall repay each outstanding Domestic Swing Line Loan on or prior to the Swing Line Loan Maturity Date relating thereto. Upon notice by the Domestic Swing Line Bank on any Business Day (whether before or on the Maturity Date), each of the Domestic Banks hereby agrees to make payments to the Administrative Agent, for the account of the Domestic Swing Line Bank, on the next succeeding Business Day following such notice, in an amount equal to such Bank's Commitment Percentage of the aggregate amount of all Domestic Swing Line Loans outstanding. The parties hereto agree that such payments made to the Administrative Agent for the account of the Domestic Swing Line Bank shall constitute Domestic Revolving Credit Loans made to the Borrower hereunder, and shall be a Base Rate Loan. The proceeds thereof shall be applied directly to the Domestic Swing Line Bank to repay the Domestic Swing Line Bank for such outstanding Domestic Swing Line Loans. Each Domestic Bank hereby absolutely, unconditionally and irrevocably agrees to make such Domestic Revolving Credit Loans upon one Business Day's notice as set forth above, notwithstanding (i) that the amount of such Loan may not comply with the applicable minimums set forth in Section 2.3 hereof, (ii) the failure of the Borrower to meet the conditions set forth in Section Section 9 or 10 hereof, (iii) the occurrence or continuance of a Default or an Event of Default hereunder, (iv) the date of such Loan, and (v) the Total Domestic Commitment in effect at such time. In the event that it is impracticable for such amounts to be paid to the Administrative Agent or the Domestic Swing Line Bank or such Loan to be made for any reason on the date otherwise required above, then each Domestic Bank hereby agrees that it shall forthwith purchase (as of the date such payment and such Loan would have been made, but adjusted for any payments received from the Borrower on or after such date and prior to such purchase) from the Domestic Swing Line Bank, and the Domestic Swing Line Bank shall sell to each Domestic Bank, such participations in the Domestic Swing Line Loans (including all accrued and unpaid interest thereon) outstanding as shall be necessary to cause the Domestic Banks to share in such Domestic Swing Line Loans pro rata based on their respective Domestic Commitment Percentages (without regard to any termination of the Total Domestic Commitment) by making available to the Domestic Swing Line Bank an amount equal to such Domestic Bank's participation in the Domestic Swing Line Loans; provided that (x) all interest payable on the Domestic Swing Line Loans shall be for the account of the Domestic Swing Line Bank as a funding and administrative fee until the date as of which the respective participation is purchased (unless paid to the Domestic Swing Line Bank pursuant to clause (y) below), and (y) at the time any purchase of such participation is actually made, the purchasing Bank shall be required to pay the Domestic Swing Line Bank interest on the principal amount of the participation so purchased for each day from and including the date such Loan would otherwise 46 -37- have been made until the date of payment for such participation at the rate of interest in effect applicable to Base Rate Loans during such period. (e) THE DOMESTIC SWING LINE NOTE. The obligation of the Borrower to repay the Domestic Swing Line Loans made pursuant to this Agreement and to pay interest thereon as set forth in this Agreement shall be evidenced by a promissory note of the Borrower with appropriate insertions substantially in the form of Exhibit A-3 attached hereto (the "Domestic Swing Line Note"), dated the Closing Date and payable to the order of the Domestic Swing Line Bank in a principal amount stated to be the lesser of (i) the Maximum Domestic Swing Line Loan Amount, or (ii) the aggregate principal amount of Domestic Swing Line Loans at any time advanced by the Domestic Swing Line Bank and outstanding thereunder. The Borrower irrevocably authorizes the Domestic Swing Line Bank to make or cause to be made, at or about the time of the Drawdown Date of any Domestic Swing Line Loan or at the time of receipt of any payment of principal on the Domestic Swing Line Note, an appropriate notation on the Note Record reflecting the making of such Domestic Swing Line Loan or (as the case may be) the receipt of such payment. The outstanding amount of the Domestic Swing Line Loans set forth on such Note Record shall be prima facie evidence of the principal amount thereof owing and unpaid to the Domestic Swing Line Bank, but the failure to record, or any error in so recording, any such amount on such Note Record shall not limit or otherwise affect the actual amount of the obligations of the Borrower hereunder or under the Domestic Swing Line Note to make payments of principal of or interest on the Domestic Swing Line Note when due. Section 2.13. THE CANADIAN SWING LINE LOANS. (a) Subject to the terms and conditions hereinafter set forth, upon notice by the Canadian Borrower made to the Canadian Swing Line Bank in accordance with Section 2.13(b) hereof, the Canadian Swing Line Bank agrees to lend to the Canadian Borrower Canadian Swing Line Loans on any Business Day from the Closing Date until the Maturity Date in an aggregate principal amount not to exceed C$10,000,000 (the "Maximum Canadian Swing Line Loan Amount"). Each Canadian Swing Line Loan shall be in a minimum amount equal to C$1,000 or an integral multiple thereof. Notwithstanding any other provisions of this Agreement and in addition to the limit set forth above, at no time shall the aggregate principal amount of the Domestic Swing Line Loans outstanding plus the Dollar Equivalent of the aggregate principal amount of the Canadian Swing Line Loans outstanding exceed the Total Domestic Commitment then in effect minus the sum of the aggregate amount of Domestic Revolving Credit Loans then outstanding plus the aggregate Maximum Drawing Amount of all Letters of Credit outstanding; provided however that subject to the limitations set forth in this Section 2.13(a) from time to time the sum of the aggregate outstanding Canadian Swing Line Loans plus all outstanding Canadian Revolving Credit Loans made by the Canadian Swing Line Bank may exceed the Canadian Swing Line Bank's Commitment Percentage of the Total Canadian Commitment then in effect. (b) NOTICE OF BORROWING. When the Canadian Borrower desires the Canadian Swing Line Bank to make a Canadian Swing Line Loan, it shall send to the Canadian Swing Line Bank (with a copy to the Administrative Agent) a Loan Request, which shall set forth the principal amount of the proposed Canadian Swing Line Loan and the Swing Line Loan Maturity Date relating thereto, which shall in no event be later than the Maturity Date. Each such Loan Request 47 -38- must be received by the Canadian Swing Line Bank not later than 12:00 p.m. (Toronto, Ontario time) on the date of the proposed borrowing. Each such Loan Request shall be irrevocable and binding on the Canadian Borrower and shall obligate the Canadian Borrower to borrow the Canadian Swing Line Loan from the Canadian Swing Line Bank on the proposed Drawdown Date thereof. Upon satisfaction of the applicable conditions set forth in this Agreement, on the proposed Drawdown Date the Canadian Swing Line Bank shall make the Canadian Swing Line Loan available to the Canadian Borrower no later than 3:00 p.m. (Toronto, Ontario time) on the proposed Drawdown Date by crediting the amount of the Canadian Swing Line Loan to the Canadian Borrower's account maintained with the Canadian Swing Line Bank at an office designated by the Canadian Borrower by written notice to the Canadian Agent; provided that the Canadian Swing Line Bank shall not advance any Canadian Swing Line Loans after it has received notice from any Bank that a Default or Event of Default has occurred and stating that no new Canadian Swing Line Loans are to be made until such Default or Event of Default has been cured or waived in accordance with the provisions of this Agreement. The Canadian Swing Line Bank shall not be obligated to make any Canadian Swing Line Loans at any time when any Bank is a Delinquent Bank unless the Canadian Swing Line Bank has entered into arrangements satisfactory to it to eliminate the Canadian Swing Line Bank's risk with respect to such Delinquent Bank, including by cash collateralizing such Delinquent Bank's Commitment Percentage of the outstanding Canadian Swing Line Loans and any such additional Canadian Swing Line Loans to be made. (c) INTEREST ON CANADIAN SWING LINE LOANS. Each Canadian Swing Line Loan shall be a Canadian Base Rate Loan and, except as otherwise provided in Section 6.3 hereof, shall bear interest from the Drawdown Date thereof until repaid in full at the rate per annum equal to the Canadian Base Rate plus the Applicable Margin, which shall be paid quarterly in arrears on the last day of each calendar quarter. (d) REPAYMENT OF CANADIAN SWING LINE LOANS. The Canadian Borrower shall repay each outstanding Canadian Swing Line Loan on or prior to the Swing Line Loan Maturity Date relating thereto. Upon notice by the Canadian Swing Line Bank on any Business Day (whether before or on the Maturity Date), each of the Domestic Banks hereby agrees to make payments in Dollars to the Administrative Agent, for the account of the Canadian Swing Line Bank, on the next succeeding Business Day following such notice, in an amount equal to such Bank's Domestic Commitment Percentage of the Dollar Equivalent of the aggregate amount of all Canadian Swing Line Loans outstanding. The parties hereto agree that such payments made to the Administrative Agent for the account of the Canadian Swing Line Bank shall constitute Domestic Revolving Credit Loans made to the Borrower hereunder, and shall be deemed to have been requested by the Borrower as Domestic Revolving Credit Loans for the purpose of repaying the Borrower's obligations under the Canadian Guaranty to the Canadian Swing Line Bank, and shall constitute a Domestic Base Rate Loan. The proceeds thereof shall be applied directly to the Canadian Swing Line Bank to repay the Canadian Swing Line Bank for such outstanding Canadian Swing Line Loans and the Borrower hereby authorizes such direct payment. Each Domestic Bank hereby absolutely, unconditionally and irrevocably agrees to make such Domestic Revolving Credit Loans upon one Business Day's notice as set forth above, notwithstanding (i) that the amount of such Loan may not comply with the applicable minimums 48 -39- set forth in Section 2.3 hereof, (ii) the failure of the Borrower to meet the conditions set forth in Section Section 9 or 10 hereof, (iii) the occurrence or continuance of a Default or an Event of Default hereunder, (iv) the date of such Loan, and (v) the Total Domestic Commitment in effect at such time. In the event that it is impracticable for such payments to be made to the Administrative Agent or the Canadian Swing Line Bank or such Loan to be made for any reason on the date otherwise required above, then each Domestic Bank hereby agrees that it shall forthwith purchase (as of the date such Loan would have been made, but adjusted for any payments received from the Canadian Borrower or the Borrower on or after such date and prior to such purchase) from the Canadian Swing Line Bank, and the Canadian Swing Line Bank shall sell to each Domestic Bank, such participations in Dollars in the Canadian Swing Line Loans (including all accrued and unpaid interest thereon) outstanding as shall be necessary to cause the Domestic Banks to share in such Canadian Swing Line Loans pro rata based on their respective Domestic Commitment Percentages (without regard to any termination of the Total Domestic Commitment) by making available to the Canadian Swing Line Bank an amount in Dollars equal to such Bank's Dollar Equivalent of its participation in the Canadian Swing Line Loans; provided that (x) all interest payable on the Canadian Swing Line Loans shall be for the account of the Canadian Swing Line Bank as a funding and administrative fee until the date as of which the respective participation is purchased (unless paid to the Canadian Swing Line Bank pursuant to clause (y) below), and (y) at the time any purchase of such participation is actually made, the purchasing Bank shall be required to pay the Canadian Swing Line Bank interest on the principal amount of the participation so purchased for each day from and including the date such Loan would otherwise have been made until the date of payment for such participation at the rate of interest in effect applicable to Base Rate Loans during such period. (e) THE CANADIAN SWING LINE NOTE. The obligation of the Canadian Borrower to repay the Canadian Swing Line Loans made pursuant to this Agreement and to pay interest thereon as set forth in this Agreement shall be evidenced by a promissory note of the Canadian Borrower with appropriate insertions substantially in the form of Exhibit A-4 attached hereto (the "Canadian Swing Line Note"), dated the Closing Date and payable to the order of the Canadian Swing Line Bank in a principal amount stated to be the lesser of (i) the Maximum Canadian Swing Line Loan Amount, or (ii) the aggregate principal amount of Canadian Swing Line Loans at any time advanced by the Canadian Swing Line Bank and outstanding thereunder. The Canadian Borrower irrevocably authorizes the Canadian Swing Line Bank to make or cause to be made, at or about the time of the Drawdown Date of any Canadian Swing Line Loan or at the time of receipt of any payment of principal on the Canadian Swing Line Note, an appropriate notation on the Note Record reflecting the making of such Canadian Swing Line Loan or (as the case may be) the receipt of such payment. The outstanding amount of the Canadian Swing Line Loans set forth on such Note Record shall be prima facie evidence of the principal amount thereof owing and unpaid to the Canadian Swing Line Bank, but the failure to record, or any error in so recording, any such amount on such Note Record shall not limit or otherwise affect the actual amount of the obligations of the Canadian Borrower hereunder or under the Canadian Swing Line Note to make payments of principal of or interest on the Canadian Swing Line Note when due. 49 -40- Section 3. LETTERS OF CREDIT. Section 3.1. LETTERS OF CREDIT. Subject to the terms and conditions set forth in this Agreement, upon written request of the Borrower delivered to the Letter of Credit Bank and upon the execution and delivery by the Borrower of Reimbursement Agreements with the Letter of Credit Bank (with a copy to the Administrative Agent), the Letter of Credit Bank shall issue, extend and renew at any time from the Closing Date until the Maturity Date, and subject to the satisfaction of the conditions precedent set forth in Section Section 9 and 10 hereof, Letters of Credit in such form as the Borrower and the Letter of Credit Bank may agree for the account of the Borrower or any of its Subsidiaries, provided that at no time shall the Maximum Drawing Amount of all Letters of Credit outstanding exceed $100,000,000 or, if less, the Total Domestic Commitment, and provided further that at no time shall the sum of (a) the aggregate principal amount of all Domestic Revolving Credit Loans outstanding, plus (b) the aggregate principal amount of all Domestic Swing Line Loans outstanding, plus (c) the Dollar Equivalent of the aggregate principal amount of all Canadian Swing Line Loans outstanding, plus (d) the aggregate Maximum Drawing Amount of all Letters of Credit outstanding exceed the lesser of (A) the remainder of (i) the Borrowing Base Amount then in effect minus (ii) the Dollar Equivalent of the aggregate amount of Canadian Revolving Credit Loans then outstanding minus (iii) the Dollar Equivalent of the aggregate face amount of Bankers' Acceptances then outstanding or (B) the Total Domestic Commitment then in effect. Each written request for the issuance of a Letter of Credit hereunder shall be received by the Letter of Credit Bank at least ten (10) Business Days prior to the proposed date of issuance, provided that the Letter of Credit Bank shall use its best efforts to issue such Letter of Credit within five (5) Business Days following its receipt of any written request therefor. The expiry dates, amounts and beneficiaries of the Letters of Credit will be as agreed by the Borrower and the Letter of Credit Bank in the applicable Reimbursement Agreement. The Borrower may request, and the Letter of Credit Bank upon terms and conditions approved by the Borrower shall issue, substitute Letters of Credit for the Letters of Credit to reflect reductions in the amount of the Borrower's obligations supported by such Letters of Credit. Each Letter of Credit issued by the Letter of Credit Bank hereunder shall identify: (i) the dates of issuance and expiry of such Letter of Credit, (ii) the amount of such Letter of Credit (which shall be a sum certain), (iii) the beneficiary and account party of such Letter of Credit, and (iv) the drafts and other documents necessary to be presented to the issuing bank upon drawing thereunder. Each Letter of Credit issued hereunder shall expire one year after its date of issuance unless renewed by the Letter of Credit Bank in accordance with the terms of such Letter of Credit. In no event shall any Letter of Credit issued hereunder expire after the Maturity Date. Section 3.2. EFFECTS OF DRAWINGS. Upon the payment by the Letter of Credit Bank in respect of each drawing under a Letter of Credit, the unreimbursed amount of the payment shall be deemed to be a Revolving Credit Loan that is a Base Rate Loan, made on the date of such payment by the Letter of Credit Bank, for all purposes of this Agreement. The liability of the Borrower under this Agreement to repay the Banks in respect of drawings under Letters of Credit shall be Obligations hereunder and shall be secured pursuant to the Security Documents. Section 3.3. LETTER OF CREDIT LOAN OBLIGATIONS ABSOLUTE. (a) The obligations of the Borrower to repay the Letter of Credit Bank and the Banks as provided hereunder in respect of drawings 50 -41- under Letters of Credit shall rank pari passu with the obligations of the Borrower to repay the Loans hereunder, and shall be absolute and unconditional under any and all circumstances. Without limiting the generality of the foregoing, the Borrower's obligation to repay the Borrower's obligations in respect of drawings under Letters of Credit, or any renewals or extensions thereof, shall not be subject to any defense based on the non-application or misapplication by the beneficiary of the proceeds of any such payment or the legality, validity, regularity or enforceability of the Letter of Credit, or any renewal or extension thereof, or any other document whatsoever. Subject to the limitations of the following sentence, the Letter of Credit Bank may accept or pay any draft presented to it under any Letter of Credit, or any renewal or extension thereof, regardless of when drawn or made and whether or not negotiated, if such draft, accompanying certificate or documents and any transmittal advice are presented on or before the expiry date of the Letter of Credit, or the renewal or extension thereof then in effect. Furthermore, neither the Letter of Credit Bank nor any of its correspondents shall be responsible, as to any document presented under a Letter of Credit or any renewal or extension thereof which appears to be regular on its face, and appears on its face to conform to the terms of the Letter of Credit and to make reasonable reference thereto, for the validity or sufficiency of any signature or endorsement, for delay in giving any notice or failure of any instrument to bear adequate reference to the Letter of Credit or to any renewal or extension thereof, or failure of documents not clearly specified in the Letter of Credit to accompany any instrument at negotiation, or for failure of any person to note the amount of any draft on the reverse of the Letter of Credit or on any renewal or extension thereof. (b) Any action, inaction or omission on the part of the Letter of Credit Bank or any of its correspondents under or in connection with any Letter of Credit, or any renewal or extension thereof, or the related instruments, documents or property, if in good faith and in conformity with such laws, regulations or customs as are applicable and the terms of this Section 3.3, shall be binding upon the Borrower and shall not place the Letter of Credit Bank or any of its correspondents under any liability to the Borrower, in the absence of gross negligence or willful misconduct by the Letter of Credit Bank or its correspondents. The Letter of Credit Bank's rights, powers, privileges and immunities specified in or arising under this Agreement are in addition to any heretofore or at any time hereafter otherwise created or arising, whether by statute or rule of law or contract. All Letters of Credit issued hereunder will, except to the extent otherwise expressly provided hereunder, be governed by the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce, Publication No. 500, and any subsequent revisions thereof. Section 3.4. OBLIGATIONS OF THE BANKS. (a) Each Domestic Bank and the Borrower hereby acknowledge that each Letter of Credit issued by the Letter of Credit Bank pursuant to this Agreement is issued by the Letter of Credit Bank on behalf of all of the Domestic Banks. Each Domestic Bank (other than the Letter of Credit Bank) absolutely, unconditionally and irrevocably agrees to reimburse the Letter of Credit Bank in an amount equal to such Bank's Domestic Commitment Percentage of each drawing under any Letter of Credit made in accordance with this Section 3 and to be responsible for its Commitment Percentage of all liabilities incurred by the Letter of Credit Bank in respect of each Letter of Credit opened or extended by the Letter of Credit Bank for the account of the Borrower pursuant to this Agreement. In the 51 -42- event that for any reason (including without limitation as a result of the commencement of any proceedings under any bankruptcy, reorganization, insolvency or other similar law with respect to the Borrower) it is impracticable for any Domestic Bank to reimburse the Letter of Credit Bank in an amount equal to such Bank's Domestic Commitment Percentage of any drawing under any Letter of Credit, then each such Bank agrees that at the option of the Letter of Credit Bank it shall purchase a participation in, or take an assignment from the Letter of Credit Bank of, the Borrower's obligation to repay the Letter of Credit Bank in respect of such drawing under such Letter of Credit in an amount equal such Bank's Domestic Commitment Percentage of such drawing under the Letter of Credit. The obligations of the Domestic Banks hereunder are several and the failure of any Domestic Bank to fulfill its obligations shall not result in any Bank becoming obligated to advance more than its Domestic Commitment Percentage of such drawing under such Letter of Credit. (b) The Letter of Credit Bank, upon receipt of any draft drawn under a Letter of Credit, shall promptly examine such draft and any accompanying certificate or other document in accordance with this Section 3 and with its customary procedures for conformity to the requirements of such Letter of Credit. In the event the Letter of Credit Bank determines to pay such draft in accordance with the foregoing, each Bank shall, and hereby absolutely, unconditionally and irrevocably agrees, to contemporaneously provide to the Letter of Credit Bank, in funds immediately available to the Letter of Credit Bank, such Bank's Commitment Percentage of the funds necessary to pay such draft. (c) Each Bank agrees with the Letter of Credit Bank and the other Banks (other than the Letter of Credit Bank) that its obligations to provide to the Letter of Credit Bank its Domestic Commitment Percentage of the amount of any draft drawn under any Letter of Credit in accordance with this Section 3.4 shall be absolute, irrevocable and unconditional and further agrees that such obligations shall not be affected in any way by any intervening circumstances occurring before or after the making of such payment by the Letter of Credit Bank pursuant to any Letter of Credit, including without limitation: (i) any modification or amendment of, or any consent, waiver, release or forbearance with respect to, any of the terms of this Agreement or any other instrument or document referred to herein; (ii) any other act or omission to act of any kind by the Letter of Credit Bank; (iii) the existence of any Default or Event of Default; or (iv) any change of any kind whatsoever in the financial position or creditworthiness of the Borrower or any of its Subsidiaries or any other Person. Section 4. BANKERS' ACCEPTANCES. Section 4.1. ACCEPTANCE AND PURCHASE. Subject to the terms and conditions hereof, each Canadian Bank severally agrees to accept and purchase Bankers' Acceptances drawn upon it by 52 -43- the Canadian Borrower denominated in Canadian Dollars. The Canadian Borrower shall notify the Canadian Agent by irrevocable written notice (each a "Bankers' Acceptance Notice") at least one (1) Business Day prior to the date of any borrowing by way of Bankers' Acceptances. Each borrowing by way of Bankers' Acceptances shall be in a minimum aggregate face amount of C$1,000,000 or an integral multiple of C$100,000 thereof. The face amount of each Bankers' Acceptance shall be C$100,000 or any integral multiple thereof. Each Bankers' Acceptance Notice shall be in the form of Exhibit J. In no event shall the Dollar Equivalent of the aggregate face amount of all outstanding Bankers' Acceptances exceed the lesser of (a) the remainder of (i) Borrowing Base Amount then in effect minus (ii) the aggregate principal amount of the Domestic Revolving Credit Loans outstanding minus (iii) the aggregate principal amount of the Domestic Swing Line Loans outstanding minus (iv) the Dollar Equivalent of the aggregate principal amount of the Canadian Swing Line Loans outstanding minus (v) the aggregate Maximum Drawing Amount of all Letters of Credit and (b) the remainder of (1) the Total Canadian Commitment minus (2) the Dollar Equivalent of the outstanding amount of all Canadian Revolving Credit Loans. (a) Term. Each Bankers' Acceptance shall be issued and shall mature on a Canadian Business Day. Each Bankers' Acceptance shall have a term of 30, 60, 90 or 180 days, shall mature no later than five (5) days prior to the Maturity Date, and shall be in form and substance reasonably satisfactory to the Canadian Bank which is accepting such Bankers' Acceptance. (b) Bankers' Acceptances in Blank. To facilitate the acceptance of Bankers' Acceptances under this Agreement, the Canadian Borrower shall, on the Canadian Facility Effective Date and from time to time as required, provide to the Canadian Agent bills of exchange, in form satisfactory to the Canadian Agent, duly executed and endorsed in blank by the Canadian Borrower in quantities sufficient for each Canadian Bank to fulfill its obligations hereunder. In addition, the Canadian Borrower hereby appoints each Canadian Bank as its attorney to sign and endorse on its behalf, in handwriting or by facsimile or mechanical signature as and when deemed necessary by such Canadian Bank, blank forms of Bankers' Acceptances. The Canadian Borrower recognizes and agrees that all Bankers' Acceptances signed and/or endorsed on its behalf by a Canadian Bank shall bind the Canadian Borrower as fully and effectually as if signed in the handwriting of and duly issued by the proper signing officers of the Canadian Borrower. Each Canadian Bank is hereby authorized to issue such Bankers' Acceptances endorsed in blank in such face amounts as may be determined by such Canadian Bank provided that the aggregate amount thereof is equal to the aggregate amount of Bankers' Acceptances required to be accepted by such Bank pursuant to clause (d) below. Neither any Canadian Bank nor the Canadian Agent shall be responsible or liable for its failure to accept a Bankers' Acceptance if the cause of such failure is, in whole or in part, due to the failure of the Canadian Borrower to provide duly executed and endorsed bills of exchange to the Canadian Agent on a timely basis nor shall any Canadian Bank or the Canadian Agent be liable for any damage, loss or other claim arising by reason of any loss or improper use of any such instrument except loss or improper use arising by reason of the negligence or willful misconduct of such Bank or the Canadian Agent, its officers, employees, agents or representatives. Each Canadian Bank shall maintain a record with respect to Bankers' Acceptances (i) received by it from the Canadian Agent in blank hereunder, (ii) voided by it for any reason, (iii) accepted by it 53 -44- hereunder, (iv) purchased by it hereunder, and (v) cancelled at their respective maturities. Each Canadian Bank further agrees to retain such records in the manner and for the statutory periods provided in the various Canadian provincial or federal statutes and regulations which apply to such Bank. (c) Execution of Bankers' Acceptances. Bills of exchange of the Canadian Borrower to be accepted as Bankers' Acceptances hereunder shall be duly executed by one or more duly authorized officers on behalf of the Canadian Borrower. Notwithstanding that any person whose signature appears on any Bankers' Acceptance as a signatory for the Canadian Borrower may no longer be an authorized signatory for the Canadian Borrower at the date of issuance of a Bankers' Acceptance, such signature shall nevertheless be valid and sufficient for all purposes as if such authority had remained in force at the time of such issuance and any such Bankers' Acceptance so signed shall be binding on the Canadian Borrower, unless the Canadian Bank accepting such Bankers' Acceptance has actual knowledge that such signatory is no longer an authorized signatory. (d) Issuance of Bankers' Acceptances. Promptly following receipt of a Bankers' Acceptance Notice, the Canadian Agent shall so advise the Canadian Banks of the face amount of each Bankers' Acceptance to be accepted by it and the term thereof. The aggregate face amount of Bankers' Acceptances to be accepted by a Canadian Bank shall be determined by the Canadian Agent by reference to the respective Canadian Commitments of the Canadian Banks, except that, if the face amount of a Bankers' Acceptance, which would otherwise be accepted by a Canadian Bank, would not be C$100,000 or an integral multiple thereof, such face amount shall be increased or reduced by the Canadian Agent in its sole and absolute discretion to the nearest integral multiple of C$100,000. (e) Acceptance of Bankers' Acceptances. Each Bankers' Acceptance to be accepted by a Canadian Bank shall be accepted at such Bank's office shown on Schedule 1.1 hereof or as otherwise designated by said Canadian Bank from time to time. (f) Purchase of Bankers' Acceptances. On the relevant date of borrowing, each Canadian Bank severally agrees to purchase from the Canadian Borrower, at the face amount thereof discounted by the Applicable BA Discount Rate, any Bankers' Acceptance accepted by it and provide to the Canadian Agent, for the account of the Canadian Borrower, the BA Discount Proceeds in respect thereof after deducting therefrom the amount of the Acceptance Fee payable by the Canadian Borrower to such Bank under Section 4.3 in respect of such Bankers' Acceptance. (g) Sale of Bankers' Acceptances. Each Canadian Bank may at any time and from time to time hold, sell, rediscount or otherwise transfer, in each case to a financial institution or bank resident in Canada, any or all Bankers' Acceptances accepted and purchased by it. (h) Waiver of Presentment and Other Conditions. The Canadian Borrower waives presentment for payment and any other defense to payment of any amounts due to a Canadian Bank in respect of a Bankers' Acceptance accepted by such Canadian Bank pursuant to this Agreement which might exist solely by reason of such Bankers' Acceptance being held, at the 54 -45- maturity thereof, by such Bank in its own right. The Canadian Borrower shall not claim or require any days of grace or require the Canadian Agent or any Canadian Bank to claim any days of grace for the payment of any Bankers' Acceptance. Section 4.2. REFUNDING BANKERS' ACCEPTANCES. With respect to each Bankers' Acceptance, the Canadian Borrower, except during the occurrence and continuation of an Event of Default, may give irrevocable telephone or written notice (or such other method of notification as may be agreed upon between the Canadian Agent and the Canadian Borrower) to the Canadian Agent on the Business Day prior to such maturity date of such Bankers' Acceptance of the Canadian Borrower's intention to issue one or more Bankers' Acceptances on such maturity date (each a "Refunding Bankers' Acceptance") to provide for the payment of such maturing Bankers' Acceptance (it being understood that payments by the Canadian Borrower and fundings by the Canadian Banks in respect of each maturing Bankers' Acceptance and each related Refunding Bankers' Acceptance shall be made on a net basis reflecting the difference between the face amount of such maturing Bankers' Acceptance and the BA Discount Proceeds (net of the applicable Acceptance Fee) of such Refunding Bankers' Acceptance). Any funding on account of any maturing Bankers' Acceptance must be made at or before 12:00 noon (Toronto, Ontario time) on the maturity date of such Bankers' Acceptance. If the Canadian Borrower fails to give such notice, the Canadian Borrower shall be irrevocably deemed to have requested and to have been advanced a Canadian Revolving Credit Loan bearing interest at the Canadian Base Rate in the face amount of such maturing Bankers' Acceptance on the maturity date of such maturing Bankers' Acceptance from the Canadian Bank which accepted such maturing Bankers' Acceptance, which Loan shall thereafter bear interest as such in accordance with the provisions hereof and otherwise shall be subject to all provisions of this Agreement applicable to Canadian Revolving Credit Loans until paid in full. Section 4.3. ACCEPTANCE FEE. An acceptance fee (the "Acceptance Fee") shall be payable by the Canadian Borrower to each Canadian Bank and each Canadian Bank shall deduct the amount of such Acceptance Fee from the BA Discount Proceeds (in the manner specified in Section 4.1(f) in respect of each Bankers' Acceptance), said fee to be calculated at a rate per annum equal to the Applicable Acceptance Fee Rate calculated on the face amount of such Bankers' Acceptance and computed on the basis of the number of days in the term of such Bankers' Acceptance and a year of 365 days. 55 -46- Section 4.4. CIRCUMSTANCES MAKING BANKERS' ACCEPTANCES UNAVAILABLE. If, by reason of circumstances affecting the money market generally, there is no market for Bankers' Acceptances (i) the right of the Canadian Borrower to request a borrowing of Bankers' Acceptances shall be suspended until the circumstances causing a suspension no longer exist, and (ii) any Bankers' Acceptance Notice which is outstanding shall be cancelled and the requested borrowing shall not be made. Section 5. FEES. Section 5.1. COMMITMENT FEE. (a) The Borrower shall pay to the Administrative Agent for the respective accounts of the Domestic Banks a commitment fee (the "Domestic Commitment Fee") at the rate per annum equal to the Applicable Margin then in effect on the daily average amount during each quarter or portion thereof from the date hereof to the Maturity Date by which the Total Domestic Commitment exceeded the sum of the aggregate principal balance of Revolving Credit Loans outstanding plus the maximum Drawing Amount of all Letters of Credit outstanding. The Domestic Commitment Fee shall be payable quarterly in arrears on the last day of each March, June, September and December for the immediately preceding quarter or portion thereof, commencing on the first such date after the Closing Date with a final payment on the Maturity Date or any earlier date on which the Total Domestic Commitment shall terminate. (b) The Canadian Borrower shall pay to the Canadian Agent for the respective accounts of the Canadian Banks a commitment fee (the "Canadian Commitment Fee") at the rate per annum equal to the Applicable Margin then in effect on the daily average amount during each quarter or portion thereof from the date hereof to the Maturity Date by which the Canadian Dollar Equivalent of the Total Canadian Commitment exceeded the sum of the aggregate principal balance of Canadian Revolving Credit Loans outstanding plus the aggregate face amount of Bankers' Acceptances outstanding. The Canadian Commitment Fee shall be payable quarterly in arrears on the last day of each March, June, September and December for the immediately preceding quarter or portion thereof, commencing on the first such date after the Closing Date with a final payment on the Maturity Date or any earlier date on which the Total Canadian Commitment shall terminate. Section 5.2. LETTER OF CREDIT FEE. The Borrower shall pay to the Letter of Credit Bank a fee (the "Letter of Credit Fee") for each Letter of Credit issued or renewed by the Letter of Credit Bank at a rate per annum (except as provided in Section 6.3 hereof) equal to the Applicable Margin in effect from time to time on the Maximum Drawing Amount of such Letter of Credit for the period such Letter of Credit is outstanding. The Letter of Credit Bank shall, in turn, remit to each Domestic Bank (including BKB) such Bank's Domestic Commitment Percentage of the Letter of Credit Fee. In addition, the Borrower will pay the Letter of Credit Bank a Fronting Fee (the "Fronting Fee") equal to one-tenth of one percent (0.10%) per annum on the Maximum Drawing Amount of such Letter of Credit for the period such Letter of Credit is outstanding, which shall be retained by the Letter of Credit Bank for its own account. The Letter of Credit 56 -47- Fee and the Fronting Fee shall be payable quarterly in arrears on the last day of each calendar quarter. Section 5.3. CLOSING FEE. The Borrower agrees to pay to the Administrative Agent on the Closing Date the Closing Fee as set forth in the Fee Letter. Without limiting the obligations of the Canadian Borrower under the Guaranties, nothing contained in this Section 5.3 shall impose any obligation on the Canadian Borrower. Section 5.4. ADMINISTRATIVE AGENT'S FEE. The Borrower shall pay to the Administrative Agent, for its own account, the Administrative Agent's Fee as set forth in the Fee Letter. Without limiting the obligations of the Canadian Borrower under the Guaranties, nothing contained in this Section 5.4 shall impose any obligation on the Canadian Borrower. Section 6. CERTAIN GENERAL PROVISIONS. Section 6.1. PAYMENTS. All payments hereunder (whether of principal, interest, Reimbursement Obligations, Commitment Fees, Letter of Credit Fees, Fronting Fees, Administrative Agent's Fees or otherwise) shall be made by the Borrower and the Canadian Borrower to the applicable Agent in immediately available funds at the Head Office of such Agent no later than 1:00 p.m. (local time for such Agent). Payments hereunder shall be applied as provided herein; provided that during such time as any amounts owed by the Borrower or the Canadian Borrower hereunder are overdue, all payments received hereunder shall be applied first to all amounts overdue starting with amounts most overdue and continuing with amounts next most overdue until all such overdue amounts are paid in full, and then to all other amounts due at such time as provided herein. Section 6.2. COMPUTATIONS. All computations of interest on the Loans (other than Eurodollar Rate Loans), the Commitment Fees and all other fees shall be based on a 365-day year and paid for the actual number of days elapsed. All computations of interest on Eurodollar Rate Loans shall be based on a 360-day year and paid for the actual number of days elapsed. For purposes of the Interest Act (Canada), (i) whenever any interest or fee under this Agreement is calculated using a base rate on a year of 360 days or 365 days, as the case may be, the rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (x) the applicable rate based on a year of 360 days or 365 days, as the case may be, (y) multiplied by the actual number of days in the calendar year in which the period for which such interest or fee is payable (or compounded) ends, and (z) divided by 360 or 365, as the case may be, (ii) the principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement, and (iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields. Except as otherwise provided in the definition of the term "Interest Period" with respect to Eurodollar Rate Loans, whenever a payment hereunder or under any of the other Loan Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest and all applicable fees shall accrue during such extension. The outstanding amount of the Loans as reflected on the Note Records from time to time and any calculation of interest thereon shall be considered correct and binding on the Borrower and the Canadian Borrower absent manifest 57 -48- error, unless within five (5) Business Days after receipt of any notice by an Agent or any of the Banks of such outstanding amount, such Agent or such Bank shall notify the Borrower or the Canadian Borrower to the contrary. Section 6.3. INTEREST RATE UPON EVENT OF DEFAULT. Upon the occurrence and during the continuance of any Event of Default, principal and (to the extent permitted by applicable law) interest on the Loans, the Letter of Credit Fee(s) and all other amounts payable hereunder shall bear interest compounded monthly and payable on demand at a rate per annum equal to 2% above the rate otherwise in effect for such Loans or Letter(s) of Credit, to accrue from the date any Event of Default occurs until the obligation of the Borrower and/or the Canadian Borrower, as the case may be, with respect to the payment thereof shall be discharged whether before or after judgment. Section 6.4. INTEREST LIMITATION. Notwithstanding any other term of this Agreement or any other document referred to herein, the maximum amount of interest which may be charged to or collected from any person liable hereunder shall be absolutely limited to, and shall in no event exceed, the maximum amount of interest which could lawfully be charged or collected under applicable law (including, to the extent applicable, the provisions of Section 5197 of the Revised Statutes of the United States of America, as amended, 12 U.S.C. Section 85, as amended), so that the maximum of all amounts constituting interest under applicable law, howsoever computed, shall never exceed as to any person liable therefor such lawful maximum, and any term of this Agreement or any other document referred to herein which could be construed as providing for interest in excess of such lawful maximum shall be and hereby is made expressly subject to and modified by the provisions of this Section 6.4. Section 6.5. CAPITAL ADEQUACY. If any change in law or any governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) or the interpretation thereof by a court or governmental authority with appropriate jurisdiction affects the amount of capital required or expected to be maintained by any Bank or any corporation controlling any Bank and such Bank in good faith determines that the amount of capital required is increased by or based upon the existence of the credit facility established hereunder or any Loans made or Letters of Credit issued pursuant hereto, then such Bank may notify the Borrower and/or the Canadian Borrower, as applicable, of such fact. To the extent that the costs of such increased capital requirements are not reflected in the Base Rate, the Borrower and/or the Canadian Borrower and the Banks shall thereafter attempt to negotiate in good faith an adjustment to the compensation payable hereunder which will adequately compensate the Banks in light of these circumstances. If the Borrower and/or the Canadian Borrower and the Banks are unable to agree to such adjustment within 30 days of the day on which the Borrower or the Canadian Borrower receives such notice, then commencing on the date of such notice (but not earlier than the effective date of any such change), the fees payable hereunder shall increase by an amount certified (with reasonably detailed calculations) to the Borrower or the Canadian Borrower pursuant to Section 6.7 hereof which will, in the applicable Bank's reasonable determination, provide adequate compensation. The Banks shall allocate such cost increases among their customers in good faith and on an equitable basis. 58 -49- Section 6.6. ADDITIONAL COSTS, ETC. If any present or future applicable law, which expression, as used herein, includes statutes, rules and regulations thereunder and interpretations thereof by any competent court or by any governmental or other regulatory body or official charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time hereafter made upon or otherwise issued to any Bank or Agent by any central bank or other fiscal, monetary or other authority (whether or not having the force of law), shall: (a) subject any Bank or Agent to any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature with respect to this Agreement, the other Loan Documents, any Letters of Credit, such Bank's Commitment or the Loans (other than taxes based upon or measured by the income or profits of such Bank or Agent) which could also affect other similar agreements, loans, letters of credit or commitments of such Bank or Agent, as the case may be, or (b) materially change the basis of taxation (except for changes in taxes on income or profits) of payments to any Bank of the principal of or the interest on any Loans or any other amounts payable to any Bank or Agent under this Agreement or any of the other Loan Documents, or (c) impose or increase or render applicable (other than to the extent specifically provided for elsewhere in this Agreement) any special deposit, reserve, assessment, liquidity, capital adequacy or other similar requirements (whether or not having the force of law) against assets held by, or deposits in or for the account of, or loans by, or letters of credit issued by, or commitments of an office of any Bank, or (d) impose on any Bank or Agent any other conditions or requirements with respect to this Credit Agreement, the other Loan Documents, any Letters of Credit, the Loans, such Bank's Commitment, or any class of loans, letters of credit or commitments of which any of the Loans, the Letters of Credit or such Bank's Commitment forms a part, which could also affect other similar agreements, loans, letters of credit or commitments of such Bank or Agent, as the case may be, and the result of any of the foregoing is (i) to increase the cost to any Bank of making, funding, issuing, renewing, extending or maintaining any of the Loans or such Bank's Commitment or any Letter of Credit, or (ii) to reduce the amount of principal, interest, or other amount payable to such Bank or Agent hereunder on account of such Bank's Commitment, any Letter of Credit or any of the Loans, or (iii) to require such Bank or Agent to make any payment or to forego any interest or other sum payable hereunder, the amount of which payment or foregone interest or other sum is calculated by reference to the gross amount of 59 -50- any sum receivable or deemed received by such Bank or Agent from the Borrower or the Canadian Borrower hereunder, then, and in each such case, the Borrower or the Canadian Borrower, as applicable, will (to the extent lawful), upon demand made by such Bank or (as the case may be) such Agent at any time and from time to time and as often as the occasion therefor may arise, pay to such Bank or the applicable Agent such additional amounts as will be sufficient to compensate such Bank or such Agent for such additional cost, reduction, payment or foregone interest or other sum. Section 6.7. BANK CERTIFICATES. A certificate signed by an officer of a Bank, setting forth any additional amount required to be paid by the Borrower or the Canadian Borrower to such Bank under Section Section 6.5 or 6.6 hereof and the basis therefor, shall be delivered by a Bank to the Borrower or the Canadian Borrower in connection with each demand made at any time by such Bank upon the Borrower or the Canadian Borrower under such section, and each such certificate shall constitute prima facie evidence of the additional amount required to be paid by the Borrower or the Canadian Borrower, as applicable, to such Bank. A claim by a Bank for all or any part of any additional amount required to be paid by the Borrower or the Canadian Borrower under Section Section 6.5 or 6.6 hereof may be made at any time and from time to time as often as the occasion therefor may arise. To the extent applicable, the Banks shall allocate all such cost increases among their customers in good faith and on an equitable basis. The Borrower or the Canadian Borrower, as applicable, shall not be required to pay additional amounts under Section Section 6.5 or 6.6 hereof which accrue or are incurred more than ninety (90) days before an Agent or a Bank has given notice to the Borrower or the Canadian Borrower pursuant to this Section 6.7. Section 6.8. PAYMENTS TO BE FREE OF DEDUCTIONS. All payments by the Borrower and the Canadian Borrower under this Agreement and under any of the other Loan Documents shall be made without set-off or counterclaim. Section 6.9. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior to the commencement of any Interest Period relating to any Eurodollar Rate Loan, the Administrative Agent or the Canadian Agent shall determine or be notified by the Majority Banks that adequate and reasonable methods do not exist for ascertaining the Eurodollar Rate that would otherwise determine the rate of interest to be applicable to any Eurodollar Rate Loan during any Interest Period, the Administrative Agent or the Canadian Agent shall forthwith give notice of such determination (which shall be conclusive and binding on the Borrower, the Canadian Borrower and the Banks) to the Borrower, the Canadian Borrower and the Banks. In such event (i) any Loan Request or Conversion Request with respect to Eurodollar Rate Loans shall be automatically withdrawn and shall be deemed a request for Base Rate Loans, (ii) each Eurodollar Rate Loan will automatically, on the last day of the then current Interest Period relating thereto, become a Base Rate Loan, and (iii) the obligations of the Banks to make Eurodollar Rate Loans shall be suspended until the Administrative Agent, the Canadian Agent or the Majority Banks determines that the circumstances giving rise to such suspension no longer exist, whereupon the Administrative Agent, the Canadian Agent or, as the case may be, the Administrative Agent or the Canadian Agent upon the instruction of the Majority Banks, shall so notify the Borrower, the Canadian Borrower and the Banks. 60 -51- Section 6.10. ILLEGALITY. Notwithstanding any other provisions herein, if any present or future law, regulation, treaty or directive or the interpretation or application thereof shall make it unlawful for any Bank to make or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice of such circumstances to the Borrower, the Canadian Borrower and the other Banks and thereupon (i) the commitment of such Bank to make Eurodollar Rate Loans or convert Loans of another Type to Eurodollar Rate Loans shall forthwith be suspended and (ii) such Bank's Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted automatically to Base Rate Loans on the last day of each Interest Period applicable to such Eurodollar Rate Loans or within such earlier period as may be required by law. The Borrower and the Canadian Borrower hereby agree promptly to pay the Administrative Agent for the account of each Domestic Bank and the Canadian Agent for the account of each Canadian Bank, upon demand by such Bank, any additional amounts due under Section 6.11 hereof in connection with any conversion in accordance with this Section 6.10. Section 6.11. INDEMNITY. The Borrower and the Canadian Borrower agree to indemnify each Bank and to hold each Bank harmless from and against any loss, cost or expense (excluding loss of anticipated profits) that such Bank may sustain or incur as a consequence of (i) default by the Borrower or the Canadian Borrower in payment of the principal amount of or any interest on any Eurodollar Rate Loans as and when due and payable, including any such loss or expense arising from interest or fees payable by such Bank to lenders of funds obtained by it in order to maintain its Eurodollar Rate Loans, (ii) failure by the Borrower or Canadian Borrower in making a borrowing or conversion after the Borrower or Canadian Borrower has given (or is deemed to have given) a Loan Request or a Conversion Request relating thereto in accordance with Section Section 2.6 or 2.7 hereof or (iii) the making of any payment of a Eurodollar Rate Loan or a Bankers' Acceptance or the making of any conversion of any such Eurodollar Rate Loan to a Base Rate Loan on a day that is not the last day of the applicable Interest Period with respect thereto, including interest or fees payable by such Bank to lenders of funds obtained by it in order to maintain any such Loans. Section 6.12. CURRENCY OF PAYMENT. Except as provided in Section 31, payments of principal or interest with respect to any Loan or obligation with respect to Letters of Credit or Bankers' Acceptances shall be made in the currency in which such Loan was advanced or in which such Letter of Credit or such Bankers' Acceptance was issued; provided, that with respect to Domestic Revolving Credit Loans deemed made to the Borrower pursuant to Section 2.13(d) in repayment of Canadian Swing Line Loans made to the Canadian Borrower, the principal and interest on such Domestic Revolving Credit Loans shall be repaid in Dollars. Section 6.13. CURRENCY FLUCTUATIONS. (a) Not later than 1:00 p.m. (Boston time) on the last Business Day of each calendar month or any other Business Day if requested by the Canadian Agent before 10:00 a.m. on such day (the "Calculation Date"), the Administrative Agent shall determine the Exchange Rate as of such date. The Exchange Rate so determined shall become effective on the first Business Day immediately following such determination (a "Reset Date") and shall remain effective until the next succeeding Reset Date. Nothing contained in this Section 6.13 shall be construed to require the Administrative Agent to calculate compliance under this Section 6.13 61 -52- more frequently than once each month, unless requested to do so by the Canadian Agent pursuant to the first sentence of this Section 6.13(a). (b) Not later than 4:00 p.m. (Boston time) on each Reset Date, the Administrative Agent shall, in consultation with the Canadian Agent, determine the Dollar Equivalent of the outstanding Canadian Revolving Credit Loans and Bankers' Acceptances. (c) If, on any Reset Date and on the Maturity Date, the aggregate outstanding amount of the Dollar Equivalent of all Canadian Revolving Credit Loans and the Dollar Equivalent of the aggregate face amount of all Bankers' Acceptances exceeds the Total Canadian Commitment (the amount of such excess referred to herein as the "Canadian Excess Amount") by more than one percent (1%) of the aggregate amount of such Commitment, then (A) the Canadian Agent shall give notice thereof to the Canadian Borrower and the Canadian Banks and (B) within two (2) Business Days thereafter, the Canadian Borrower shall repay or prepay Canadian Revolving Credit Loans in accordance with this Agreement in an aggregate principal amount such that, after giving effect thereto, the aggregate outstanding amount of the Dollar Equivalent of all Canadian Revolving Credit Loans and the Dollar Equivalent of the aggregate face amount of all Bankers' Acceptances no longer exceeds the Total Canadian Commitment. Notwithstanding the foregoing, to avoid the incurrence of breakage costs with respect to Canadian Revolving Credit Loans which are Eurodollar Rate Loans, the Canadian Borrower shall not be obligated to repay any Canadian Revolving Credit Loan that is a Eurodollar Rate Loan until the end of the Interest Period relating thereto to the extent that the unused amount of the Domestic Commitments of the Domestic Banks which are affiliates of the Canadian Banks shall be greater than or equal to the Canadian Excess Amount. On each Reset Date and until the Canadian Revolving Credit Loans are repaid in accordance with the first sentence of this paragraph (c), the Total Domestic Commitment shall be automatically reduced by an amount equal to the Canadian Excess Amount. Such reduction shall be made by reducing the Domestic Commitments of each such Domestic Bank that is an affiliate of a Canadian Bank by an amount equal to such Domestic Bank's Domestic Commitment Percentage of the Canadian Excess Amount. Section 6.14. REPLACEMENT OF BANKS. If any Bank (an "Affected Bank") (i) makes demand upon the Borrower or the Canadian Borrower for (or if the Borrower or the Canadian Borrower is otherwise required to pay) amounts pursuant to Section Section 6.5, 6.6, 6.7 or 30, (ii) is unable to make or maintain Eurodollar Rate Loans as a result of a condition described in Section 6.10 or (iii) defaults in its obligation to make Loans, or accept and purchase Bankers' Acceptances, in accordance with the terms of this Agreement (such Bank being referred to as a "Defaulting Bank"), the Borrower or the Canadian Borrower may, within ninety (90) days of receipt of such demand, notice (or the occurrence of such other event causing the Borrower or the Canadian Borrower to be required to pay such compensation or causing Section 6.10 to be applicable), or default, as the case may be, by notice (a "Replacement Notice") in writing to the Administrative Agent and, if a Canadian Bank, the Canadian Agent and such Affected Bank (A) request the Affected Bank to cooperate with the Borrower or the Canadian Borrower in obtaining a replacement bank satisfactory to the Administrative Agent and the Borrower or the Canadian Borrower (the "Replacement Bank"); (B) request the non-Affected Banks to acquire and assume all of the Affected Bank's Loans and 62 -53- Commitment and accept and purchase Bankers' Acceptances, as provided herein, but none of such Banks shall be under an obligation to do so; or (C) designate a Replacement Bank approved by the Administrative Agent, such approval not to be unreasonably withheld or delayed. If any satisfactory Replacement Bank shall be obtained, and/or if any one or more of the non-Affected Banks shall agree to acquire and assume all of the Affected Bank's Loans and Commitment and accept and purchase Bankers' Acceptances, then such Affected Bank shall assign, in accordance with Section 18, all of its Commitment, Loans, Bankers' Acceptances, Letter of Credit participations, Notes and other rights and obligations under this Agreement and all other Loan Documents to such Replacement Bank or non-Affected Banks, as the case may be, in exchange for payment of the principal amount so assigned and all interest and fees accrued on the amount so assigned, plus all other Obligations then due and payable to the Affected Bank; provided, however, that (i) such assignment shall be without recourse, representation or warranty and shall be on terms and conditions reasonably satisfactory to such Affected Bank and such Replacement Bank and/or non-Affected Banks, as the case may be, and (ii) prior to any such assignment, the Borrower or the Canadian Borrower, as the case may be, shall have paid to such Affected Bank all amounts properly demanded and unreimbursed under Section Section 6.5, 6.6. 6.7, 6.10 and 30. Upon the effective date of such assignment, the Borrower or the Canadian Borrower shall issue replacement Notes to such Replacement Bank and/or non-Affected Banks, as the case may be, and such institution shall become a "Bank" for all purposes under this Agreement and the other Loan Documents. Section 7. SECURITY AND GUARANTIES. (a) The Obligations of the Borrower and the Canadian Borrower to the Banks, the Swing Line Banks, the Letter of Credit Bank and the Agents under the Loan Documents shall (i) be secured by a pledge by the Borrower of all Intercompany Notes owed to the Borrower pursuant to the terms of the Pledge Agreement, (ii) be secured by a first priority perfected lien on and security interest in substantially all of the assets of the Borrower as provided in the Security Documents (including, without limitation, accounts receivable, motor vehicles, trailers and Investments but excluding real estate), (iii) be secured by a pledge by the Borrower of one hundred percent (100%) of the capital stock of each of the Domestic Subsidiaries (other than Kar-Tainer International, Inc. as to which ninety-nine percent (99%) of the capital stock will be so pledged) and the Canadian Subsidiaries and not less than sixty-five percent (65%) of the capital stock of each of the Foreign Subsidiaries (other than the Canadian Subsidiaries and Kar-Tainer International Limited ("KTIL"); provided that, upon receipt of necessary governmental approvals for the pledge of the capital stock of KTIL, which the Borrower agrees to make good faith efforts to obtain, not less than sixty-five percent (65%) of the capital stock of KTIL will be so pledged) pursuant to the terms of the Stock Pledge Agreement, and (iv) be secured by an assignment of certain acquisition documents pursuant to the Assignment of Acquisition Documents. The Obligations of the Canadian Borrower in respect of the Canadian Swing Line Loans, Canadian Revolving Credit Loans and Bankers' Acceptances shall be guaranteed by the Borrower pursuant to the terms of the Canadian Guaranty. (b) The Obligations shall also be absolutely and unconditionally, jointly and severally, guaranteed by each of the Borrower's Domestic Subsidiaries and the Canadian Subsidiaries (other than AH, Auto Haulaway Releasing Services (1981) Limited, and MCL Ryder Transport, Inc.) pursuant to a guaranty in substantially the form of Exhibit H attached 63 -54- hereto. Auto Haulaway Releasing Services Limited and MCL Ryder Transport, Inc. shall guaranty the guaranty obligations of, respectively, the Canadian Borrower and Ryder Automotive Acquisition LLC pursuant to a guaranty in substantially the form of Exhibit H attached hereto (such guaranty, together with the guaranty by the Borrower's Domestic Subsidiaries and other Canadian Subsidiaries referred to above, in each case, as amended, modified or supplemented from time to time, are referred to herein, collectively, as the "Guaranties" and individually as a "Guaranty"). The obligations of such Subsidiaries under such Guaranties shall be secured by (i) a first priority perfected lien on and security interest in substantially all of the assets of each such Subsidiary as provided in the Security Documents (including, without limitation, accounts receivable, motor vehicles, trailers and Investments but excluding real estate and (ii) a pledge by each such Subsidiary of one hundred percent (100%) of the capital stock of each of its Domestic Subsidiaries and Canadian Subsidiaries and not less than sixty-five percent (65%) of the capital stock of each of its Foreign Subsidiaries (other than the Canadian Subsidiaries) pursuant to the terms of the Stock Pledge Agreement. (c) The Borrower shall cause each of its Domestic Subsidiaries and Canadian Subsidiaries acquired or formed after the Closing Date, no later than thirty (30) days after the acquisition or formation of such Subsidiary, to (i) execute and deliver to each of the Banks and the Administrative Agent a guaranty which is substantially in the form of Exhibit H hereto and which is reasonably satisfactory to the Banks and the Administrative Agent in all respects; (ii) grant the Administrative Agent, for the benefit of the Banks a first priority perfected lien on and security interest in substantially all of its assets (including without limitation, accounts receivable, motor vehicles, trailers and Investments but excluding real estate) pursuant to such documents and instruments as shall be satisfactory to the Banks and the Administrative Agent in all respects (it being understood that the documents and instruments relating to the grant of a security interest by such Subsidiaries shall be similar in form and content to the applicable Security Documents executed on the Closing Date, with such changes as the Administrative Agent shall deem necessary or desirable to account for additional types of collateral, local law requirements, and such other matters as the Administrative Agent may deem necessary or desirable in order to perfect its security interest in, or remedies with respect to, such assets), and (iii) execute and deliver to each of the Banks and the Administrative Agent all other documents and instruments, including, without limitation, corporate authority documents and legal opinions, as the Administrative Agent may reasonably request in connection with the delivery of such guaranty and such security. The Borrower shall deliver to the Banks an updated Schedule 8.16(a) or Schedule 8.16(b), as applicable, upon the acquisition or formation of any Subsidiary. 64 -55- Section 8. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to the Banks as follows (provided that each of the following representations and warranties of the Borrower regarding ACD and its Subsidiaries is, solely with respect to representations and warranties made on the Closing Date, or assets owned as of the Closing Date or periods elapsed on or prior to the Closing Date, based upon the Borrower's knowledge and based upon the representations and warranties of Ryder System, Inc. set forth in the ACD Acquisition Documents): Section 8.1. EXISTENCE AND GOOD STANDING, ETC. (a) Each of the Borrower and its Subsidiaries (other than Allied Systems) is (i) a corporation, duly organized and validly existing and in good standing under the laws of its jurisdiction of incorporation, and (ii) has adequate power to own its property and conduct its business substantially as presently conducted. Allied Systems is a limited partnership duly organized, validly existing under the Uniform Act and in good standing under the laws of Georgia, and has adequate power to own its property and conduct its business substantially as presently conducted. AAGI has adequate power to act on behalf of Allied Systems as managing general partner of Allied Systems. (b) The Borrower and its Subsidiaries are qualified to do business and in good standing in each of the jurisdictions listed on Schedule 8.1 attached hereto, which constitute all of the jurisdictions in which the nature of their businesses and properties make such qualification necessary, except for jurisdictions in which the failure to qualify will have no material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries, considered as a whole, or the Borrower, considered individually, or on the Borrower's or any of its Subsidiaries' ability to perform its obligations under the Loan Documents to which such Person is a party. Section 8.2. POWER; CONSENTS; ABSENCE OF CONFLICT WITH OTHER AGREEMENTS, ETC. The (i) execution, delivery and performance by each of the Borrower and its Subsidiaries (other than Allied Systems) of the Loan Documents, the Senior Notes to which such Person is a party, and the borrowings and transactions contemplated hereby and thereby, and (ii) the execution and delivery by AAGI on behalf of Allied Systems and the performance by Allied Systems of the Loan Documents and the Senior Notes to which Allied Systems is a party: (a) are within the powers of such Person, and have been duly authorized by all requisite corporate or partnership (as the case may be) proceedings of such Person; (b) do not require any approval or consent of, or filing with, any governmental agency or authority bearing on the validity of such instruments and borrowings which is required by applicable laws or regulations of any such agency or authority having jurisdiction in the matter other than those approvals and consents obtained and filings (i) made prior to the Closing Date, (ii) under the Uniform Commercial Code and (iii) regarding the notation of the lien in favor of the Administrative Agent on the certificates of title with respect to motor vehicles, and are not in contravention of the corporate charter or by-laws of any such Person, or any 65 -56- amendment thereof, or, with respect to Allied Systems, the Uniform Act, the terms of the Partnership Agreement, Partnership Certificate or any amendment thereof, or any law, regulation, order, judgment, writ, injunction, license or permit, the non-compliance with which would materially adversely affect the business, assets or financial condition of the Borrower and its Subsidiaries, considered as a whole, or of the Borrower, considered individually; and (c) except as described on Schedule 8.2 attached hereto, will not conflict with or result in any breach or contravention of, or the creation of any lien (except as contemplated by the Security Documents) under, any indenture, agreement, lease, instrument or undertaking to which the Borrower or any of its Subsidiaries is a party or by which the Borrower or any of its Subsidiaries is bound. No such breaches or liens will materially adversely affect the business, assets or financial condition of the Borrower and its Subsidiaries, considered as a whole, or the Borrower, considered individually. Section 8.3. BINDING EFFECT OF DOCUMENTS. The Borrower and each of its Subsidiaries (other than Allied Systems) has duly executed and delivered each of the Loan Documents to which such Person is a party and each of such documents is in full force and effect. AAGI has duly executed and delivered on behalf of Allied Systems each of the Loan Documents to which Allied Systems is a party and each of such documents is in full force and effect. Each of the Loan Documents to which the Borrower or any of its Subsidiaries is a party is and will be the valid and legally binding obligation of such Person, enforceable against such Person, in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights in general, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Section 8.4. TITLE TO PROPERTIES. The Borrower and its Subsidiaries (other than ACD and its Subsidiaries) own all of the assets reflected on the consolidated balance sheet of the Borrower and its Subsidiaries as at the Balance Sheet Date and after giving effect to the ACD Acquisition, the Borrower and its Subsidiaries own all of the assets reflected on the pro forma consolidated balance sheet of the Borrower and its Subsidiaries dated June 30, 1997, except (i) for assets subject to the capitalized leases listed on Schedule 12.1 attached hereto, (ii) where the failure to own such assets would not materially adversely affect the business, assets or financial condition of the Borrower and its Subsidiaries, taken as a whole, and (iii) for assets sold or otherwise disposed of in the ordinary course of business since such dates, subject in each case to no mortgages, security interests, leases, liens or other encumbrances except those permitted by Section 12.2 hereof. Section 8.5. FINANCIAL STATEMENTS AND PROJECTIONS. (a) The Borrower has furnished to the Banks the audited consolidated balance sheet of the Borrower and its Subsidiaries (other than ACD and its Subsidiaries) dated as at the Balance Sheet Date, the unaudited consolidated balance sheets of the Borrower and its Subsidiaries (other than ACD and its Subsidiaries) dated as at March 31, 1997 and June 30, 1997 and the related consolidated statements of income and retained earnings and cash flows of the Borrower and its Subsidiaries (other than ACD and its Subsidiaries) for the fiscal periods ended 66 -57- on such dates. Each of the balance sheets and related statements of income and retained earnings and cash flows as at the Balance Sheet Date, March 31, 1997 and June 30, 1997, and for the fiscal periods then ended, have been prepared in accordance with Generally Accepted Accounting Principles and present fairly the financial position of the Borrower and its Subsidiaries (other than ACD and its Subsidiaries) as at the dates thereof. There are no contingent liabilities of the Borrower or any of its Subsidiaries (other than ACD and its Subsidiaries) as of such dates involving material amounts, known to the officers of the Borrower or its Subsidiaries, which are not disclosed in such balance sheets and the notes related thereto except as listed and described on Schedule 8.5(a) attached hereto. (b) The Borrower has furnished to the Banks (i) the audited consolidated balance sheet of ACD and its Subsidiaries dated as at the Balance Sheet Date and the related consolidated statements of income and retained earnings and cash flows for the fiscal year ended on such date, (ii) the unaudited consolidated statement of income of ACD and its Subsidiaries for the fiscal year ended on the Balance Sheet Date, and (iii) the unaudited consolidated balance sheets of ACD and its Subsidiaries dated as at June 30, 1997 and the related consolidated statement of income of ACD and its Subsidiaries for the fiscal period ended on such date. Such unaudited statements of income for the fiscal periods ending on the Balance Sheet Date and June 30, 1997 and such unaudited balance sheet as at June 30, 1997 have been adjusted to eliminate assets and liabilities and the results of operations not transferred in connection with the ACD Acquisition (and all such adjusted financial statements contain footnotes describing such elimination). Each of the balance sheets and related statements of income and retained earnings and cash flows as at the Balance Sheet Date and June 30, 1997, and for the fiscal periods then ended, have been prepared in accordance with Generally Accepted Accounting Principles and present fairly the financial position of ACD and its Subsidiaries as at the dates thereof. There are no contingent liabilities of ACD or any of its Subsidiaries as of such dates involving material amounts, known to the officers of the Borrower or its Subsidiaries, which are not disclosed in such balance sheets and the notes related thereto except as listed and described on Schedule 8.5(a) attached hereto. (c) The projections of the consolidated balance sheets and income and cash flow statements of the Borrower and its Subsidiaries for the 1997 through 2002 fiscal years, identified as Forecast Scenario #97 Da2Bank dated August 6, 1997, copies of which have been delivered to the Banks, disclose all assumptions deemed material by the Borrower which were made by the Borrower with respect to its financial condition and the projected volume of motor vehicles to be hauled by the Borrower and its Subsidiaries and which were used in formulating such projections. To the knowledge of the Borrower or any of its Subsidiaries, no facts have come to their attention that, individually or in the aggregate, would, in accordance with the customary budgeting practices of the Borrower, require a material change or result in a material change in any such projections. The projections are based upon estimates and assumptions which the Borrower believes to be reasonable, have been prepared in all material respects on the basis of the assumptions stated therein and reflect estimates of the Borrower and its Subsidiaries, which the Borrower believes to be reasonable, of the results of operations and other information projected therein. Neither the Borrower nor any Subsidiary of the Borrower makes any representation or warranty that the projections will, in fact, be achieved. 67 -58- (d) Each of the Borrower and its Subsidiaries, both before and after giving effect to the ACD Acquisition and the other transactions contemplated by this Agreement and the other Loan Documents, is solvent, has assets having a fair value in excess of the amount required to pay its probable liabilities on their existing debts as they become absolute and matured, and has, and based on current projections, will have, access to adequate capital for the conduct of its business and the ability to pay its debts from time to time incurred in connection therewith as such debts mature. Section 8.6. NO MATERIAL CHANGES, ETC. (a) The following representation and warranty shall be made by the Borrower on the Closing Date: Since the Balance Sheet Date, there have occurred no changes in the business, assets or financial condition of the Borrower and its Subsidiaries (other than ACD and its Subsidiaries) as shown on or reflected in the consolidated balance sheet of the Borrower as at the Balance Sheet Date, other than the ACD Acquisition and those described on Schedule 8.6 attached hereto, and all of such changes in the aggregate, have not been materially adverse. (b) The following representation and warranty shall be made by the Borrower on each occasion on which the Borrower repeats or is deemed to repeat the representations and warranties set forth in this Section 8: Since the Closing Date, there have occurred no changes in the business, assets or financial condition of the Borrower and its Subsidiaries as shown on or reflected in the pro forma consolidated balance sheet of the Borrower as at the Closing Date, other than those described on Schedule 8.6 attached hereto, and all of such changes in the aggregate, have not been materially adverse. Section 8.7. LITIGATION. (a) The following representation and warranty shall be made by the Borrower on the Closing Date: Except as disclosed on Schedule 8.7 attached hereto, there are no actions, suits, proceedings or investigations of any kind pending or, to the best of the Borrower's knowledge and after due inquiry, threatened against (i) the Borrower or any of its Subsidiaries (other than ACD and its Subsidiaries) or (ii) to the best of the Borrower's knowledge, ACD and its Subsidiaries, before any court, tribunal or administrative agency or board which, if determined adversely, might, either in any case or in the aggregate, materially adversely affect the properties, assets, financial condition or business of the Borrower and its Subsidiaries, considered as a whole, materially impair the rights of the Borrower and its Subsidiaries to carry on their businesses substantially as now conducted, result in any substantial liability not adequately covered by insurance, or which question the validity of this Agreement or any of the other Loan Documents or any action taken or to be taken pursuant hereto or thereto. (b) The following representation and warranty shall be made by the Borrower on each occasion on which the Borrower repeats or is deemed to repeat the representations and warranties set forth in this Section 8: Except as disclosed on Schedule 8.7 attached hereto, there are no actions, suits, proceedings or investigations of any kind pending or, to the best of the Borrower's knowledge and after due inquiry, threatened against the Borrower or any of its Subsidiaries, 68 -59- before any court, tribunal or administrative agency or board which, if determined adversely, might, either in any case or in the aggregate, materially adversely affect the properties, assets, financial condition or business of the Borrower and its Subsidiaries, considered as a whole, materially impair the rights of the Borrower and its Subsidiaries to carry on their businesses substantially as now conducted, result in any substantial liability not adequately covered by insurance, or which question the validity of this Agreement or any of the other Loan Documents or any action taken or to be taken pursuant hereto or thereto. Section 8.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor any of its Subsidiaries is subject to any charter, corporate, partnership or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of such Person's officers has or is expected in the future to have a materially adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries, considered as a whole. Neither the Borrower nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of such Person's officers has or is expected to have any materially adverse effect on the business of the Borrower and its Subsidiaries, considered as a whole. Section 8.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower nor any of its Subsidiaries is violating any provision of any charter documents or by-laws or partnership documents, as applicable, or any agreement or instrument by which it or any of its properties is bound, or any decree, order, judgment, statute, license, rule or regulation, in each case in a manner which could result in the imposition of substantial penalties or materially and adversely affect the business, assets or financial condition of the Borrower and its Subsidiaries, considered as a whole. Section 8.10. TAX STATUS. Except as described in Schedule 8.10 attached hereto, each of the Borrower and its Subsidiaries has (a) made or filed all federal, state and provincial tax returns, reports and declarations required by any jurisdiction to which it is subject, (b) paid all taxes and other governmental assessments and charges, as shown or determined to be due on such tax returns, reports and declarations, where the penalty for or the result of any failure to do so would have a material adverse effect on the financial condition of the Borrower and its Subsidiaries, considered as a whole, except for taxes the amount, applicability or validity of which is currently being contested by it in good faith by appropriate proceedings and with respect to which it has set aside on its books reserves reasonably deemed by it to be adequate thereto, and (c) set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Borrower know of no basis for any such claim. Section 8.11. EMPLOYEE BENEFIT PLANS. (a) All Guaranteed Pension Plans have been operated and administered in all material respects in accordance with ERISA and, to the extent applicable, the Internal Revenue Code of 1986, as amended. The current value of all accrued benefits under all of such plans which are subject to Title IV of ERISA as of January 1, 1995 does not exceed the current value of the assets of such plans allocable to such accrued benefits, based upon the actuarial assumptions used for such plans. No Reportable Event (as defined in ERISA) has 69 -60- occurred with respect to any Guaranteed Pension Plan, and no steps have been taken to terminate any Guaranteed Pension Plan. Each of the Borrower and each Related Entity has made all contributions to each Multiemployer Plan required pursuant to any applicable collective bargaining agreement. To the best of the Borrower's knowledge after due inquiry, neither the Borrower nor any Related Entity has taken any action to trigger any termination liability with respect to any Multiemployer Plan or incurred any material liability as a result of a complete or partial withdrawal, as defined in ERISA, from any Multiemployer Plan. All contributions required under applicable Canadian tax and pension law have been made in respect of all pension plans of the Canadian Borrower and each Canadian Subsidiary and each such pension plan is fully funded on a timely basis in accordance with all applicable Canadian laws and regulations. (b) No litigation or administrative or other proceeding is pending or, to the best of the Borrower's knowledge after due inquiry, threatened with respect to any pension plan, welfare benefit plan, bonus plan, stock option plan, deferred compensation plan or other similar plans for the employees of the Canadian Subsidiaries (collectively, the "Canadian Plans") which, if determined adversely, might, either in any case or in the aggregate, materially adversely affect the properties, assets, financial condition or business of any of the Canadian Subsidiaries considered as a whole, and each Canadian Plan has been administered in all respects in compliance with all applicable laws including but not limited to the Income Tax Act (Canada) and the Pension Benefits Standards Act (Canada) and with the terms of such Plan. Section 8.12. LOCATION OF OFFICE. The Borrower's and each of its Subsidiaries' chief executive office and principal place of business and the location where its books and records are kept is described on Schedule 8.12 attached hereto. Section 8.13. BUSINESS. Except as disclosed on Schedule 8.13 attached hereto, each of the Borrower and its Subsidiaries enjoys peaceful and undisturbed possession under all leases which are material to the Borrower and its Subsidiaries, considered as a whole, of real or personal property of which any Person is lessee, subject to the rights of lessors, sublessors and sublessees and other parties lawfully in possession in the ordinary course of business, none of which contains, to the best of the Borrower's knowledge after due inquiry, any unusual or burdensome provision which would be reasonably likely to materially adversely affect or impair the operations of the Borrower and its Subsidiaries, considered as a whole, and all such leases which are material to the operations of the Borrower and its Subsidiaries are valid and subsisting and in full force and effect. Each of the Borrower and its Subsidiaries owns or possesses the right to use all of the franchises, rights and licenses necessary for the conduct of its business as now conducted which are material to the conduct of the business of the Borrower and its Subsidiaries, considered as a whole, without any conflict with the rights of others which would be reasonably likely to materially adversely affect such Person's ownership of or right to use any such franchises, rights and licenses. The Borrower and each of its Subsidiaries owns, leases or has the right to use all properties, franchises, rights and licenses, and employs such employees and/or engages such independent contractors, as are sufficient to operate its business in all material respects as such business is operated on the Closing Date. AH has no assets or liabilities other than the Intercompany Notes payable to the Borrower and transferred by the Borrower to it, and AH does not conduct any business activities of any kind other than such business as relates to the 70 -61- holding of such Intercompany Notes. Haul Insurance has no assets or liabilities other than those associated with the provision of insurance and related services. Haul Insurance will not conduct any business activities other than providing insurance and related services, substantially all of which insurance and related services shall be provided for the benefit of the Borrower and its Subsidiaries; provided that Haul Insurance may provide insurance and related services to other Persons so long as (i) the insurance premiums relating to such insurance are charged on a non-commingled basis and (ii) Haul Insurance has taken appropriate steps (through reinsurance and other appropriate means) to reduce the insurance risk relating to such third-party insurance to an amount not in excess of the capital provided to support the same, all in a manner reasonably acceptable to the Administrative Agent. Section 8.14. DISCLOSURE. None of this Agreement or any of the other Loan Documents to the knowledge of the management of the Borrower or any of its Subsidiaries, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading. There is no fact known to the management of the Borrower or any of its Subsidiaries which materially adversely affects, or which is reasonably likely in the future to materially adversely affect, the business, assets, financial condition or prospects of the Borrower and its Subsidiaries, considered as a whole. Section 8.15. TITLE AND REGISTRATION. All Motor Vehicle Equipment which, under applicable law, is required to be registered is properly registered in the name of the Borrower or the appropriate Subsidiary of the Borrower, and all Motor Vehicle Equipment, the ownership of which, under applicable law, is evidenced by a certificate of title, is properly titled in the name of the Borrower or the appropriate Subsidiary of the Borrower, except, in each case, (i) for Motor Vehicle Equipment of ACD or its Subsidiaries which is in the process of being re-registered or re-titled as described on Schedule 8.15 attached hereto, provided that any such re-registering or re-titling does not materially interfere with the business operation of ACD or its Subsidiaries and (ii) for Motor Vehicle Equipment with respect to which the certificates of title which have been lost and the net book value of which is less than $1,000,000; provided that such certificates of title are replaced within a reasonable time after discovery of such loss. Section 8.16. CAPITALIZATION. (a) Except as set forth on Schedule 8.16(a) attached hereto, on and as of the Closing Date and after giving effect to the ACD Acquisition, the Borrower owns or holds of record and/or beneficially (whether directly or indirectly) no shares of any class in the capital of any other corporations and no legal and/or beneficial interest in any Person. Except as set forth on Schedule 8.16(a) attached hereto, the Borrower has no Subsidiaries. Schedule 8.16(a) lists the jurisdiction of incorporation of each such Subsidiary and indicates whether such Subsidiary is a Guarantor. (b) Except as set forth on Schedule 8.16(b) attached hereto, on and as of the Closing Date and after giving effect to the ACD Acquisition, none of the Borrower's Subsidiaries owns or holds of record and/or beneficially (whether directly or indirectly) any shares of any class in the capital of any other corporations and no legal and/or beneficial interest in any Person. Except as 71 -62- set forth on Schedule 8.16(b) attached hereto, after giving effect to the ACD Acquisition, none of the Borrower's Subsidiaries has any Subsidiaries. Schedule 8.16(b) lists the jurisdiction of incorporation of each such Subsidiary and indicates whether such Subsidiary is a Guarantor. Section 8.17. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrower nor any of its Subsidiaries is a "holding company" or a "subsidiary company" of a "holding company" or an "affiliate" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935; nor is it a "registered investment company", or an "affiliated company" or a "principal underwriter" of a "registered investment company", as such terms are defined in the Investment Company Act of 1940, as amended. Section 8.18. CERTAIN TRANSACTIONS. Except for any transaction that (a) is listed on Schedule 8.18 attached hereto, (b) has been approved by the majority of the so-called "outside directors" of the Board of Directors of the Borrower, (c) is in respect of intercompany Indebtedness or Investments between the Borrower or any of the Guarantors or between Guarantors, or (d) does not require payments by the Borrower or any of its Subsidiaries in excess of $60,000 in the aggregate, none of the officers, directors, or employees of the Borrower or any of its Subsidiaries is presently a party to any transaction with the Borrower or any of its Subsidiaries or Affiliates (other than for services as employees, officers and directors), including, without limitation, any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Borrower, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. Section 8.19. OPERATING RIGHTS. (a) The Borrower and its Subsidiaries (including ACD and its Subsidiaries) have all certificates of convenience and necessity and operating rights necessary to conduct interstate and intrastate transportation businesses consisting of transporting cars and trucks in and between the states listed on Schedule 8.19(a) attached hereto. Each of such certificates of convenience and necessity and operating rights is listed on Schedule 8.19(a) attached hereto, and is in full force and effect. (b) Each of the Canadian Subsidiaries has all operating authorizations necessary or desirable for the conduct of the business of each such Person as conducted on the Closing Date. Each of such operating authorizations is listed on Schedule 8.19(b) attached hereto, and (except as described on Schedule 8.19(b) attached hereto) is in good standing, is in full force and effect and is being held and operated by such Canadian Subsidiary in accordance with the terms thereof. In the event that any Canadian Subsidiary is merged with another Canadian Subsidiary, the Borrower shall provide the Administrative Agent and the Banks with an updated Schedule 8.19(b) hereto. Section 8.20. MATERIAL CONTRACTS. Neither the Borrower nor any of its Subsidiaries is party to or bound by any contract material to such Person's business other than the contracts listed and described on Schedule 8.20 attached hereto. Each of such contracts is in full force and effect, 72 -63- and there exists thereunder no default by the Borrower or such Subsidiary, or to such Person's knowledge, any accrued right of rescission. Section 8.21. ENVIRONMENTAL COMPLIANCE. (a) Neither the Borrower nor any of its Subsidiaries is in violation of any applicable judgment, decree, order, law, license, rule or regulation pertaining to environmental matters, including, without limitation, those arising under the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended, ("CERCLA") the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Water Pollution Control Act, the Toxic Substances Control Act or any other federal, state, provincial or local statute, regulation, ordinance, order or decree relating to health, safety or the environment (hereinafter "Environmental Laws"), which violation would have a material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries, taken as a whole. (b) Except as disclosed on Schedule 8.21 hereto, neither the Borrower nor any of its Subsidiaries has received notice that it has been identified by the United States Environmental Protection Agency as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986) except as noted in Schedule 8.21; nor has the Borrower or any of its Subsidiaries received any notification that any Hazardous Waste, as defined by 42 U.S.C. Section 6903(5), any Hazardous Substances as defined by 42 U.S.C. Section 9601(14), any "pollutant or contaminant" as defined by 42 U.S.C. Section 9601(33) and any toxic substance, hazardous materials, oil, or other chemicals or substances regulated by any Environmental Laws (collectively, "Hazardous Substances") which it has disposed of has been found at any site at which a federal, state or provincial agency is conducting a remedial investigation or other corrective action pursuant to any Environmental Law. (c) Except for small quantities of solvents and cleaners and other Hazardous Substances used or generated in the ordinary course of business in material compliance with Environmental Laws and otherwise as set forth on Schedule 8.21 attached hereto: (i) no portion of the Borrower's properties or portion of any Subsidiaries' properties has been used for the handling, processing, storage or disposal of Hazardous Substances and no underground tank or other underground storage receptacle for Hazardous Substances is located on such properties; (ii) in the course of its activities, neither Borrower nor any of its Subsidiaries has generated or is generating any Hazardous Waste on any of its properties; (iii) there have been no releases (i.e. any past or present releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping) of Hazardous Substances by the Borrower or any of its Subsidiaries on, upon, or into the properties of the Borrower or any of its Subsidiaries, which releases would have a material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries, considered as a whole, or the Borrower, considered individually, or on the Borrower's and its Subsidiaries', taken as a whole, ability to perform their obligations under the Loan Documents. In addition, to the best of Borrower's knowledge, there have been no such releases on, upon, or into any real property in the vicinity of any of the real properties of the Borrower or any of its Subsidiaries which, through soil or 73 -64- groundwater contamination, may have come to be located on and which would have a material adverse effect on the value of any real properties of the Borrower or any of its Subsidiaries. Neither the Canadian Borrower nor any of its Subsidiaries has transported, removed or disposed of any Hazardous Waste to a location outside of Canada, except in material compliance with all applicable Environmental Laws. Section 8.22. COLLATERAL. (a) Except as otherwise provided in any of the Security Documents, all of the Obligations of the Borrower, the Canadian Borrower and the Borrower's other Subsidiaries to the Banks, the Letter of Credit Bank and the Agents under or in respect of the Loan Documents will at all times from and after the execution and delivery of each of the Security Documents be entitled to all of the benefits of and be secured by each of such Security Documents. (b) No financing statement which names the Borrower or any of its Subsidiaries as a debtor, or encumbers or attempts to encumber any of the material assets or a material portion of the assets of any of the Borrower or its Subsidiaries, has been filed in any jurisdiction in the United States or any State thereof pursuant to Article 9 of the Uniform Commercial Code of any State or in Canada or any province thereof, and neither the Borrower nor any of its Subsidiaries has signed any financing statement or any security agreement authorizing any secured party thereunder to file any such financing statement in any such jurisdiction, other than (i) financing statements with respect to liens, security interests and other encumbrances permitted by Section 12.2 hereof and (ii) filings for which arrangements reasonably satisfactory to the Administrative Agent in all respects have been made for the termination of record thereof. (c) No mortgages, chattel mortgages, assignments, statements of assignment, security agreements or deeds of trust have been filed by any person or persons with respect to any material part of the property or assets of the Borrower or any Subsidiary, except for mortgages and security agreements which are otherwise permitted by the provisions of Section 12.2 hereof. Section 8.23. NO DEFAULT. No Default or Event of Default exists. Section 8.24. INSURANCE. Schedule 8.24 attached hereto lists the policies and types and amounts of coverage (including deductibles) of theft, fire, liability, property and casualty and other insurance (including self-insurance as determined by the Borrower in its reasonable business judgment) owned, held or maintained by the Borrower and its Subsidiaries on the date hereof. Such policies of insurance (to the extent applicable) are maintained with financially sound and reputable insurance companies (which may include Haul Insurance), funds or underwriters and are of the kinds, cover such risks and are in such amounts, with such deductibles and exclusions, as are consistent with the general practices of businesses engaged in similar activities. All such policies of insurance are in full force and effect and are valid and enforceable policies and will remain in full force and effect through the respective dates set forth in such schedule; and coverage thereunder will not be reduced by, or terminate or lapse by reason of, the transactions contemplated by this Agreement. The insurance maintained by the Borrower and its Subsidiaries is sufficient for compliance by the Borrower and each of its Subsidiaries with 74 -65- all requirements of law and all agreements to which the Borrower and each of its Subsidiaries is a party, to the extent applicable. To the extent that Allied Systems, ACD, the Canadian Borrower and any other Subsidiary of the Borrower engaged in the auto hauling business self-insures certain of its respective properties, such self-insurance protects against such casualties and contingencies and is at such levels as is in accordance with sound business practices. Section 8.25. SUBORDINATED DEBT DOCUMENTS. The Borrower has furnished to the Banks true, correct and complete copies of the Subordinated Debt Documents. None of the Subordinated Debt Documents has been amended, modified or supplemented as of the date hereof, except as permitted by Section 12.13. Each of the representations and warranties made by the Borrower and any of its Subsidiaries in any of the Subordinated Debt Documents to which such Person is a party was true and correct when made and continues to be true and correct in all respects, and no event of default, or event which, with the passage of time or the giving of notice would be an event of default, has occurred and is continuing under the terms of the Subordinated Debt Documents. Section 8.26. USE OF PROCEEDS. (A) GENERAL. The proceeds of the Loans and Bankers' Acceptances shall be used for working capital and general corporate purposes and to provide funds for the ACD Acquisition and Permitted Acquisitions. The Borrower will obtain Letters of Credit solely for general corporate purposes. (B) REGULATIONS G, U AND X. No portion of any Loan or Bankers' Acceptance is to be used, and no portion of any Letter of Credit is to be obtained, for the purpose of purchasing or carrying any "margin security" or "margin stock" as such terms are used in Regulations G, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224. (C) INELIGIBLE SECURITIES. No portion of the proceeds of any Loans or Bankers' Acceptance is to be used, and no portion of any Letter of Credit is to be obtained, for the purpose of (a) knowingly purchasing, or providing credit support for the purchase of, Ineligible Securities from a Section 20 Subsidiary during any period in which such Section 20 Subsidiary makes a market in such Ineligible Securities, (b) knowingly purchasing, or providing credit support for the purchase of, during the underwriting or placement period, any Ineligible Securities being underwritten or privately placed by a Section 20 Subsidiary, or (c) making, or providing credit support for the making of, payment of principal or interest on Ineligible Securities underwritten or privately placed by a Section 20 Subsidiary and issued by or for the benefit of the Borrower or any Subsidiary or other Affiliate of the Borrower. Section 8.27. PERFECTION OF SECURITY INTEREST. Except as disclosed on Schedule 8.27 hereto, all filings, assignments, pledges and deposits of documents or instruments have been made and all other actions have been taken that are necessary or advisable, under applicable law, to establish and perfect the Administrative Agent's first-priority security interest in the Collateral. The Collateral and the Administrative Agent's rights with respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses, other than as may be held by account debtors with respect to Collateral consisting of accounts or general intangibles. A Guarantor or the 75 -66- Borrower is the owner of the Collateral free from any lien, security interest, encumbrance and any other claim or demand, except for Permitted Liens. Section 8.28. BANK ACCOUNTS. Schedule 8.28 sets forth the account numbers and location of all bank accounts of the Borrower and each of its Subsidiaries. Section 8.29. ACQUISITION DOCUMENTS. The Borrower has furnished to the Banks true, correct and complete copies of the ACD Acquisition Documents. None of the Acquisition Documents has been amended, modified or supplemented as of the date hereof, except as permitted by Section 12.16. Each of the representations and warranties of the Borrower and its Subsidiaries and, to the best of the Borrower's knowledge, Ryder System, Inc., contained in the ACD Acquisition Documents is true and correct in all materials respects as of the Closing Date. Section 8.30. SENIOR NOTES. The Borrower has furnished to the Banks a true, correct and complete copy of the Senior Note Indenture. The Senior Note Indenture has not been amended, modified or supplemented as of the date hereof, except as permitted by Section 12.14. Each of the representations and warranties of the Borrower contained in the Senior Note Indenture is true and correct in all material respects as of the Closing Date. Section 9. CLOSING CONDITIONS. This Agreement shall not become effective, the Banks shall have no obligation to advance any Revolving Credit Loans requested by the Borrower or the Canadian Borrower hereunder, the Swing Line Banks shall have no obligation to advance any Swing Line Loan requested by the Borrower or, as the case may be, the Canadian Borrower hereunder, the Letter of Credit Bank shall have no obligation to issue, extend or renew any Letters of Credit hereunder, and the Canadian Banks shall have no obligation to issue, purchase or accept any Bankers' Acceptance unless and until the date (the "Closing Date") that each of the following conditions precedent is satisfied: Section 9.1. DELIVERY OF LOAN DOCUMENTS; PAYMENT OF FEES. (a) Each of the Loan Documents shall have been duly and properly authorized, executed and delivered by the respective party or parties thereto and shall be in full force and effect on and as of the Closing Date. (b) Executed original counterparts of the Loan Documents shall have been furnished to each Bank. (c) The Banks shall have received a certificate from the Borrower as to the matters set forth in Section Section 9.2, 9.3 and 9.4 hereof. (d) The Administrative Agent shall have received from the Borrower the Administrative Agent's Fee pursuant to the terms of the Fee Letter and other fees payable by the Borrower on the Closing Date. Section 9.2. REPRESENTATIONS AND WARRANTIES. The representations and warranties contained in Section 8 hereof shall have been correct as of the date on which made and shall also be correct at and 76 -67- as of the Closing Date with the same effect as if made at and as of such time, except to the extent that the facts upon which such representations and warranties are based may have changed in the ordinary course as a result of transactions permitted or contemplated hereby. Section 9.3. PERFORMANCE; NO DEFAULT. The Borrower and the Canadian Borrower and each of their Subsidiaries shall have performed and complied with all terms and conditions herein required to be performed or complied with by it prior to or at the time of the Closing Date, and at the time of the Closing Date, there shall exist no Default or Event of Default or condition which, with either or both the giving of notice or the lapse of time, would result in a Default or an Event of Default upon consummation of the initial borrowing of Revolving Credit Loans or otherwise. Section 9.4. REQUISITE ACTION. All requisite action necessary for the valid execution, delivery and performance by the Borrower and each of its Subsidiaries of this Agreement and the other Loan Documents to which it is or is to become a party shall have been duly and effectively taken, and evidence thereof satisfactory to the Banks shall have been provided to each of the Banks. Section 9.5. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the transactions contemplated by this Agreement and all documents incident thereto shall be reasonably satisfactory in substance and in form to the Administrative Agent and to the Administrative Agent's Special Counsel, and the Administrative Agent and such counsel shall have received all information and such counterpart originals or certified or other copies of such documents as the Administrative Agent or such counsel may reasonably request. Section 9.6. OPINIONS OF COUNSEL. (a) The Banks shall have received from Cohen Pollock Merlin Axelrod and Tanenbaum, P.C., counsel to the Borrower and each of its Subsidiaries (other than the Canadian Borrower and its Subsidiaries), a favorable opinion addressed to the Banks and dated the Closing Date, substantially in the form of Exhibit E-1 attached hereto. (b) The Banks shall have received from Morris/Rose/Ledgett, Canadian counsel to the Canadian Borrower and its Subsidiaries, a favorable opinion addressed to the Banks and dated the Closing Date, substantially in the form of Exhibit E-2 attached hereto. Section 9.7. BANKING LAW REQUIREMENTS. The Banks shall have received from the Borrower signed copies of such statements, in substance and form reasonably satisfactory to the Banks, as they shall require for purposes of compliance with any applicable regulations of the Board of Governors of the Federal Reserve System. Section 9.8. DELIVERY OF CHARTER AND OTHER DOCUMENTS. The Banks shall have received from the Borrower and each of its Subsidiaries, certified by a duly authorized officer of such Person (or, in the case of Allied Systems, AAGI as the managing general partner of Allied Systems) to be true and complete as of the Closing Date, of each of (a) its charter or other incorporation documents, or, in the case of Allied Systems, the Partnership Agreement, in each case as in effect on such date, (b) its by-laws, or, in the case of Allied Systems, the Partnership Certificate, in each case as in effect on such date, (c) the records of all action taken to authorize the execution and delivery by such Persons, or, in the case of Allied Systems, by the Borrower on behalf of 77 -68- Allied Systems, of each of the Loan Documents and the performance by such Person of all of its agreements and obligations under each of such documents and, in the case of the Borrower and the Canadian Borrower, the borrowings and other transactions contemplated by this Agreement, and (d) an incumbency certificate giving the name and bearing a specimen signature of each individual who shall be authorized to sign, in such Person's name and on such Person's behalf, each of the Loan Documents to which it is a party, to make application for the Loans (in the case of the Borrower and the Canadian Borrower), and to give notices and to take other action on such Person's behalf under the Loan Documents to which such Person is a party. Section 9.9. SECURITY DOCUMENTS. The Security Documents shall be effective to create in favor of the Administrative Agent a legal, valid and enforceable first (except for liens permitted under Section 12.2 hereof and entitled to priority under applicable law) security interest in and lien upon the Collateral. All filings, recordings, deliveries of instruments and other actions necessary or desirable in the opinion of the Administrative Agent to protect and preserve such security interests shall have been duly effected. The Administrative Agent shall have received evidence thereof in form and substance satisfactory to the Administrative Agent. Section 9.10. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Administrative Agent shall have received from each of the Borrower and each of its Subsidiaries a completed and fully executed Perfection Certificate and the results of UCC searches and applicable Canadian lien searches with respect to the Collateral, indicating no liens other than Permitted Liens and otherwise in form and substance reasonably satisfactory to the Administrative Agent. Section 9.11. BALANCE SHEET; COMPLIANCE CERTIFICATE; BORROWING BASE CERTIFICATE. The Borrower shall have delivered to the Administrative Agent, in each case, in form and substance satisfactory to the Administrative Agent, dated as of the Closing Date and based on the most recent month-end financial statements available to the Borrower, which in no event shall be earlier than the fiscal month ending June 30, 1997 (a) the pro forma consolidated closing balance sheet of the Borrower and its Subsidiaries, after giving effect to the ACD Acquisition, the financing contemplated hereby and the issuance of the Senior Notes; (b) a Compliance Certificate; and (c) a Borrowing Base Certificate demonstrating the Borrowing Base Amount as of such date. Section 9.12. SENIOR NOTES. The Borrower shall have received the proceeds from the issuance of the Senior Notes, in an aggregate amount of at least $110,000,000 and not more than $150,000,000, pursuant to such documents and instruments as shall be satisfactory, in form and substance, to the Administrative Agent. Section 9.13. OTHER INDEBTEDNESS. The terms and conditions of any Indebtedness (including, without limitation, maturities, interest rates, prepayment and redemption requirements, covenants, defaults, remedies, security provisions and subordination provisions) of the Borrower and its Subsidiaries shall be satisfactory to the Administrative Agent in all respects, and the Administrative Agent shall be satisfied that neither the Borrower nor its Subsidiaries are subject to contractual or other restrictions that would be violated by the ACD Acquisition or the 78 -69- transactions contemplated hereby, including the granting of security interests and guarantees and payment of dividends by Subsidiaries. Section 9.14. CONCERNING THE ACD ACQUISITION. (a) The ACD Acquisition shall have been consummated for an aggregate purchase price not to exceed $114,500,000, as adjusted pursuant to Sections 1.4 and 1.5 of the Acquisition Agreement referred to in the definition of "ACD Acquisition Documents", in accordance with applicable law, pursuant to the ACD Acquisition Documents and on such terms and conditions as shall have been disclosed to, and approved by, the Administrative Agent. (b) The Borrower shall have provided the Banks with a copy, certified to be true, correct and complete of each of the ACD Acquisition Documents, and such ACD Acquisition Documents shall be in form and substance satisfactory to the Administrative Agent and no provision thereof shall have been amended, supplemented, waived or otherwise modified without the consent of the Administrative Agent. Section 9.15. SATISFACTORY COMPLETION OF DUE DILIGENCE; ETC. (a) The Administrative Agent shall have completed and be satisfied in all respects with its due diligence investigation of the Borrower and its Subsidiaries, including, without limitation, the Administrative Agent's review and satisfaction with (i) all management industry customer and supplier checkings, (ii) all accounting due diligence, (iii) all liabilities assumed or created in connection with the ACD Acquisition (including, without limitation, assumed worker's compensation, pension and product liabilities of ACD), and (iv) all materials prepared by or for the Borrower. The Administrative Agent shall be satisfied that the written materials furnished to the Administrative Agent and the Arranger for their review do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading. (b) The Administrative Agent shall have received appraisals from commercial finance examiners satisfactory to the Administrative Agent, in form and substance satisfactory to the Administrative Agent, with respect to certain of the Collateral and environmental reports with respect to any real property owned by the Borrower or its Subsidiaries. (c) The Administrative Agent shall be satisfied with the adequacy and condition of the assets of the Borrower and its Subsidiaries, including without limitation, the assets to be acquired in the ACD Acquisition. Section 9.16. CAPITAL STRUCTURE. The Administrative Agent shall be satisfied in all respects with the financial condition, capital structure (including, without limitation, amounts of senior and subordinated debt and equity investments), corporate structure, assets and liabilities of the Borrower and its Subsidiaries, after giving effect to the ACD Acquisition, including, without limitation, the continued effectiveness of the Subordinated Debt. 79 -70- Section 9.17. PROJECTIONS. The Administrative Agent shall be satisfied that the financial forecast of revenues and EBITDA for the Borrower, after giving effect to the ACD Acquisition, as presented in the Allied Holdings, Inc. Merger and Acquisition Model prepared by the Borrower, dated August 6, 1997 (the "Projections") are based on reasonable assumptions and are derived from financial information which is substantially correct. The Administrative Agent shall be satisfied that the Projections do not contain any untrue statement of a material nature or omit to state a material fact necessary in order to make the statements contained therein not misleading. The Administrative Agent shall be satisfied that there has occurred no material adverse change in the financial prospects of the Borrower and its Subsidiaries, after giving effect to the ACD Acquisition, from that contained in the Projections. Section 9.18. NO MATERIAL ADVERSE CHANGE. The Administrative Agent shall be satisfied that there shall have occurred no material adverse change in the business, operations, assets, properties or condition of the Borrower or its Subsidiaries or the business acquired pursuant to the ACD Acquisition since the Balance Sheet Date. Section 9.19. NO LITIGATION. No litigation, inquiry, injunction or restraining order shall be pending, entered or threatened that, in the reasonable opinion of the Administrative Agent, could reasonably be expected to have a material adverse effect on (i) the transactions contemplated hereby or the ACD Acquisition, (ii) the business, assets, liabilities (actual or contingent) operations, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries or ACD, (iii) the ability of the Borrower and its Subsidiaries to perform their obligations under the Loan Documents, (iv) the rights and remedies of the Administrative Agent and the Banks under the Loan Documents, or (v) the perfection or priority of any security interests granted to the Administrative Agent under the Loan Documents. Section 9.20. CAPITAL MARKETS. The Administrative Agent shall be satisfied that a clear market exists for the syndication of the financing contemplated hereby and that there shall have occurred no material adverse change in the syndication or capital markets or the regulations or policies affecting the Borrower, its Subsidiaries, the Administrative Agent, the Arranger or the Banks. Section 9.21. CONTRACTS. The Administrative Agent shall be satisfied with its review of all material contracts of the Borrower and its Subsidiaries, including without limitation, labor agreements and customer contracts (including, without limitation, the contracts between the Borrower and its Subsidiaries and General Motors Corporation). The Administrative Agent shall be satisfied that there shall exist no default under any material contract or agreement of the Borrower or its Subsidiaries or ACD. Section 9.22. CONSENTS AND APPROVALS. All governmental and third-party approvals (including landlords' and other consents) necessary or advisable in connection with the ACD Acquisition, the financings contemplated hereby and the continuing operations of the Borrower and its Subsidiaries shall have been obtained and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose materially adverse conditions on the Borrower and its Subsidiaries or the ACD Acquisition. 80 -71- Section 9.23. OTHER DOCUMENTATION. All other documentation, including any tax sharing agreements or other financing arrangements of the Borrower and its Subsidiaries, shall be reasonably satisfactory in form and substance to the Banks. Section 9.24. SOLVENCY CERTIFICATE. The Administrative Agent shall have received an officer's certificate of the Borrower dated as of the Closing Date as to the solvency of the Borrower and its Subsidiaries following the consummation of the ACD Acquisition and the transactions contemplated herein, substantially in the form attached hereto as Exhibit K. Section 9.25. PAYOFF ARRANGEMENTS. The Administrative Agent shall have received a payoff letter, in form and substance satisfactory to the Administrative Agent, with respect to the existing credit facility of the Borrower. Section 10. CONDITIONS OF SUBSEQUENT BORROWINGS. The obligations of the Banks to make any Revolving Credit Loans, the Swing Line Banks to make any Swing Line Loans, the Letter of Credit Bank to issue, extend or renew any Letters of Credit pursuant to Section 3 hereof, and the Canadian Banks to issue, purchase or accept any Bankers' Acceptances subsequent to the Closing Date are subject to the following conditions precedent: Section 10.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties contained in Section 8 and otherwise made by the Borrower or any of its Subsidiaries in writing in connection with the transactions contemplated by this Agreement subsequent to the date hereof shall have been correct in all material respects as of the date on which made and shall also be correct in all material respects at and as of the date of such Borrowing with the same effect as if made at and as of such time, except to the extent that the facts upon which such representations and warranties are based may have changed in the ordinary course of business or as a result of transactions permitted or contemplated hereby. Section 10.2. PERFORMANCE; NO DEFAULT. The Borrower and each of its Subsidiaries shall have performed and complied in all material respects with all of the terms and conditions herein required to be performed or complied with by them prior to or at the time of such Borrowing and at the time of such Borrowing there shall exist no Default or Event of Default or condition which would, with either or both the giving of notice or the lapse of time, result in a Default or an Event of Default upon consummation of such Borrowing, or otherwise. Section 11. AFFIRMATIVE COVENANTS. The Borrower and the Canadian Borrower hereby covenant and agree that, so long as any Domestic Commitment or Canadian Commitment is in effect, any Notes, Letters of Credit or Bankers' Acceptances are outstanding, any amounts are owing pursuant to this Agreement, the Swing Line Banks have any obligation to make any Swing Line Loan, the Letter of Credit Bank has any obligation to issue, extend or renew any Letter of Credit, or the Canadian Banks have any obligation to issue, purchase or accept any Bankers' Acceptance, they will and will cause each of their Subsidiaries to: 81 -72- Section 11.1. PUNCTUAL PAYMENT. Duly and punctually pay or cause to be paid the principal and interest on the Loans, the Notes, the Bankers' Acceptances, the Commitment Fee, the Letter of Credit Fee, the Fronting Fee, the Administrative Agent's Fee and all other amounts from time to time owing hereunder, all in accordance with the terms of this Agreement, the Notes and the other Loan Documents. Section 11.2. MAINTENANCE OF OFFICE. Maintain its chief executive office and principal place of business at the location listed opposite such Person's name on Schedule 8.12 attached hereto, unless it shall have (a) given the Administrative Agent at least 30 days' prior written notice of such change of chief executive office, and (b) filed in all necessary jurisdictions such UCC-3 financing statements or other documents as may be necessary to continue without impairment or interruption the perfection and priority of the liens on the Collateral. The Borrower and each of its Subsidiaries will retain its present name unless it shall have complied with the provisions of clauses (a) and (b) of the immediately preceding sentence. Section 11.3. RECORDS AND ACCOUNTS. Keep true individual records and books of account for each of the Borrower and its Subsidiaries, together with worksheets to consolidate such records and books of account, in which full, true and correct entries will be made in accordance with Generally Accepted Accounting Principles, and maintain adequate accounts and reserves for all taxes (including income taxes), all depreciation, depletion, obsolescence and amortization of its properties and the properties of its Subsidiaries, all contingencies, and all other reserves. Section 11.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. Furnish to the Banks: (a) As soon as practicable and, in any event, within one hundred and twenty (120) days after the end of each fiscal year of the Borrower, (i) the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, each setting forth in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with Generally Accepted Accounting Principles, and accompanied by a report and unqualified opinion of the Borrower's Independent Accountants (who shall be reasonably satisfactory to the Banks), which report and opinion shall have been prepared in accordance with generally accepted auditing standards and (ii) the consolidating balance sheets of the Borrower and each of its Subsidiaries as at the end of such fiscal year, and the consolidating statements of income and cash flows of the Borrower and each of its Subsidiaries for the fiscal year then ended, in each case as reflected on the unaudited worksheets prepared by the Borrower in support of the consolidated financial statements delivered to the Banks pursuant to clause (i) hereof. In addition, the Borrower will obtain from such Independent Accountants and deliver to the Banks within said period of 120 days the certified statement of such Independent Accountants that they have read a copy of this Agreement and that, in making the examination necessary for said certification, performing activities within the normal scope of their audit and without further inquiry, they have obtained no knowledge of any Default then existing by the Borrower in the fulfillment of any of the terms, covenants, provisions or conditions hereof (insofar as the same relate to financial matters), the Notes, or, if such accountants shall have obtained knowledge of any then existing Default, they shall disclose in 82 -73- such statement any such Default; provided, that such accountants shall not be liable to the Banks for failure to obtain knowledge of any Default. (b) As soon as practicable and, in any event, within forty-five (45) days after the end of each of the first three fiscal quarters in each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the portion of the fiscal year then ended, each in reasonable detail, prepared in accordance with Generally Accepted Accounting Principles consistently applied, except for provisions for footnotes and subject to year-ended audit adjustment and certified by an Officer's Certificate of the Borrower. (c) Promptly upon receipt thereof, copies of all management letters of substance and other reports of substance which are submitted to the Borrower by its Independent Accountants in connection with any annual or interim audit of the books of the Borrower made by such accountants. (d) As soon as practicable but, in any event, within ten (10) Business Days after the issuance thereof, copies of such other financial statements and reports as the Borrower shall send to its stockholders generally and copies of all regular and periodic reports which the Borrower may be required to file with the Securities and Exchange Commission or any similar or corresponding governmental commission, department or agency substituted therefor, and copies of all regular and periodic reports which the Borrower or any of its Subsidiaries may be required to file with the Interstate Commerce Commission or any similar or corresponding federal governmental commission, department, board, bureau, or agency substituted therefor. (e) As soon as practicable and, in any event, within forty-five (45) days after the end of each of the first three fiscal quarters in each fiscal year of the Borrower, and within one hundred and twenty (120) days after the end of the fourth fiscal quarter in each fiscal year of the Borrower, a certificate substantially in the form of Exhibit F attached hereto (a "Compliance Certificate") from the Borrower as at the end of such fiscal quarter and, as soon as practicable and, in any event, within twenty (20) days of the end of each calendar month, a certificate substantially in the form of Exhibit G attached hereto showing the Borrowing Base Amount and the other information set forth therein as at the end of the immediately preceding month (the "Borrowing Base Certificate"); provided, that after delivery of the Borrowing Base Certificate for the month ending March 31, 1998, the Borrower may deliver Borrowing Base Certificates on a fiscal quarterly basis within twenty (20) days of the end of each fiscal quarter but provided however that if, at any time during any fiscal quarter, the sum of the aggregate principal amount of the Domestic Revolving Credit Loans outstanding plus the aggregate principal amount of the Domestic Swing Line Loans outstanding plus the Dollar Equivalent of the aggregate principal amount of the Canadian Swing Line Loans outstanding plus the Dollar Equivalent of the aggregate principal amount of the Canadian Revolving Credit Loans outstanding plus the Dollar Equivalent of the aggregate face amount of Bankers' Acceptances then outstanding plus the aggregate Maximum Drawing Amount of all Letters of Credit outstanding exceeds an amount equal to seventy five percent (75%) of the lesser of (i) the Total Commitment in effect from time 83 -74- to time or (ii) the Borrowing Base Amount then in effect, then the Borrower shall deliver a Borrowing Base Certificate within twenty (20) days of the end of the then-current calendar month. (f) As soon as practicable, and in any event, not later than February 1 of each fiscal year of the Borrower, beginning with the 1999 fiscal year (except if such disclosure is prohibited under applicable securities laws), the Borrower's annual forecast for such year, prepared on a quarterly or, at the discretion of the Borrower, monthly basis, in form and detail substantially similar to those annual forecasts delivered to the Administrative Agent prior to the Closing Date. (g) Simultaneously with the issuance thereof, copies of all notices, financial statements, reports and other communications of any kind as the Borrower shall send to the holders of the Subordinated Debt and/or the Senior Notes. (h) With reasonable promptness, such other data as the Banks may reasonably request. Section 11.5. BUSINESS AND LEGAL EXISTENCE. The Borrower will, and will cause each of its Subsidiaries to, keep in full force and effect its legal existence (except for mergers and other transactions permitted by Section 12.5 hereof) and all rights, licenses, leases and franchises reasonably necessary to the conduct of their businesses. Section 11.6. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS. The Borrower will, and will cause each of its Subsidiaries to, comply, in all material respects, with (i) the applicable laws and regulations wherever its business is conducted, including all Environmental Laws, (ii) the provisions of its charter documents and by-laws, and, in the case of Allied Systems, the Partnership Agreement and Partnership Certificate, (iii) all agreements and instruments by which it or any of its properties may be bound and (iv) all applicable laws, regulations, decrees, orders, and judgments. If any authorization, consent, approval, permit or license from any officer, agency or instrumentality of any government shall become necessary or required in order that the Borrower or any of its Subsidiaries may fulfill any of its obligations hereunder or any of the other Loan Documents to which the Borrower or such Subsidiary is a party, the Borrower will, or (as the case may be) will cause such Subsidiary to, immediately take or cause to be taken all reasonably steps within the power of the Borrower or such Subsidiary to obtain such authorization, consent, approval, permit or license and furnish the Administrative Agent and the Banks with evidence thereof. Section 11.7. PAYMENT OF TAXES. Promptly pay and discharge all lawful state, provincial and federal taxes, assessments and governmental charges or levies imposed upon them or upon their income or profit or upon any property, real, personal or mixed, belonging to them; provided that the Borrower and its Subsidiaries shall not be required to pay any such tax, assessment, charge or levy if the same shall not at the time be due and payable or can be paid thereafter without penalty or if the validity thereof shall currently be contested in good faith by appropriate proceedings and if the Borrower or such Subsidiaries shall have set aside on their books reserves deemed by them reasonably adequate with respect to such tax, assessment, charge or levy. 84 -75- Section 11.8. MAINTENANCE OF PROPERTY. Keep such Person's Motor Vehicle Equipment and other properties material to the operation of such Person's business in such condition and repair as is customary in such Person's industry and historical practices, and make all needful and proper repairs, replacements, additions and improvements thereto as are necessary, in the reasonable business judgment of such Person's officers, for the conduct of such Person's business, reasonable wear and tear excepted. Section 11.9. INSURANCE. Maintain or cause to be maintained insurance in accordance with historical practices (which may include reasonable self-insurance for property damage) protecting the Borrower and its Subsidiaries with respect to (a) fire and extended coverage, and (b) liability for bodily injury and property damage resulting from operation of Motor Vehicle Equipment and with respect to real property owned or leased by the Borrower or any of its Subsidiaries, substantially as listed and described on Schedule 8.24 attached hereto; provided, that the Borrower and its Subsidiaries may, in their reasonable discretion and consistent with past practices, change the insurances listed on Schedule 8.24 in a manner not having a material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries, considered as a whole, or the Borrower, considered individually, or on the Borrower's or any of its Subsidiaries' ability to perform its obligations under the Loan Documents to which such Person is a party. In the event that any of such insurance coverages or policies shall be changed, the Borrower shall, together with the Compliance Certificate relating to the fiscal quarter in which such change occurs, deliver to the Administrative Agent an updated Schedule 8.24. No policy of insurance shall be terminated or cancelled without 30 days' prior written notice to the Administrative Agent. Section 11.10. INSPECTION OF PROPERTIES AND BOOKS. Permit the Banks, the Administrative Agent and any designated representatives to visit and inspect any of the properties of the Borrower and its Subsidiaries to examine the books of account (and to make copies thereof and extracts therefrom), and to discuss the affairs, finances and accounts of the Borrower and its Subsidiaries with, and to be advised as to the same by, such Person's officers, all at such reasonable times and intervals as any Bank or the Administrative Agent may reasonably request. Section 11.11. TITLE AND REGISTRATION. Cause all Motor Vehicle Equipment, now owned or hereafter acquired by the Borrower or any of its Subsidiaries, which, under applicable law, is required to be registered, to be properly registered in the name of such Person and cause all Motor Vehicle Equipment, now owned or hereafter acquired by the Borrower or any of its Subsidiaries, the ownership of which, under applicable law, is evidenced by a certificate of title, to be properly titled in the name of such Person, with the Administrative Agent's lien noted thereon. Section 11.12. NOTICE OF MATERIAL CLAIMS AND LITIGATION. Notify the Banks within five (5) Business Days after becoming aware of the commencement of any claims (other than claims under a policy of insurance in amounts which, together with any interest accrued thereon, do not exceed the face value of such policy), actions, suits, proceedings or investigations of any kind pending or threatened against the Borrower or any of its Subsidiaries in an amount in excess of 85 -76- $2,500,000, before any court, tribunal or administrative agency or board or which, if adversely determined, might, either in any case or in the aggregate, materially adversely affect the business, assets or financial condition of the Borrower and its Subsidiaries, considered as a whole, or materially impair the right of the Borrower and its Subsidiaries, considered as a whole, to carry on their businesses substantially as now conducted, or which question the validity of this Agreement or the Notes or any other Loan Documents or any action taken or to be taken pursuant hereto or thereto. Section 11.13. FUNDING OF PENSION PLANS. With respect to any Guaranteed Pension Plan, at all times make payment of all contributions required to meet the applicable minimum funding standards set forth in ERISA and applicable Canadian tax and pension requirements, and make all contributions to Multiemployer Plans required pursuant to any applicable collective bargaining agreements. The Borrower will, and will cause each Related Entity to, prevent any "employee pension benefit plan", as such term is defined in Section 3 of ERISA, maintained by the Borrower or any Related Entity from engaging in any "prohibited transaction", as such term is defined in Section 4975 of the Internal Revenue Code of 1986, as amended, which could result in a material liability for the Borrower or any Related Entity. The Borrower will not, nor will any Related Entity, fail to contribute to or terminate any such pension plan in a manner which could result in the imposition of a lien or encumbrance on the assets of the Borrower or any Related Entity pursuant to Section Section 302(f) or 4068 of ERISA. Section 11.14. COPIES OF PENSION PLAN REPORTS. Upon the request of the Administrative Agent, deliver to the Administrative Agent (a) copies of all Forms 5500, Forms 5500-C and/or Forms 5500-R relating to a Guaranteed Pension Plan together with all attachments thereto, including any actuarial statement required to be made under Section 103(d) of ERISA, promptly following the date on which any such form is filed with the Internal Revenue Service and (b) copies of all operating and governing documents pertaining to the Canadian Plans, including without limitation summary plan descriptions, actuarial reports (if any) and annual reports with respect thereto. The Borrower will, and will cause each Related Entity to, deliver to the Administrative Agent copies of any request for waiver from the funding standards or extension of the amortization periods required by Section Section 303 and 304 of ERISA or Section 412 of the Internal Revenue Code of 1986, as amended, promptly following the date on which the request is submitted to the Department of Labor or the Internal Revenue Service, as the case may be. Section 11.15. NOTICE OF TERMINATION. Furnish to the Administrative Agent forthwith a copy of (a) any notice of the termination of a Guaranteed Pension Plan sent by the Borrower or any Related Entity to the Pension Benefit Guaranty Corporation under Section 4041(a) of ERISA, (b) any notice, report, or demand sent or received by the Borrower or any Related Entity under Section Section 4041, 4041A, 4042, 4043, 4062, 4063, 4064, 4066, or 4068 of ERISA or under Subtitle E of Title IV of ERISA, and (c) any notice, report or demand of a corresponding type sent or received by the Borrower, the Canadian Borrower or any of its Subsidiaries under applicable law with respect to any Canadian Plan. The Borrower will, and will cause each Related Entity to, promptly notify the Administrative Agent of any "complete withdrawal", "partial withdrawal" or "reorganization", as such terms are defined in ERISA, with respect to any Multiemployer Plan upon the Borrower's learning of the existence of such event. 86 -77- Section 11.16. PAYMENT OF PENSION BENEFITS. Cause each Guaranteed Pension Plan to pay all benefits guaranteed by the Pension Benefit Guaranty Corporation or any corresponding or similar Canadian Person, when due, except so long as the obligation to pay such benefits is being contested in good faith by appropriate proceedings by the Borrower or any Related Entity. Section 11.17. OPERATING RIGHTS. Keep in full force and effect each of the certificates of convenience and necessity, licenses, permits, operating rights and operating authorizations listed on Schedule 8.19(a) and Schedule 8.19(b) attached hereto (collectively, "Rights"); provided that any of such Rights may be permitted to lapse if (i) it shall no longer be necessary to the conduct of the business of the Borrower and its Subsidiaries or (ii) the Subsidiary owning such Right shall merge into another Subsidiary of the Borrower. In the event of the lapse or termination of any such Right, the Borrower shall promptly deliver to the Administrative Agent and the Banks an updated Schedule 8.19(a) or Schedule 8.19(b), as appropriate. Section 11.18. ENVIRONMENTAL COMPLIANCE. Comply, in all material respects, with all Environmental Laws, including, without limitation, those concerning the establishment and maintenance of underground tanks and other underground storage receptacles. Section 11.19. LINE OF BUSINESS. Continue to engage exclusively in the businesses conducted by them on the Closing Date and in related businesses. The Borrower shall cause Haul Insurance to engage exclusively in the business of providing insurance and related services, substantially all of which insurance and related services shall be provided for the benefit of the Borrower and its other Subsidiaries, except as permitted pursuant to Section 8.13 hereof. Section 11.20. FURTHER ASSURANCES. Cooperate with the Banks and the Agents and execute such further instruments and documents as any Bank or Agent shall reasonably request to carry out to its satisfaction the transactions contemplated by this Agreement and the other Loan Documents. Section 11.21. COMMERCIAL FINANCE EXAMINATIONS. The Borrower shall permit the Administrative Agent's commercial finance examiners to conduct periodic Commercial Finance Examinations (for use by the Administrative Agent and the Banks only) and the Borrower agrees that the Commercial Finance Examinations shall be at the Borrower's expense, provided that prior to a Default or an Event of Default, the Borrower shall not be obligated to pay for more than one Commercial Finance Examination during any twelve month period. Section 11.22. NOTICE OF DEFAULT. The Borrower shall promptly notify the Administrative Agent and each of the Banks in writing of the occurrence of any Default or Event of Default of which the Borrower shall have actual knowledge. Section 12. NEGATIVE COVENANTS. The Borrower and the Canadian Borrower agree that, so long as any Commitment is in effect, any Notes, Letters of Credit or Bankers' Acceptances are outstanding, any amounts are owing pursuant to this Agreement, the Swing Line Banks have any obligation to make any Swing Line Loans, the Letter of Credit Bank has any 87 -78- obligation to issue, extend or renew any Letter of Credit, or the Canadian Banks have any obligation to issue, purchase or accept any Bankers' Acceptance, they will not and will not permit any of their Subsidiaries to: Section 12.1. INDEBTEDNESS. Create, incur, assume, guarantee, agree to purchase, or repurchase or provide funds in respect of, or otherwise become or be or remain liable with respect to, any Indebtedness of any type whatsoever owed to any Person, except: (a) with respect to the Notes and any other Indebtedness incurred pursuant to the terms of this Agreement; (b) Indebtedness and other liabilities incurred by the Borrower or any of its Subsidiaries (other than AH or Haul Insurance) in the ordinary course of business not incurred through (i) the borrowing of money, or (ii) the obtaining of credit, except for credit on an open account basis customarily extended in connection with normal purchases or leases of goods and services; (c) Indebtedness for taxes, assessments, governmental charges or levies to the extent that payment thereof shall not at the time be required to be made in accordance with the provisions of Section 11.6 hereof; (d) Secured Property Indebtedness of the Borrower or any of its Subsidiaries (other than AH or Haul Insurance), provided that the aggregate amount of all such Secured Property Indebtedness shall not exceed $25,000,000 at any time, and provided further, that on the date on which any such Secured Property Indebtedness is incurred, created, assumed or guaranteed by the Borrower or any of its Subsidiaries (other than AH or Haul Insurance), the aggregate amount of such Secured Property Indebtedness (i) in the case of Secured Property Indebtedness secured by Motor Vehicle Equipment, does not exceed 100% and is not less than 80% of the Net Equipment Value of such Motor Vehicle Equipment and (ii) in the case of Secured Property Indebtedness secured by any other property, does not exceed 100% of the appraised value of such property, based on appraisals reasonably satisfactory to the Administrative Agent; (e) Indebtedness in respect of judgments or awards which have been in force for less than the applicable period for taking an appeal so long as execution is not levied thereunder, or in respect of which the Borrower or the appropriate Subsidiary of the Borrower shall at the time in good faith be prosecuting an appeal or proceedings for review and in respect of which a stay or execution shall have been obtained pending such appeal or review; (f) Indebtedness of a Guarantor to the Borrower or to AH and Indebtedness of the Borrower to a Guarantor, in each case, which is evidenced by an Intercompany Note; (g) Indebtedness of the Borrower with respect to interest rate protection arrangements, foreign exchange arrangements, and hedging arrangements relating to fuel costs, provided that all such arrangements are entered into in connection with bona fide hedging operations and not for speculation; 88 -79- (h) Indebtedness of the Borrower and its Subsidiaries (other than AH or Haul Insurance) in respect of Sale-Leasebacks permitted under Section 12.6 hereof; (i) the Subordinated Debt and any replacement or refinancing thereof so long as such replacement or refinancing Indebtedness is unsecured, does not increase the principal amount thereof, does not shorten the tenor thereof, is on terms no more onerous to the Borrower, and is expressly subordinated and made junior to the payment and performance in full of the Obligations pursuant to subordination provisions in form and substance satisfactory to the Administrative Agent; (j) the Senior Notes and any Indebtedness of the Borrower issued in replacement or refinancing thereof so long as such replacement or refinancing Indebtedness is unsecured, is in an aggregate principal amount not greater than, has a maturity not earlier than, and is on terms no more onerous to the Borrower than, the Senior Notes; (k) unsecured Indebtedness of the Borrower and the Guarantors, provided that the aggregate amount of all such unsecured Indebtedness incurred under this Section 12.1(k) shall not at any time exceed $5,000,000; (l) other Indebtedness existing on the Closing Date and described on Schedule 12.1 attached hereto; (m) the Haul Insurance L/Cs, provided that none of the obligations, contingent or otherwise, of Haul Insurance, including without limitation the Haul Insurance L/Cs, shall be guarantied by the Borrower or any of its other Subsidiaries; (n) Indebtedness (which specifically shall not include obligations of the Borrower to pay insurance premiums and related fees) of the Borrower to Haul Insurance in a maximum aggregate amount outstanding at any time not to exceed the amount of the Borrower's equity Investment in Haul Risk at such time; (o) Indebtedness in respect of Operating Leases; (p) Indebtedness of a Foreign Subsidiary (other than Foreign Subsidiaries which are Guarantors) incurred pursuant to a local working capital line of credit; provided that (i) the aggregate outstanding amount of such Indebtedness shall not, at any time, exceed $10,000,000 and (ii) the sum of (x) the aggregate outstanding amount of such Indebtedness plus (y) the aggregate amount of Indebtedness outstanding pursuant to Section 12.1(d) shall not, at any time, exceed $30,000,000; and (q) Indebtedness of the Borrower and the Guarantors consisting of a guaranty of (i) Indebtedness of a Guarantor otherwise permitted under this Section 12.1 or (ii) Indebtedness of a Foreign Subsidiary incurred pursuant to Section 12.1(p); provided that the liability of the Borrower and 89 -80- the Guarantors under such guaranty is limited to the equity interests in such Foreign Subsidiary pledged by the Borrower and the Guarantors pursuant to Section 12.2(j). Section 12.2. LIENS. Create, incur, assume or permit to exist any mortgage, lien, charge, security interest or other encumbrance on any real or personal property or asset, except: (a) liens and security interests granted to secure the Obligations, as contemplated by Section 7 hereof; (b) liens for taxes or assessments or governmental charges or levies if payment shall not at the time be required to be made in accordance with Section 11.6 hereof; (c) liens in respect of pledges or deposits by the Borrower or any of its Subsidiaries (other than AH or Haul Insurance) (i) under workers' compensation laws or similar legislation, (ii) in connection with surety, appeal and similar bonds incidental to the conduct of litigation, fuel purchases, road taxes, road use fees and customs, and (iii) in connection with bid, performance or similar bonds which do not exceed in the aggregate $2,500,000; and mechanics', laborers' and materialmen's and similar liens not then delinquent or which are being contested in good faith by appropriate proceedings; and liens incidental to the conduct of the business of the Borrower and its Subsidiaries (other than AH or Haul Insurance) which were not incurred in connection with the borrowing of money or the obtaining of advances or credit, all of which liens permitted by this paragraph (c) do not in the aggregate materially detract from the value of the property (except for any liens which are being contested in good faith by appropriate proceedings) or materially impair the use thereof in the operation of the business of the Borrower and its Subsidiaries as a whole; (d) liens on Motor Vehicle Equipment or real property financed by Secured Property Indebtedness (to the extent such Secured Property Indebtedness is permitted by Section 12.1(d) hereof); (e) liens in respect of judgments or awards, the Indebtedness with respect to which is permitted by Section 12.1(e) hereof; (f) encumbrances consisting of easements, rights of way, zoning restrictions, restrictions on the use of real property and defects and irregularities in the title thereto, landlord's or lessor's liens under leases to which the Borrower or a Subsidiary of the Borrower (other than AH or Haul Insurance) is a party, and other minor liens or encumbrances on real or personal property of the Borrower and its Subsidiaries (other than AH or Haul Insurance) none of which in the opinion of the Borrower interferes materially with the use of the property affected in the ordinary conduct of the business of the Borrower and its Subsidiaries, which defects do not individually or in the aggregate have a material adverse effect on the business of the Borrower individually or of the Borrower and its Subsidiaries, considered as a whole; (g) other liens existing on the Closing Date and described on Schedule 12.2 attached hereto; 90 -81- (h) liens on cash or cash equivalents of Haul Insurance to secure the Haul Insurance L/Cs granted to the issuers thereof; (i) liens on assets of Foreign Subsidiaries (other than Canadian Subsidiaries) securing Indebtedness permitted pursuant to Section 12.1(p); and (j) liens on the equity interests owned by the Borrower and its Subsidiaries in Foreign Subsidiaries which are pledged to the lenders thereunder to secure the obligations of such Foreign Subsidiaries under Indebtedness permitted pursuant to Section 12.1(p) and the guaranty obligations of the Borrower and the Guarantors under Section 12.1(q); provided that the Borrower and its Subsidiaries shall provide the Administrative Agent with a second priority lien on such equity interests. Section 12.3. INVESTMENTS. Make, or permit to exist, any Investments, directly or indirectly, other than: (a) Marketable direct obligations of the United States of America which mature within one year from the date of issue; (b) Certificates of deposit and bankers' acceptances of any Bank or any Affiliate of any Bank; (c) (i) Certificates of deposit and bankers' acceptances of other domestic banks having total assets in excess of $10,000,000,000 or Fidelity National Bank or such other banks as may be approved by the Banks in their sole discretion, (ii) demand and time deposits in any United States or Canadian bank, provided that the aggregate amount of such demand and time deposits in any one such bank shall not exceed $500,000, and (iii) demand and time deposits by any Foreign Subsidiary in any bank; provided that the aggregate amount of such demand and time deposits shall not, at any time, exceed $2,000,000; (d) Securities commonly known as "commercial paper" issued by any company organized and existing under the laws of the United States of America or any state thereof which at the time of purchase have been rated and the ratings for which are not less than "P-1" if rated by Moody's, and not less than "A-1" if rated by Standard and Poor's; (e) Investments by the Borrower and AH in the Guarantors which are evidenced by Intercompany Notes and Investments by the Borrower and AH in the Guarantors which are equity investments; (f) Investments by the Borrower or any Subsidiary of the Borrower (other than AH or Haul Insurance) consisting of acquisitions permitted by Section 12.5(e) hereof; (g) Investments by the Borrower or any Subsidiary of the Borrower (other than AH or Haul Insurance) to acquire a less than majority interest in another Person, provided that (i) such Person is in the same or a similar line of business as the Borrower or such Subsidiary, as 91 -82- applicable, (ii) no Default or Event of Default has occurred and is continuing or would exist after giving effect thereto, (iii) the aggregate amount of all such Investments made after the Closing Date minus the return of capital thereon shall not exceed (A) if the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, determined on a Pro Forma Basis after giving effect to such Investment, is greater than or equal to 2.75:1.0, $10,000,000 and (B) if the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, determined on a Pro Forma Basis after giving effect to such Investment, is less than 2.75:1.0, $20,000,000, and (iv) if the sum of the aggregate amount of all such Investments made by the Borrower and its Subsidiaries during the period of three hundred sixty-five (365) days ending on the date of such Investment plus the aggregate consideration paid or to be paid (including assumption of liabilities) by the Borrower and its Subsidiaries in connection with acquisitions permitted pursuant to Section 12.5(e) hereof during the period of three hundred sixty-five (365) days ending on the date of such Investment exceeds (A) if the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, determined on a Pro Forma Basis after giving effect to such Investment, is greater than or equal to 2.75:1.0, $15,000,000 and (B) if the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, determined on a Pro Forma Basis after giving effect to such Investment, is less than 2.75:1.0, $30,000,000, then the Majority Banks shall have given their prior written consent to such Investment; (h) Other Investments described on Schedule 12.3 attached hereto; (i) Investments by the Borrower in Haul Insurance in a maximum aggregate amount not to exceed the amount of capital required to be maintained by Haul Insurance under the laws of the Cayman Islands, provided that such Investments shall be limited to the amount of capital required which arises from the insurance risks associated with the Borrower and its Subsidiaries (and not insurance risks relating to third parties); (j) Investments by Haul Insurance in the Borrower corresponding to the Indebtedness permitted by Section 12.1(n) hereof and other Investments by Haul Insurance permitted by the insurance and/or banking laws and regulations of the Cayman Islands incidental to the conduct of its business as an insurance company regulated by the laws of the Cayman Islands; (k) Investments consisting of (i) notes payable to the Borrower or any of its Subsidiaries from an employee of such Person and resulting from the sale to such employee of rolling stock which is used by such employee in the business operations of the Borrower and its Subsidiaries; provided that the aggregate amount of such Investments shall not, at any time, exceed $8,000,000 and (ii) non-cash consideration received by the Borrower or any of its Subsidiaries in connection with a sale of assets permitted pursuant to Section 12.5 hereof; provided that the aggregate amount of such Investments shall not, at any time, exceed $5,000,000; (l) Investments consisting of non-cash consideration received by the Borrower or any of its Subsidiaries in connection with the settlement of any claim or litigation; and 92 -83- (m) Investments in AH by the Borrower; provided that the aggregate amount of such Investments (including any such Investments made prior to the date hereof) shall not, at any time, exceed C$120,000,000. Section 12.4. DISTRIBUTIONS. (a) The Borrower will not make any Distributions except that so long as no Default or Event of Default shall have occurred and be continuing and none would result therefrom the Borrower may make Distributions provided that (i) the Borrower shall have delivered to the Administrative Agent a certificate of the appropriate officer of the Borrower demonstrating on a pro forma basis (based on the most recently ended fiscal quarter for which financial statements have been prepared and including any new issuances of equity since the end of such fiscal quarter) after giving effect to any such Distributions that the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA will be less than 2.75 to 1.00 and (ii) the sum of aggregate amount of all Distributions made during the four fiscal quarters immediately preceding such Distribution plus the amount of such Distribution does not exceed the lesser of (A) thirty-three percent (33%) of the cumulative quarterly Consolidated Net Income for such four fiscal quarters as demonstrated by the Compliance Certificate with respect to such period delivered in accordance with Section 11.4(e) hereof and (B) $1,500,000. (b) None of the Borrower's Subsidiaries shall make any Distributions, except that any Subsidiary of the Borrower may make Distributions to (i) the Borrower or (ii) a Subsidiary of the Borrower which is the owner of the capital stock of the Subsidiary making such Distribution; provided, however, that non-wholly-owned Subsidiaries of the Borrower may make Distributions on a pro rata basis among the holders of its equity interests. (c) The Borrower shall not, and shall not permit any of its Subsidiaries to, create or permit to exist any restriction (other than that contained in Section 12.4(b) hereof) on the ability of any Subsidiary of the Borrower to pay dividends to the Borrower or, in the case of a Subsidiary which is not directly owned by the Borrower, the Subsidiary of the Borrower that is the direct owner of the capital stock of such Subsidiary. Section 12.5. MERGER, CONSOLIDATION OR SALE OF ASSETS; ACQUISITIONS. Become a party to any merger, consolidation or disposition of assets, or agree to effect any asset acquisition (other than acquisitions of capital assets in the ordinary course of business) or stock acquisition, except: (a) (i) mergers, consolidations or amalgamations of any Subsidiary of the Borrower (other than AH, Haul Insurance and each other Non-Guarantor Subsidiary of the Borrower) into another Subsidiary of the Borrower (other than AH, Haul Insurance and each other Non-Guarantor Subsidiary of the Borrower), (ii) mergers of a Non-Guarantor Subsidiary into another Non-Guarantor Subsidiary, (iii) mergers or consolidations involving Subsidiaries of the Borrower with the Borrower pursuant to which the Borrower is the surviving Person, and (iv) the merger of a Non-Guarantor Subsidiary into the Borrower or a Guarantor so long as (A) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (B) the Borrower or such Guarantor is the survivor of such merger; 93 -84- (b) mergers or consolidations involving the Borrower or any Subsidiary of the Borrower (other than AH, Haul Insurance and each other Non-Guarantor Subsidiary of the Borrower), provided that (i) the Borrower or such Subsidiary of the Borrower is the surviving Person and (ii) no Default or Event of Default has occurred and is continuing or would result from such merger or consolidation; (c) sales, leases or rentals of property in the ordinary course of business (which may include sales, leases or rentals of Motor Vehicle Equipment and other equipment or real property to be upgraded, replaced or substituted with other similar or improved property and other such sales, leases, or rentals consistent with past practices of the Borrower and its Subsidiaries) and the sale or other transfer of tangible personal property that, in the reasonable good-faith judgment of the Borrower, has become obsolete or otherwise unusable in the business or operations of the Borrower and its Subsidiaries; (d) sales of assets following the consummation of the ACD Acquisition which are undertaken to eliminate redundancies (which may include sales of terminals which are reasonably deemed to be geographically duplicative by the Borrower); and (e) the acquisition (whether of stock or of substantially all of the assets of a business or business division as a going concern or by means of a merger or consolidation) of a majority interest in any other Person (a "Permitted Acquisition") provided that (i) such other Person is in the same or a similar line of business as the Borrower or the acquiring Subsidiary, as applicable, (ii) no Default or Event of Default has occurred and is continuing or would exist after giving effect thereto, (iii) if the Borrower or the acquiring Subsidiary merges with such other Person, the Borrower or such Subsidiary, as the case may be, is the surviving party, (iv) if such Person is a Domestic Subsidiary or a Canadian Subsidiary, such Person shall deliver a guaranty as provided in Section 7(c) hereof and grant a first-priority perfected lien on and security interest in its assets to the Administrative Agent, for the benefit of the Banks and the Administrative Agent, (v) in connection with any acquisition involving consideration paid or to be paid (including assumption of liabilities) by the Borrower and its Subsidiaries in excess of $1,000,000, the Borrower has delivered to the Administrative Agent Compliance Certificates demonstrating, both immediately prior to and immediately after such acquisition, compliance on a Pro Forma Basis with the covenants set forth in Section Section 12.1, 12.2, 12.8, 12.9 and 12.10 of this Agreement, including compliance with the highest performance ratio (in the case of such covenants requiring a minimum level to be exceeded) or the lowest performance ratio (in the case of such covenants setting forth a maximum level not to be exceeded) applicable during the twelve month period immediately succeeding the date of such Permitted Acquisition, and (vi) if any of (A) the consideration paid or to be paid (including assumption of liabilities) by the Borrower and/or the acquiring Subsidiary, as applicable, in connection with any such acquisition exceeds (I) if the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, determined on a Pro Forma Basis after giving effect to such acquisition, is greater than or equal to 2.75:1.0, $10,000,000 and (II) if the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, determined on a Pro Forma Basis after giving effect to such acquisition, is less than 2.75:1.0, $20,000,000, (B) the aggregate consideration paid or to be paid (including assumption of liabilities) by the Borrower and each acquiring Subsidiary in connection with all such 94 -85- acquisitions during the period of three hundred sixty-five (365) days ending on the date of such acquisition plus the aggregate amount of Investments of the Borrower and its Subsidiaries made during the period of three hundred sixty-five (365) days ending on the date of such acquisition pursuant to Section 12.3(g), exceeds (y) if the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, determined on a Pro Forma Basis after giving effect to such acquisition, is greater than or equal to 2.75:1.0, $15,000,000 and (z) if the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, determined on a Pro Forma Basis after giving effect to such acquisition, is less than 2.75:1.0, $30,000,000, or (C) the aggregate consideration paid or to be paid (including assumption of liabilities) by the Borrower and each acquiring Subsidiary in connection with all such acquisitions of Non-Guarantor Subsidiaries after the Closing Date exceeds $25,000,000 then the Majority Banks shall have given their prior written consent to such acquisition. Section 12.6. NO LEASEBACKS. Become liable, directly or indirectly, as lessee or guarantor or other surety, with respect to any lease of real or personal property, whether now owned or hereafter acquired, (a) which is to be sold or transferred by the Borrower or a Subsidiary of the Borrower to any Person, or (b) which the Borrower or a Subsidiary of the Borrower intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by the Borrower or a Subsidiary of the Borrower to any Person in connection with such lease (a "Sale-Leaseback"), except for (i) Sale-Leasebacks between the Borrower and any Guarantor or between Guarantors and (ii) other Sale-Leasebacks by the Borrower or any of its Subsidiaries (other than AH or Haul Insurance), provided that the aggregate net book value of the assets sold in connection with all such Sale-Leasebacks under this clause (ii) does not exceed $5,000,000 at any time. Section 12.7. LEASES; LEASES WITH AFFILIATES. Except for any transaction (a) disclosed on Schedule 8.18 attached hereto, (b) approved by the majority of the so-called "outside directors" of the Board of Directors of the Borrower, or (c) pursuant to which the payments required by the Borrower or any of its Subsidiaries do not exceed $60,000 in the aggregate, neither the Borrower nor any of its Subsidiaries shall enter into any agreement to rent or lease, as lessee or lessor, any real or personal property with any Affiliate. Section 12.8. CONSOLIDATED CASH FLOW RATIO. Permit, as at the end of each fiscal quarter of the Borrower ending during any period described in the table set forth below, the Consolidated Cash Flow Ratio for the period consisting of such fiscal quarter and the three preceding fiscal quarters to be less than the ratio set forth opposite such period in such table:
Fiscal Quarters Ending Ratio ---------------------- ----- 9/30/97 through 9/30/98 1.35:1.00 12/31/98 through 9/30/99 1.40:1.00 12/31/99 through 9/30/00 1.45:1.00 12/31/00 and thereafter 1.50:1.00
95 -86- Section 12.9. CONSOLIDATED NET WORTH. Permit Consolidated Net Worth at any time to be less than the sum of (a) $49,000,000, plus (b) on a cumulative basis, 50% of the sum of positive Consolidated Net Income for each fiscal year of the Borrower ending after December 31, 1997 with no deductions for losses in any year, plus (c) seventy-five percent (75%) of the proceeds (net of all customary and reasonable related expenses) received after the Balance Sheet Date by the Borrower in connection with any sale by the Borrower of equity securities issued by the Borrower, minus (d) the aggregate amount of (i) non-cash charges and expenses incurred by the Borrower and its Subsidiaries in connection with or resulting from the ACD Acquisition within 365 days of the Closing Date and (ii) severance and other cash expenses incurred by the Borrower and its Subsidiaries in connection with or resulting from the ACD Acquisition within 365 days of the Closing Date and which have been offset by a commensurate reduction in the cash component of the purchase price payable by the Borrower and its Subsidiaries in connection with the ACD Acquisition; provided that (i) such non-cash charges and expenses and such cash expenses shall have been approved by the Administrative Agent and (ii) the amount of non-cash charges and expenses and cash expenses subtracted pursuant to this clause (d) shall not exceed $7,500,000. Section 12.10. FUNDED DEBT TO EBITDA RATIO. Permit, as at the end of each fiscal quarter of the Borrower ending during any period described in the table set forth below, the ratio of Consolidated Funded Indebtedness as at date to Consolidated EBITDA for the period consisting of such fiscal quarter and the three preceding fiscal quarters, to be greater than the ratio set forth opposite such period in such table:
Fiscal Quarters Ending Ratio ---------------------- ----- 12/31/97 through 9/30/99 3.75:1.00 12/31/99 through 9/30/01 3.50:1.00 12/31/01 and thereafter 3.25:1.00
provided that, for purposes of this Section 12.10 only and for the fiscal quarter of the Borrower ending on or about (i) December 31, 1997, there shall be added to Consolidated EBITDA an amount equal to $42,200,000 (representing EBITDA attributed to ACD for the three quarters prior to the Closing Date), (ii) March 31, 1998, there shall be added to Consolidated EBITDA an amount equal to $30,555,000 (representing EBITDA attributed to ACD for the two quarters prior to the Closing Date), and (iii) June 30, 1998, there shall be added to Consolidated EBITDA an amount equal to $11,750,000 (representing EBITDA attributed to ACD for the one quarter prior to the Closing Date). In the event that the Closing Date does not occur on September 30, 1997, the Administrative Agent shall adjust the numbers set forth in the foregoing proviso to reflect the addition or deletion of the appropriate number of days. 96 -87- Section 12.11. CAPITAL EXPENDITURES. If the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA as demonstrated on a Compliance Certificate delivered in accordance with Section 11.4(e) at the end of any fiscal year of the Borrower and its Subsidiaries is equal to or exceeds 2.50 to 1.00, the Borrower shall not and shall not permit any of its Subsidiaries to make Capital Expenditures during such fiscal year that exceed in the aggregate 6.5% of Consolidated Revenues for such fiscal year; provided that (i) to the extent that the full amount of Capital Expenditures permitted hereunder is not expended by the Borrower and its Subsidiaries in such fiscal year, such unexpended portion may be carried over and expended in the immediately following fiscal year only and (ii) such unexpended portion shall be deemed expended last in such immediately following fiscal year. For purposes of calculating the amount of Capital Expenditures permitted under this Section 12.11, there shall be deducted from the actual amount of Capital Expenditures for any fiscal year an amount equal to the greater of (a) $0 and (b) the aggregate amount of Net Cash Proceeds received by the Borrower and its Subsidiaries from the sale of assets pursuant to Section Section 12.5(c) and (d) during such fiscal year and all Capital Expenditures made with insurance or condemnation proceeds used to repair or replace the property damaged, destroyed or taken. If the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA as demonstrated on Compliance Certificates delivered in accordance with Section 11.4(e) at the end of any fiscal year of the Borrower and its Subsidiaries is less than 2.50 to 1.00, then the Borrower and its Subsidiaries shall be permitted to make Capital Expenditures during such fiscal year without limitation, subject to the other provisions of this Agreement, provided that no such permitted Capital Expenditures may be carried over to any other fiscal year. Section 12.12. TRANSACTIONS WITH AFFILIATES. Except for any transaction (a) otherwise permitted by the terms of Section 8.18 hereof, (b) approved by the majority of the so-called "outside directors" of the Board of Directors of the Borrower or (c) pursuant to which the payments required by the Borrower or any of its Subsidiaries do not exceed $60,000 in the aggregate, the Borrower shall not and shall not permit any of its Subsidiaries to engage in any transaction with any Affiliate (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such Affiliate or, to the knowledge of the Borrower, any corporation, partnership, trust or other entity in which any such Affiliate has a substantial interest or is an officer, director, trustee or partner on terms more favorable to such Person than would have been obtainable on an arm's-length basis in the ordinary course of business. Section 12.13. SUBORDINATED DEBT. The Borrower will not effect or permit any change in or amendment to any of the Subordinated Debt Documents, give any notice of redemption or prepayment or offer to repurchase, or make any payment of principal of or interest on or in redemption, retirement or repurchase of any of the Subordinated Debt, provided that (i) so long as no Default or Event of Default then exists or would result from such payment, the Borrower may make regularly scheduled interest payments required by the terms of the Subordinated Debt Documents, (ii) the Borrower may repay the Subordinated Debt with the proceeds of replacement or refinancing subordinated Indebtedness incurred pursuant to Section 12.1(i) hereof, and (iii) the Borrower may repay the Subordinated Debt with the proceeds of the sale of equity securities to the extent (A) such proceeds are not required to be applied to the repayment of the Obligations 97 -88- pursuant to Section 2.9(d) and (B) such repayment is made within three hundred sixty-five (365) days of such sale of equity securities. It is understood by the parties hereto that, in connection with any repayment, prepayment, redemption, retirement, or repurchase of the Subordinated Debt pursuant to this Section 12.13, all principal, interest (other than interest accrued or incurred in the ordinary course), premium and other costs relating thereto (including, without limitation, any prepayment penalty, make-whole amount and the like) shall be paid from the proceeds of such refinancing Indebtedness or sale of equity securities. Section 12.14. SENIOR NOTES. The Borrower will not effect or permit any change in or amendment to any of the Senior Note Indenture or the Senior Notes, give any notice of redemption or prepayment or offer to repurchase, or make any payment of principal of or interest on or in redemption, retirement or repurchase of any of the Senior Notes, provided that so long as no Default or Event of Default then exists or would result from such payment, (i) the Borrower may make regularly scheduled payments required by the terms of the Senior Notes and (ii) the Borrower may repay the Senior Notes with the proceeds of (A) the sale by it or any of its Subsidiaries of any shares of their stock, options or warrants for the purchase of stock or other equity or equity instruments to the extent (I) such proceeds are not required to be applied to repay the Obligations pursuant to Section 2.9(d) hereof and (II) such repayment is made within three hundred sixty-five (365) days of such sale of equity securities, and (B) the issuance of any Indebtedness permitted pursuant to Section 12.1(j). It is understood by the parties hereto that, in connection with any repayment, prepayment, redemption, retirement, or repurchase of the Senior Notes pursuant to this Section 12.14(a), all principal, interest (other than interest accrued or incurred in the ordinary course), premium and other costs relating thereto (including, without limitation, any prepayment penalty, make-whole amount and the like) shall be paid from the proceeds of such refinancing Indebtedness or sale of equity securities. Section 12.15. ACD ACQUISITION DOCUMENTS. The Borrower will not effect or permit any material change in or material amendment to any of the ACD Acquisition Documents without the prior written consent of the Administrative Agent. Section 12.16. NEGATIVE PLEDGES. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any agreement or instrument which prohibits the Borrower or any of its Subsidiaries from granting any security interest in or any mortgage, pledge or lien on or from otherwise encumbering any of its property or other assets to secure the obligations of the Borrower or any Guarantor under this Agreement or any Guaranty or any amendment, restatement, modification, supplement, refinancing or replacement of this Agreement or any Guaranty, except, in each case, with respect to the assets of any Foreign Subsidiary with respect to which the security interest granted herein is prohibited pursuant to the terms of the Indebtedness of a Foreign Subsidiary permitted pursuant to Section 12.1(p). 98 -89- Section 13. EVENTS OF DEFAULT; ACCELERATION; ETC. Section 13.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following events ("Events of Default" or, if notice or lapse of time or notice and lapse of time is required, then, prior to such notice and/or lapse of time, "Defaults") shall occur: (a) if the Borrower or the Canadian Borrower shall default in the payment of any (i) principal hereunder or under any Note when the same shall become due and payable, whether at maturity or at any date fixed for payment or prepayment or by declaration as a result of a Default or Event of Default or otherwise or (ii) interest or other amounts due hereunder or any Note within two (2) Business Days of when the same shall become due and payable, whether at maturity or at any date fixed for payment or prepayment or by declaration as a result of a Default or Event of Default or otherwise; or (b) if the Borrower shall default in the performance of or compliance with the covenants set forth in Section 12 hereof; or (c) if the Borrower shall default in the payment or performance of or compliance with any other liability, obligation or covenant hereunder other than those specifically referenced in this Section 13.1 and such default shall not have been remedied within 20 days after written notice thereof shall have been given to the Borrower by the Administrative Agent (which notice the Administrative Agent shall give to the Borrower upon the written instruction of the Majority Banks); or (d) if any representation or warranty made by the Borrower or any of its Subsidiaries herein or in any of the other Loan Documents or in any certificate or other writing at any time delivered to the Banks pursuant hereto or any of the other Loan Documents shall prove to have been false or incorrect in any material respect on the date as of which made; or (e) if the Borrower or any of its Subsidiaries shall default (as principal or guarantor or other surety) in the payment of any principal of or premium, if any, or interest on any Indebtedness for borrowed money or in respect of capitalized leases equal to or in excess of $2,500,000 in the aggregate, or with respect to the performance of any of the terms of any evidence of such Indebtedness or any agreement relating thereto, such default shall continue for longer than the applicable period of grace, if any, specified therein and no waiver shall be in effect with respect thereto; or (f) if the Borrower or any of its Subsidiaries shall admit in writing its inability to pay its debts or make an assignment for the benefit of creditors, or if any order for relief is entered in respect of the Borrower or any of its Subsidiaries under any bankruptcy, reorganization, arrangements, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect; or 99 -90- (g) if any order is entered in any proceeding by or against the Borrower or any of its Subsidiaries decreeing or permitting the dissolution or split-up of such Person or the winding up of such Person's affairs; or (h) (i) if any petition or application for the appointment of a liquidator or receiver or custodian (or similar official) of the Borrower or any of its Subsidiaries or of any substantial part of such Person's assets is filed by such Person; or any such petition or application is filed against the Borrower or any of its Subsidiaries and such Person approves thereof, consents thereto or acquiesces therein or such petition or application remains undismissed for a period of sixty (60) days, or (ii) if any proceeding or case relating to the Borrower or any of its Subsidiaries under any bankruptcy, reorganization, arrangements, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction is commenced by such Person; or if any such proceeding or case is commenced against the Borrower or any of its Subsidiaries and such Person approves thereof, consents thereto or acquiesces therein or such proceeding or case remains undismissed for a period of sixty (60) days; or (i) if there shall remain in force, undischarged, unsatisfied and unstayed, for more than sixty (60) days, any final judgment against the Borrower or any of its Subsidiaries which, together with such other outstanding final judgments against the Borrower and its Subsidiaries, exceeds in the aggregate $500,000; or (j) if any judicial lien or attachment on the property of the Borrower or any of its Subsidiaries in an amount of $500,000 or greater shall not be released, discharged, bonded or provided for to the satisfaction of the Banks within sixty (60) days after such lien or attachment shall have come into existence; or (k) if there shall occur and be continuing beyond any applicable grace period any default under any other Loan Document, or if any of such documents shall cease to be in full force and effect; or (l) if the Borrower shall at any time own less than 100% of the capital stock of any of its Subsidiaries which are listed on Schedule 8.16(a) attached hereto; or (m) if the Management Group , as adjusted pursuant to any stock split, stock dividend or recapitalization or reclassification of the capital of the Borrower; or (n) if any person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under said Act) of either (i) thirty-five percent (35%) or more of the outstanding shares of common stock of the Borrower or (ii) a greater percentage of the outstanding shares of common stock of the Borrower than is then owned by the Management Group; or, during any period of twelve consecutive calendar months, individuals who were directors of the Borrower on the first day of such period shall cease to constitute a majority of the board of directors of the Borrower; or 100 -91- (o) if at any time AH ceases to be treated as a non-resident owned investment corporation for Canadian income tax purposes unless AH becomes a Guarantor hereunder within thirty (30) days of such cessation and no other Default or Event of Default shall have occurred and be continuing; or (p) if any default or event of default under the Subordinated Debt Documents or the Senior Notes shall have occurred and be continuing, or if the Subordinated Debt or the Senior Notes shall be prepaid, redeemed, repurchased or defeased in whole or in part, or a notice of redemption, repurchase or defeasance is required to be sent thereunder; or (q) if a "Change in Control" under and as defined in the Subordinated Debt Documents shall have occurred, or if a "Control Change Notice" or "Declaration Notice" under and as defined in the Subordinated Debt Documents shall have been given; or (r) if a "Change of Control" under and as defined in the Senior Notes shall have occurred or if a notice of a "Change of Control Offer" under, and as defined in the Senior Notes shall have been given; or (s) if any representation or warranty made by the Borrower or any of its Subsidiaries or Ryder System, Inc. or any of its affiliates in any of the ACD Acquisition Documents or in any certificate or other writing at any time delivered pursuant thereto shall prove to have been false or incorrect on the date as of which made where such failure to be true and correct could reasonably be expected to have a material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries, considered as a whole, or the Borrower, considered individually, or on the Borrower's and its Subsidiaries', considered as a whole, ability to perform their respective obligations under the Loan Documents; or (t) if the Borrower or any Related Entity incurs any unsatisfied liability, as finally determined, to the Pension Benefit Guaranty Corporation or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an aggregate amount exceeding $2,500,000, or the Borrower or any such Person is finally assessed (beyond any appeal or cure period) withdrawal liability pursuant to Title IV of ERISA by a Multiemployer Plan requiring aggregate annual payments exceeding $2,500,000, or if either of the following occurs with respect to a Guaranteed Pension Plan: (i) a reportable event within the meaning of Section 4043 of ERISA or (ii) a failure to make a required installment or other payment (within the meaning of Section 302(f)(1) of ERISA), in each case, which has (A) resulted in final, non-appealable liability of the Borrower or any of its Subsidiaries to the Pension Benefit Guaranty Corporation or such Guaranteed Pension Plan in an amount exceeding $2,500,000 or (B) has caused the termination of such Guaranteed Pension Plan by the Pension Benefit Guaranty Corporation, the appointment by the appropriate United States District Court of a trustee to administer such Guaranteed Pension Plan or the imposition of a lien in favor of such Guaranteed Pension Plan; then, in any such event, so long as the same may be continuing, the Administrative Agent may, and upon request of the Majority Banks, the Administrative Agent shall, by written notice to the 101 -92- Borrower and the Canadian Borrower, declare all amounts owing with respect to this Agreement, the Notes and the other Loan Documents to be, and they shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; provided that in the event of any Event of Default specified in paragraphs (f), (g) or (h) of this Section 13.1, all such amounts shall become immediately due and payable automatically and without any requirement of notice from the Administrative Agent. Section 13.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of Default specified in paragraphs (f), (g) or (h) of Section 13.1 shall occur, any unused portion of the credit hereunder shall immediately and automatically terminate and each of the Banks shall be relieved of all further obligations to make Loans to the Borrower or the Canadian Borrower, the Letter of Credit Bank shall be relieved of all further obligations to issue, extend or renew Letters of Credit and the Canadian Banks shall be relieved of all further obligations to issue, purchase and discount Bankers' Acceptances. If any other Event of Default shall have occurred and be continuing, the Administrative Agent may, and at the instruction of the Majority Banks, the Administrative Agent shall, terminate the Total Commitment by written notice to the Borrower and the Canadian Borrower and upon such notice being given such unused portion of the Total Commitment hereunder shall terminate immediately and each of the Banks shall be relieved of all further obligations to make Loans to the Borrower or the Canadian Borrower, the Letter of Credit Bank shall be relieved of all further obligations to issue, extend or renew Letters of Credit and the Canadian Banks shall be relieved of all further obligations to issue, purchase and discount Bankers' Acceptances. No termination of all or any portion of the Total Commitment shall relieve (i) the Borrower or the Canadian Borrower or any Guarantor of any of their Obligations to the Banks or the Agents hereunder or elsewhere or (ii) any Bank from its obligations to the other Banks and the Agents hereunder, including, without limitation, under Section 31 hereof. Section 14. NOTICE AND WAIVERS OF DEFAULT. Section 14.1. NOTICE OF DEFAULT. If any Person shall give any notice or take any other action in respect of a claimed default (whether or not constituting an Event of Default) under this Agreement, the Notes or under any other note, evidence of indebtedness, indenture or other obligation for borrowed money as to which the Borrower or any of its Subsidiaries is a party or obligor, whether as principal or surety, the Borrower shall forthwith give written notice thereof to the Banks, describing the notice or action and the nature of the claimed default. Section 14.2. WAIVERS OF DEFAULT. Any Default or Event of Default specified in Section 13.1 hereof may be waived as provided in Section 24 hereof. Any Default or Event of Default so waived shall be deemed to have been cured and not to be continuing during the period for which such waiver is applicable; but no such waiver shall extend to or affect any subsequent like default or impair any rights arising therefrom. 102 -93- Section 15. REMEDIES ON DEFAULT, ETC. Section 15.1. RIGHTS OF BANKS. In case any one or more of the Events of Default specified in Section 13.1 hereof shall have occurred and be continuing, and whether or not all amounts owing with respect to the Notes have been declared due and payable pursuant to Section 13.1 hereof, each Bank, if owed any amount with respect to the Notes, may proceed to protect and enforce its rights by suit in equity, action at law and/or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement or the Notes including the obtaining of the ex parte appointment of a receiver, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of such Bank. Section 15.2. SETOFF. Regardless of the adequacy of any collateral, during the continuance of any Event of Default, any deposits or other sums credited by or due from any of the Banks to the Borrower or the Canadian Borrower and any securities or other property of the Borrower or the Canadian Borrower in the possession of such Bank may be applied to or set off by such Bank against the payment of Obligations and any and all other liabilities, direct, or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the Borrower and the Canadian Borrower to such Bank. Each of the Banks agrees with each other Bank that (a) if an amount to be set off is to be applied to Indebtedness of the Borrower or the Canadian Borrower to such Bank, other than Indebtedness evidenced by the Note held by such Bank or by this Agreement, such amount shall be applied ratably to such other Indebtedness and to the Indebtedness evidenced by such Note held by such Bank or by this Agreement, and (b) if such Bank shall receive from the Borrower or the Canadian Borrower, whether by voluntary payment, exercise of the right of setoff, counterclaim, cross action, enforcement of the claim evidenced by the Note held by or other Obligations hereunder owed to such Bank by proceedings against the Borrower or the Canadian Borrower at law or in equity or by proof thereof in bankruptcy, reorganization, liquidation, receivership or similar proceedings, or otherwise, and shall retain and apply to the payment of the Note held by, and Obligations hereunder owed to, such Bank any amount in excess of its ratable portion of the payments received by all of the Banks with respect to the Notes held by, and other amounts owed hereunder to, all of the Banks, such Bank will make such disposition and arrangements with the other Banks with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as shall result in each Bank receiving in respect of the Note held by it and other Obligations owed it, its proportionate payment as contemplated by this Agreement; provided that if all or any part of such excess payment is thereafter recovered from such Bank, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest. 15.3. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following the occurrence or during the continuance of any Default or Event of Default, the Administrative Agent, the Canadian Agent or any Bank, as the case may be, receives any monies in connection with the enforcement of any the Security Documents, or otherwise with respect to the realization upon any of the Collateral, such monies shall be distributed for application as follows: 103 -94- (a) First, to the payment of, or (as the case may be) the reimbursement of the Administrative Agent and the Canadian Agent for or in respect of all reasonable costs, expenses, disbursements and losses which shall have been incurred or sustained by such Agent in connection with the collection of such monies by such Agent, for the exercise, protection or enforcement by such Agent of all or any of the rights, remedies, powers and privileges of such Agent under this Agreement or any of the other Loan Documents or in respect of the Collateral or in support of any provision of adequate indemnity to such Agent against any taxes or liens which by law shall have, or may have, priority over the rights of such Agent to such monies; (b) Second, to all other Obligations in respect of the Loans, the Letters of Credit, the Bankers' Acceptances, the Notes and other Obligations arising under this Agreement or the other Loan Documents, in such order or preference as the Majority Banks may determine; provided, however, that (i) distributions shall be made (A) pari passu among Obligations with respect to the Administrative Agent's Fee and all other Obligations and (B) with respect to each type of Obligation owing to the Banks, such as interest, principal, fees and expenses, among the Banks pro rata, and (ii) the Administrative Agent may in its discretion make proper allowance to take into account any Obligations not then due and payable; (c) Third, to the payment and satisfaction of all other Obligations; (d) Fourth, upon payment and satisfaction in full or other provisions for payment in full satisfactory to the Banks and the Agent of all of the Obligations, to the payment of any obligations required to be paid pursuant to Section 9-504(1)(c) of the Uniform Commercial Code; and (e) Fifth, the excess, if any, shall be returned to the Borrower, the Canadian Borrower or to such other Persons as are entitled thereto. 104 -95- Section 16. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION. Section 16.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. The Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower or one or more of its Subsidiaries, in connection with this Credit Agreement or otherwise, by a Section 20 Subsidiary. The Borrower, for itself and each of its Subsidiaries, hereby authorizes (a) such Section 20 Subsidiary to share with each Agent and each Bank any information delivered to such Section 20 Subsidiary by the Borrower or any of its Subsidiaries, and (b) each Agent and each Bank to share with such Section 20 Subsidiary any information delivered to such Agent or such Bank by the Borrower or any of its Subsidiaries pursuant to this Credit Agreement, or in connection with the decision of such Bank to enter into this Credit Agreement; it being understood, in each case, that any such Section 20 Subsidiary receiving such information shall be bound by the confidentiality provisions of this Credit Agreement. Such authorization shall survive the payment and satisfaction in full of all of Obligations. Section 16.2. CONFIDENTIALITY. Each of the Banks and each Agent agrees, on behalf of itself and each of its affiliates, directors, officers, employees and representatives, to use reasonable precautions to keep confidential, in accordance with their customary procedures for handling confidential information of the same nature and in accordance with safe and sound banking practices, any non-public information supplied to it by the Borrower or any of its Subsidiaries pursuant to this Credit Agreement that is identified by such Person as being confidential at the time the same is delivered to the Banks or such Agent, provided that nothing herein shall limit the disclosure of any such information (a) after such information shall have become public other than through a violation of this Section 16, (b) to the extent required by statute, rule, regulation or judicial process, (c) to counsel for any of the Banks or either Agent, (d) to bank examiners or any other regulatory authority having jurisdiction over any Bank or an Agent, or to auditors or accountants, (e) to the Administrative Agent, any Bank or any Section 20 Subsidiary, (f) in connection with any litigation to which any one or more of the Banks, an Agent or any Section 20 Subsidiary is a party, or in connection with the enforcement of rights or remedies hereunder or under any other Loan Document, (g) to a Subsidiary or affiliate of such Bank as provided in Section 16.1 or (h) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant agrees to be bound by the provisions of Section 18.6. Section 16.3. PRIOR NOTIFICATION. Unless specifically prohibited by applicable law or court order, each of the Banks and the Agents shall, prior to disclosure thereof, notify the Borrower of any request for disclosure of any such non-public information by any governmental agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Bank by such governmental agency) or pursuant to legal process. Section 16.4. OTHER. In no event shall any Bank or Agent be obligated or required to return any materials furnished to it or any Section 20 Subsidiary by the Borrower or any of its Subsidiaries. The obligations of each Bank under this Section 16 shall supersede and replace the obligations of such Bank under any confidentiality letter in respect of this financing signed and delivered by such Bank to the Borrower prior to the date hereof and shall be binding upon any assignee of, or 105 -96- purchaser of any participation in, any interest in any of the Loans or Reimbursement Obligations from any Bank. Section 17. THE AGENTS. Section 17.1. AUTHORIZATION. (a) Each Agent is authorized to take such action on behalf of each of the Banks and to exercise all such powers as are hereunder and under any of the other Loan Documents and any related documents delegated to the Agents, together with such powers as are reasonably incident thereto, provided that no duties or responsibilities not expressly assumed herein or therein shall be implied to have been assumed by the Agents. (b) The relationship between the Agents and the Banks is and shall be that of an independent contractor. The use of the term "Administrative Agent" or "Canadian Agent" or "Agents" herein is for convenience only and is used to describe, as a form of convention, the independent contractual relationship between the Agents and each of the Banks. Nothing contained in this Agreement or any of the other Loan Documents shall be construed to create an agency, trust or other fiduciary relationship between either Agent and any of the Banks. (c) As an independent contractor empowered by the Banks to exercise certain rights and perform certain duties and responsibilities hereunder and under the other Loan Documents, the Agents are nevertheless a "representative" of the Banks, as that term is defined in Article 1 of the Uniform Commercial Code, for purposes of actions for the benefit of the Banks and the Agents with respect to all collateral security and guaranties contemplated by the Loan Documents. Such actions include the designation of either Agent as "secured party", "mortgagee", "lienholder" or the like on all financing statements, motor vehicle titles and other documents and instruments, whether recorded or otherwise, relating to the attachment, perfection, priority or enforcement of any security interests, mortgages, liens or deeds of trust in collateral security intended to secure the payment or performance of any of the Obligations, all for the benefit of the Banks and the Agents. Section 17.2. EMPLOYEES AND AGENTS. The Agents may exercise their powers and execute its duties by or through employees or agents and shall be entitled to take, and to rely on, advice of counsel concerning all matters pertaining to its rights and duties under this Agreement and the other Loan Documents. The Agents may utilize the services of such Persons as the Agents in their sole discretion may reasonably determine, and all reasonable fees and expenses of any such Persons shall be paid by the Borrower. Section 17.3. NO LIABILITY. Neither of the Agents nor any of their shareholders, directors, officers or employees nor any other Person assisting them in their duties nor any agent or employee thereof, shall be liable for any waiver, consent or approval given or any action taken, or omitted to be taken, in good faith by it or them hereunder or under any of the other Loan Documents, or in connection herewith or therewith, or be responsible for the consequences of 106 -97- any oversight or error of judgment whatsoever, except that the Agents or such other Person, as the case may be, may be liable for losses due to its willful misconduct or gross negligence. Section 17.4. NO REPRESENTATIONS. (a) Neither Agent shall be responsible for the execution or validity or enforceability of this Agreement, the Notes, the Letters of Credit, the Bankers' Acceptances, any of the other Loan Documents or any instrument at any time constituting, or intended to constitute, collateral security for the Notes, or for the value of any such collateral security or for the validity, enforceability or collectability of any such amounts owing with respect to the Notes, or for any recitals or statements, warranties or representations made herein or in any of the other Loan Documents or in any certificate or instrument hereafter furnished to it by or on behalf of the Borrower or any of its Subsidiaries, or be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or in any instrument at any time constituting, or intended to constitute, collateral security for the Notes or to inspect any of the properties, books or records of the Borrower or any of its Subsidiaries. Neither Agent shall be bound to ascertain whether any notice, consent, waiver or request delivered to it by the Borrower, the Canadian Borrower or any holder of any of the Notes shall have been duly authorized or is true, accurate and complete. Neither Agent has made nor does it now make any representations or warranties, express or implied, nor does it assume any liability to the Banks, with respect to the credit worthiness or financial conditions of the Borrower or any of its Subsidiaries. Each Bank acknowledges that it has, independently and without reliance upon either Agent, the Documentation Agent or any other Bank, and based upon such information and documents as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. (b) For purposes of determining compliance with the conditions set forth in Section 9, each Bank that has executed this Credit Agreement shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document and matter either sent, or made available, by the Administrative Agent to such Bank for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Bank, unless an officer of the Administrative Agent active upon the Borrower's account shall have received notice from such Bank prior to the Closing Date specifying such Bank's objection thereto and such objection shall not have been withdrawn by notice to the Administrative Agent to such effect on or prior to the Closing Date. Section 17.5. PAYMENTS. (a) A payment by the Borrower or the Canadian Borrower to the appropriate Agent hereunder or any of the other Loan Documents for the account of any Bank shall constitute a payment to such Bank. Each Agent agrees promptly to distribute to each Bank such Bank's pro rata share of payments received by such Agent for the account of the Banks except as otherwise expressly provided herein or in any of the other Loan Documents. 107 -98- (b) If in the reasonable opinion of either Agent the distribution of any amount received by it in such capacity hereunder, under the Notes or under any of the other Loan Documents might involve it in liability, it may refrain from making distribution until its right to make distribution shall have been adjudicated by a court of competent jurisdiction. If a court of competent jurisdiction shall adjudge that any amount received and distributed by such Agent is to be repaid, each Person to whom any such distribution shall have been made shall either repay to such Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such court. (c) Notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents, (i) any Bank that (A) fails to make available to the appropriate Agent its pro rata share of any Revolving Credit Loan, or fails to make available to a Swing Line Bank its pro rata share of any Swing Line Loan, or fails to make available to the Letter of Credit Bank its pro rata share of each drawing under any Letter of Credit or (B) fails to comply with the provisions of Section 15 hereof with respect to making dispositions and arrangements with the other Banks, where such Bank's share of any payment received, whether by setoff or otherwise, is in excess of its pro rata share of such payments due and payable to all of the Banks, and (ii) Canadian Bank which fails to purchase and accept Banker's Acceptances in each case as, when and to the full extent required by the provisions of this Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall be deemed a Delinquent Bank until such time as such delinquency is satisfied. A Delinquent Bank shall be deemed to have assigned any and all payments due to it from the Borrower and the Canadian Borrower, whether on account of outstanding Loans, Letters of Credit, interest, fees or otherwise, to the remaining nondelinquent Banks for application to, and reduction of, their respective pro rata shares of all outstanding Loans. The Delinquent Bank hereby authorizes each Agent to distribute such payments to the nondelinquent Banks in proportion to their respective pro rata shares of all outstanding Loans. A Delinquent Bank shall be deemed to have satisfied in full a delinquency when and if, as a result of application of the assigned payments to all outstanding Loans of the nondelinquent Banks, the Banks' respective pro rata shares of all outstanding Loans have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency. Section 17.6. HOLDERS OF NOTES. The Agents may deem and treat the payee of any Note as the absolute owner or purchaser thereof for all purposes hereof until it shall have been furnished in writing with a different name by such payee or by a subsequent holder, assignee or transferee. Section 17.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold harmless the Agents from and against any and all claims, actions and suits (whether groundless or otherwise), losses, damages, costs, expenses (including any expenses for which the Agents have not been reimbursed by the Borrower as required by Section 19 hereof), and liabilities of every nature and character arising out of or related to this Agreement, the Notes, or any of the other Loan Documents or the transactions contemplated or evidenced hereby or thereby, or the Agents' actions taken hereunder or thereunder, except to the extent that any of the same shall be directly caused by such Agent's willful misconduct or gross negligence. 108 -99- Section 17.8. AGENTS AS BANKS; DOCUMENTATION AGENT; CO-AGENTS. In their individual capacity, BKB and the Canadian Bank which shall serve as Canadian Agent shall have the same obligations and the same rights, powers and privileges in respect to their Commitments, the Loans made by it, and, if applicable, Bankers' Acceptances purchased and accepted by it, and as the holder of any of the Notes, as they would have were they not also Agents. None of the Documentation Agent or either Co-Agent shall have any obligation, liability, responsibility or duty under this Agreement other than as applicable to all Banks as such. Section 17.9. RESIGNATION; REMOVAL. Each Agent may resign at any time by giving sixty (60) days' prior written notice thereof to the Banks and the Borrower and each Agent may be removed at any time by the Majority Banks as a result of such Agent's willful misconduct or gross negligence upon thirty (30) days' prior written notice thereof to the Banks, such Agent and the Borrower. Upon any such resignation or removal, the Majority Banks shall have the right to appoint a successor Administrative Agent or Canadian Agent. Unless a Default or Event of Default shall have occurred and be continuing, such successor Administrative Agent or Canadian Agent shall be reasonably acceptable to the Borrower. If, in the case of the resignation of the Administrative Agent or Canadian Agent, no successor Administrative Agent or Canadian Agent shall have been so appointed by the Majority Banks and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent's or Canadian Agent's giving of notice of resignation, then the retiring Administrative Agent or Canadian Agent may, on behalf of the Banks, appoint a successor Administrative Agent or Canadian Agent, which shall be a financial institution having a senior debt rating of not less than A or its equivalent by Standard & Poor's Ratings Group. Upon the acceptance of any appointment as Administrative Agent or Canadian Agent hereunder by a successor Administrative Agent or Canadian Agent, such successor Administrative Agent or Canadian Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent or Canadian Agent, and the retiring or removed Administrative Agent or Canadian Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's or Canadian Agent's resignation or the Administrative Agent's or Canadian Agent's removal, the provisions of this Agreement and the other Loan Documents shall continue in effect for such Agent's benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent or Canadian Agent. Section 17.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank hereby agrees that, upon learning of the existence of a Default or an Event of Default, it shall promptly notify the Administrative Agent thereof. The Administrative Agent hereby agrees that upon receipt of any notice under this Section 17.10 it shall promptly notify the other Banks of the existence of such Default or Event of Default. Section 18. ASSIGNMENT AND PARTICIPATION. Section 18.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein, each Bank may assign to one or more Eligible Assignees a portion of its interests, rights and obligations under this Agreement (including a portion of its Domestic Commitment Percentage or Canadian Commitment Percentage); provided that (a) each such assignment shall be of a constant, and not 109 -100- a varying, percentage of all of the assigning Bank's rights and obligations under this Agreement, (b) the parties to such assignment shall execute and deliver to the Administrative Agent, for recording in the Register (as hereinafter defined), an Assignment and Acceptance, substantially in the form of Exhibit I attached hereto (an "Assignment and Acceptance"), together with the Note subject to such assignment, (c) the Administrative Agent and, unless a Default or a Event of Default shall have occurred and be continuing or the assignment is to an Affiliate of the assigning Bank, the Borrower shall have given their prior written consent to each such assignment, which consent shall not be unreasonably withheld, (d) each assignment shall be in a minimum amount of not less than $5,000,000 (or, if less, such Bank's entire Commitment), and (e) BKB (and its Affiliates) shall at all times prior to the occurrence of an Event of Default maintain a Commitment of at least $15,000,000. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five (5) Business Days after the execution thereof, (i) the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Bank hereunder, and (ii) the assigning Bank shall, to the extent provided in such assignment be released from its obligations under this Agreement. Section 18.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By executing and delivering an Assignment and Acceptance, the parties to the assignment thereunder confirm to and agree with each other and the other parties hereto as follows: (a) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim, the assigning Bank makes no representation or warranty, express or implied, and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or the attachment, perfection or priority of any security interest or mortgage; (b) the assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower and its Subsidiaries or any other Person primarily or secondarily liable in respect of any of the Obligations, or the performance or observance by the Borrower and its Subsidiaries or any other Person primarily or secondarily liable in respect of any of the Obligations of any of their obligations under this Agreement or any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (c) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 8.5 and Section 11.4 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (d) such assignee will, independently and without reliance upon the assigning Bank, the Agents or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (e) such assignee represents and warrants that it is an Eligible Assignee; (f) such assignee appoints and authorizes the Agents to take such action as Agents on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Agents by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; (g) such assignee agrees that it will perform in 110 -101- accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Bank; (h) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; and (i) such assignee acknowledges that it has made arrangements with the assigning Bank satisfactory to the assigning Bank with respect to its pro rata share of Letter of Credit Fees in respect of outstanding Letters of Credit. Section 18.3. REGISTER. The Administrative Agent shall maintain a copy of each Assignment and Acceptance delivered to it and a register or similar list (the "Register") for the recordation of the names and addresses of the Banks and the Commitment Percentages of, and principal amount of the Loans owing, the Banks from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Canadian Borrower, the Administrative Agent and the Banks may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and the Banks at any reasonable time and from time to time upon reasonable prior notice. Upon each such recordation, the assigning Bank agrees to pay to the Administrative Agent a registration fee in the sum of $3,500. The Borrower shall have no liability hereunder for payment of the registration fee. Section 18.4. RESTATED NOTES. Upon its receipt of an Assignment and Acceptance executed by the parties to such assignment, together with the Note subject to such assignment, the Administrative Agent shall (a) record the information contained therein in the Register, and (b) give prompt notice thereof to the Borrower and the Banks (other than the assigning Bank). Within five (5) Business Days after receipt of such notice, the Borrower and the Canadian Borrower, if applicable, at their own expense, shall execute and deliver to the Administrative Agent, in exchange for the surrendered Note, a restated Note to the order of such Eligible Assignee in an amount equal to the amount assumed by such Eligible Assignee pursuant to such Assignment and Acceptance and a restated Note to the order of the assigning Bank in an amount equal to the amount retained by it hereunder, if any. Such restated Notes shall provide that they are replacements for the surrendered Note, shall be in an aggregate principal amount equal to the aggregate principal amount of the surrendered Note, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the assigned Note. Within five (5) days of issuance of any restated Note pursuant to this Section 18.4, the Borrower and the Canadian Borrower, if applicable, shall deliver an opinion of counsel, addressed to the Banks and the Agents, relating to the due authorization, execution and delivery of such restated Notes and the legality, validity and binding effect thereof, in form and substance satisfactory to the Banks. The surrendered Note shall be cancelled and returned to the Borrower. Section 18.5. PARTICIPATIONS. Each Bank may sell participations to one or more banks or other entities in all or a portion of such Bank's rights and obligations under this Agreement and the other Loan Documents; provided that (a) each such participation shall be in an amount of not less than $5,000,000, (b) any such sale or participation shall not affect the rights and duties of the selling Bank hereunder to the Borrower or the Canadian Borrower, and (c) the only rights granted to the participant pursuant to such participation arrangements with respect to waivers, amendments or modifications of the Loan Documents shall be the rights to approve waivers, amendments or modifications that would reduce the principal of or the interest rate on any Loans, 111 -102- extend the term or increase the amount of the Commitment of such Bank as it relates to such participant, reduce the amount of any Commitment Fees or Letter of Credit Fees to which such participant is entitled or extend any regularly scheduled payment date for principal or interest. The Borrower and the Canadian Borrower hereby agree that each such participant shall have, subject to the terms of Section 15.2, the right of setoff that is granted to each Bank pursuant to Section 15.2. Section 18.6. DISCLOSURE. The Borrower for itself and on behalf of its Subsidiaries agrees that in addition to disclosures made in accordance with standard and customary banking practices any Bank may disclose information obtained by such Bank pursuant to this Agreement to assignees or participants and potential assignees or participants hereunder; provided that such assignees or participants or potential assignees or participants shall agree (a) to treat in confidence such information unless such information otherwise becomes public knowledge, (b) not to disclose such information to a third party, except as required by law or legal process and (c) not to make use of such information for purposes unrelated to such contemplated assignment or participation. Section 18.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall have no right to vote as a Bank hereunder or under any of the other Loan Documents for purposes of granting consents or waivers or for purposes of agreeing to amendments or other modifications to any of the Loan Documents or for purposes of making requests to the Administrative Agent pursuant to Section 13.1 and the determination of the Majority Banks shall for all purposes of this Agreement and the other Loan Documents be made without regard to such assignee Bank's interest in any of the Loans. If any Bank sells a participating interest in any of the Loans to a participant, and such participant is the Borrower or an Affiliate of the Borrower, then such transferor Bank shall promptly notify the Administrative Agent of the sale of such participation. A transferor Bank shall have no right to vote as a Bank hereunder or under any of the other Loan Documents for purposes of granting consents or waivers or for purposes of agreeing to amendments or modifications to any of the Loan Documents or for purposes of making requests to the Administrative Agent pursuant to Section 13.1 to the extent that such participation is beneficially owned by the Borrower or any Affiliate of the Borrower, and the determination of the Majority Banks shall for all purposes of this Agreement and the other Loan Documents be made without regard to the interest of such transferor Bank in the Loans to the extent of such participation. Section 18.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall retain its rights to be indemnified pursuant to Section 19 with respect to any claims or actions arising prior to the date of such assignment. If any assignee Bank is not incorporated under the laws of the United States of America or any state thereof, it shall, prior to the date on which any interest or fees are payable hereunder or under any of the other Loan Documents for its account, deliver to the Borrower and the Administrative Agent certification as to its exemption from deduction or withholding of any United States federal income taxes. Anything contained in this Section 18 to the contrary notwithstanding, any Bank may at any time pledge all or any portion of its interest and rights under this Agreement (including all or any portion of its Note) to any of the twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or the enforcement thereof shall release the pledgor Bank from its obligations hereunder or under any of the other Loan Documents. 112 -103- Section 18.9. ASSIGNMENT BY BORROWER. Neither the Borrower nor the Canadian Borrower shall assign or transfer any of their rights or delegate any of their obligations under any of the Loan Documents without the prior written consent of each of the Banks. Section 19. EXPENSES. Whether or not the transaction contemplated hereby shall be consummated, the Borrower will pay (a) the cost of (i) preparing this Agreement, the other Loan Documents and Security Documents and the instruments used in connection with the issuance thereof, (ii) any taxes (including any interest and penalties in respect thereof), other than the Banks' federal and state income taxes, payable on or with respect to the transactions contemplated by this Agreement (the Borrower hereby agreeing to indemnify the Banks with respect thereto), and (iii) the Borrower's performance of and compliance with the terms hereof; (b) the reasonable fees, expenses and disbursements of the Administrative Agent's Special Counsel and any local counsel to the Administrative Agent incurred in connection with the preparation of this Agreement, the other Loan Documents and Security Documents and the instruments used in connection with the issuance thereof and the syndication thereof, with amendments, modifications, approvals, consents or waivers hereto and any termination hereof; (c) the fees, expenses and disbursements of the Administrative Agent and the Arranger incurred by the Administrative Agent and the Arranger in connection with the preparation, administration, syndication and interpretation of the Loan Documents and other instruments mentioned herein, (d) all reasonable out-of-pocket expenses (including, without limitation, reasonable attorney's fees and costs, which attorneys may be employees of a Bank and reasonable consulting, accounting, appraisal, investment banking and similar professional fees and charges) incurred by the Administrative Agent and the Banks in connection with (i) the enforcement or preservation of rights under any of the Loan Documents against the Borrower or any of its Subsidiaries or the administration thereof after the occurrence of a Default or Event of Default (including engineering, appraisal and investment banking charges) and (ii) any litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to the Banks' relationship with the Borrower or any of its Subsidiaries, (e) all reasonable fees, expenses and disbursements of the Administrative Agent incurred in connection with UCC searches or UCC filings and applicable Canadian lien searches and filings, motor vehicle lien notations and other collateral security searches and filings, and (f) all reasonable costs of conducting appraisals and Commercial Finance Examinations of the Borrower's properties, including the applicable daily time charges of the Administrative Agent's commercial finance examiners, agents, consultants and representatives engaged in such examinations and appraisals as in effect from time to time, and reasonable out-of-pocket travel and other related expenses. The covenants of this Section 19 shall survive payment or satisfaction of payment of amounts owing with respect to this Agreement or the Notes. Section 20. SURVIVAL OF COVENANTS, ETC. All covenants, agreements, representations and warranties made herein and in any certificates or other papers delivered by or on behalf of the Borrower or the Canadian Borrower pursuant hereto are material and shall be deemed to have been relied upon by the Banks, notwithstanding any investigation heretofore or hereafter made by them and shall survive the making by the Banks of the Loans, the making by the Swing Line Banks of the Swing Line Loans, and the issuance by the Letter of Credit Bank of 113 -104- the Letters of Credit, as herein contemplated, and shall continue in full force and effect so long as any Letter of Credit or any Loans or other amount due under this Agreement or the Notes remains outstanding and unpaid or any Bank has any obligation to make any Loans or the Letter of Credit Bank has any obligation to issue, extend or renew any Letter of Credit. All statements contained in any certificate or other paper delivered to the Banks at any time by or on behalf of the Borrower or the Canadian Borrower pursuant hereto or in connection with the transaction contemplated hereby shall constitute representations and warranties by the Borrower or, as the case may be, the Canadian Borrower hereunder. Section 21. NOTICES. Except as otherwise specified herein, all notices and other communications made or required to be given pursuant to this Agreement shall be in writing and shall be either delivered by hand or mailed by United States first-class mail, postage prepaid, or sent by telecopy, telegraph or telex and confirmed by letter, addressed as follows: (a) if to the Borrower or the Canadian Borrower, at 160 Clairemont Avenue, Suite 510, Decatur, Georgia 30030, Attention: A. Mitchell Poole, Jr., President and Chief Financial Officer; (b) if to the Administrative Agent, at 100 Federal Street, Boston, Massachusetts 02110, Attention: Transportation Division, Andrew K. Michaud, Vice President, 01-08-01, or such other address for notice as the Administrative Agent shall last have furnished in writing to the Person giving the notice; (c) if to the Canadian Agent, at such address as such Person shall furnish to the parties hereto upon such Person becoming Canadian Agent hereunder; and (d) if to any Bank, at the address for notice as such Bank shall last have furnished in writing to the Person giving the notice. Except for Loan Requests and Conversion Requests, any notice so addressed shall be deemed to have been duly given or made and to have become effective (i) if delivered by hand to an officer of the party to which it is directed, at the time of the receipt thereof by such officer, or (ii) if sent by first-class mail, postage prepaid, on the earlier of (A) the fifth Business Day following the mailing thereof, or (B) the date of its receipt, if a Business Day, or if not a Business Day, the next succeeding Business Day or (iii) if sent by telecopy, telex or cable, at the time of dispatch thereof (upon telephonic confirmation from any one of Robert J. Rutland, A. Mitchell Poole, Jr., Daniel H. Popky or David S. Forbes of receipt thereof) if in normal business hours in the state where received or otherwise at the opening of business on the following Business Day. Section 22. MISCELLANEOUS. This Agreement is a contract under seal under the laws of the Commonwealth of Massachusetts and shall for all purposes be construed in accordance with and governed by such laws. The rights and remedies herein expressed are cumulative and not exclusive of any other rights which any Bank or the Agents would otherwise have. Any instruments required by any of the provisions hereof to be in the form annexed hereto as an 114 -105- exhibit shall be substantially in such form with such changes therefrom, if any, as may be approved by the Banks and the Borrower. The captions in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof. This Agreement or any amendment may be executed in separate counterparts, each of which when so executed and delivered shall be an original, but all of which together shall constitute one instrument. In proving this Agreement, it shall not be necessary to produce or account for more than one such counterpart. Section 23. ENTIRE AGREEMENT, ETC. This Agreement and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated orally or in writing, except as provided in Section 24 hereof. Section 24. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise expressly provided in this Section 24, any action to be taken or any consent or approval required or permitted by this Agreement or any other Loan Document to be given by the Banks may be given, and any term of this Agreement, any other Loan Document or any other instrument, document or agreement related to this Agreement or the other Loan Documents or mentioned therein may be amended and the performance or observance by the Borrower or any other Person of any of the terms thereof and any Default or Event of Default (as defined in any of the above-referenced documents or instruments) may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Majority Banks. Notwithstanding the foregoing, (a)(i) the rate of interest on the Notes, (ii) the term of the Notes, (iii) the amount of the Commitments of the Banks, (iv) the amount of Commitment Fees or Letter of Credit Fees hereunder, (v) the due date of any payment of principal of or interest on the Notes or any fees payable hereunder, and (vi) the amount of principal owing to the Banks may not be changed without the written consent of the Borrower and the written consent of each Bank affected thereby; (b) the definition of Majority Banks and the definition of Borrowing Base Amount may not be amended, any substantial portion of the Collateral may not be released and this Section 24 may not be amended without the written consent of all of the Banks; (c) the amount of any Letter of Credit Fees payable for the Letter of Credit Bank's account and Section 17 may not be amended without the written consent of the Administrative Agent or the Letter of Credit Bank, as applicable; and (d) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Banks in addition to the Banks required above to take such action, affect the rights and obligations of the Swing Line Banks under this Credit Agreement. No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of any Bank in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon the Borrower or the Canadian Borrower shall entitle the Borrower or the Canadian Borrower to other or further notice or demand in similar or other circumstances. Section 25. WAIVER AND RELEASE. EACH OF THE BORROWER AND THE CANADIAN BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN 115 -106- CONNECTION WITH THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. Except as prohibited by law, each of the Borrower and the Canadian Borrower hereby waives any right it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages arising out of the credit relationship among the Borrower, the Canadian Borrower and the Banks up to and including the date of this Agreement. Each of the Borrower and the Canadian Borrower (a) certifies that no representative, agent or attorney of the Banks has represented, expressly or otherwise, that the Banks would not, in the event of litigation, seek to enforce the foregoing waivers and (b) acknowledges that it has been induced to enter into this Agreement, by among other things, the mutual waivers herein. By its execution hereof and in consideration for the mutual covenants contained herein and the accommodations granted to the Borrower and the Canadian Borrower by the Banks herein and in the documents, instruments and agreements executed in connection herewith, the Borrower expressly waives and releases any and all claims and causes of actions it may have, or alleges to have (and any defenses which may arise out of any of the foregoing), against the Banks and any of their affiliates, employees, directors, officers and Administrative Agents, arising out of the credit relationship between the Borrower and the Banks up to and including the date of this Agreement. Each of the Borrower and the Canadian Borrower agrees that any suit for the enforcement of this Agreement or any of the Loan Documents may be brought in the courts of the Commonwealth of Massachusetts or any federal court sitting therein and consents to the nonexclusive jurisdiction of such court and service of process in any such suit being made upon the Borrower and the Canadian Borrower by mail at the address specified in Section 21. Each of the Borrower and the Canadian Borrower hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient court. Section 26. TERMINATION. Upon the indefeasible payment in full of all of the Obligations (or, with respect to Letters of Credit, satisfaction of the Letter of Credit reimbursement obligations by the provision of cash collateral or back-up letters of credit as provided in Section 2.1(c) hereof) and the expiration or termination in full of the Commitments and all other commitments of the Banks, the Swing Line Banks, the Letter of Credit Bank, the Administrative Agent and the Canadian Agent under this Agreement, the Borrower shall be entitled to the return, at the Borrower's expense, of all collateral for the Obligations in the possession or control of the Administrative Agent, and the Administrative Agent shall execute and deliver such termination statements as the Borrower reasonably shall request in order to give effect to the foregoing. Section 27. INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless the Administrative Agent, the Canadian Agent, the Arranger, their affiliates, the Banks, and their respective directors, officers, employees and agents from and against any and all claims, actions and suits whether groundless or otherwise, and from and against any and all liabilities, losses, damages and expenses of every nature and character arising out of this Credit Agreement or any of the other Loan Documents or the transactions contemplated hereby, except to the extent resulting from the gross negligence or willful misconduct of such indemnified party, including, 116 -107- without limitation, (i) any actual or proposed use by the Borrower or any of its Subsidiaries of the proceeds of any of the Loans or Letters of Credit, any actual or alleged infringement of any patent, copyright, trademark, service mark or similar right of the Borrower or any of its Subsidiaries comprised in the Collateral, (iii) the Borrower or any of its Subsidiaries entering into or performing this Credit Agreement or any of the other Loan Documents or (iv) with respect to the Borrower and its Subsidiaries and their respective properties and assets, the violation of any Environmental Law, the presence, disposal, escape, seepage, leakage, spillage, discharge, emission, release or threatened release of any Hazardous Substances or any action, suit, proceeding or investigation brought or threatened with respect to any Hazardous Substances (including, but not limited to, claims with respect to wrongful death, personal injury or damage to property), in each case including, without limitation, the reasonable fees and disbursements of counsel and allocated costs of internal counsel incurred in connection with any such investigation, litigation or other proceeding. In litigation, or the preparation therefor, the Banks, the Administrative Agent, the Canadian Agent and the Arranger and their affiliates shall be entitled to select their own counsel and, in addition to the foregoing indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses of such counsel. If, and to the extent that the obligations of the Borrower under this Section 27 are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under applicable law. The covenants contained in this Section 27 shall survive payment or satisfaction in full of all other Obligations. Section 28. CANADIAN GUARANTY. (a) Guaranty of Payment. The Borrower hereby irrevocably guarantees to the Agents and the Banks, the full and punctual payment when due (whether at stated maturity, by required pre-payment, by acceleration or otherwise) of all of the Obligations of the Canadian Borrower, including, without limitation, the principal and interest accruing on the Canadian Swing Line Loans, Canadian Revolving Credit Loans, Bankers' Acceptances and all such Obligations which would become due but for the operation of the automatic stay pursuant to Section 362(a) of the Federal Bankruptcy Code or any similar provision of any other bankruptcy or insolvency law and the operation of Section Section 502(b) and 506(b) of the Federal Bankruptcy Code or any similar provision of any other bankruptcy or insolvency law (such obligations of the Canadian Borrower being referred to herein as the "Guaranteed Obligations"). This Canadian Guaranty is an absolute, unconditional and continuing guaranty of the full and punctual payment of all of the Guaranteed Obligations and not of their collectability only and is in no way conditioned upon any requirement that the Agents or any Bank first attempt to collect any of the Guaranteed Obligations from the Canadian Borrower or resort to any collateral security or other means of obtaining payment. Should an Event of Default occur as a result of a default by the Canadian Borrower in the payment of any of the Guaranteed Obligations, the Obligations of the Borrower hereunder with respect to such Guaranteed Obligations in default shall, upon demand by the Administrative Agent or the Canadian Agent, become immediately due and payable to the Administrative Agent or the Canadian Agent, for the benefit of the Banks and the Agents, without demand or notice of any nature, all of which are expressly waived by the Borrower. Payments by the Borrower hereunder may be required by the Agents on any number of occasions. All payments by the Borrower hereunder shall be made to the Agents, in the manner 117 -108- and at the place of payment specified therefor in Section 6.1 hereof, for the account of the Banks and the Agents. (b) The Borrower's Agreement to Pay Enforcement Costs, etc. The Borrower further agrees, as the principal obligor and not as a guarantor only, to pay to the applicable Agent, on demand, all reasonable costs and expenses (including court costs and legal expenses) incurred or expended by such Agent or any Bank in connection with the Guaranteed Obligations, this Canadian Guaranty and the enforcement thereof, together with interest on amounts recoverable under this Section 28(b) from the time when such amounts become due until payment, whether before or after judgment, at the rate of interest for overdue principal set forth in Section 6.3 hereof, provided that if such interest exceeds the maximum amount permitted to be paid under applicable law, then such interest shall be reduced to such maximum permitted amount. (c) Waivers by the Borrower; Banks' Freedom to Act. The Borrower agrees that the Guaranteed Obligations will be paid strictly in accordance with their respective terms, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agents or any Bank with respect thereto. The Borrower waives promptness, diligence, presentment, demand, protest, notice of acceptance, notice of any Guaranteed Obligations incurred and all other notices of any kind, all defenses which may be available by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in effect, any right to require the marshalling of assets of the Canadian Borrower or any other entity or other Person primarily or secondarily liable with respect to any of the Guaranteed Obligations, and all suretyship defenses generally. Without limiting the generality of the foregoing, the Borrower agrees to the provisions of any instrument evidencing, securing or otherwise executed in connection with any Guaranteed Obligation and agrees that the Guaranteed Obligations of the Borrower hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (i) the failure of the Agents or any Bank to assert any claim or demand or to enforce any right or remedy against the Canadian Borrower or any other entity or other person primarily or secondarily liable with respect to any of the Guaranteed Obligations; (ii) any extensions, compromise, refinancing, consolidation or renewals of any Guaranteed Obligation; (iii) any change in the time, place or manner of payment of any of the Guaranteed Obligations or any rescissions, waivers, compromise, refinancing, consolidation or other amendments or modifications of any of the terms or provisions of this Agreement, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any of the Guaranteed Obligations; (iv) the addition, substitution or release of any entity or other person primarily or secondarily liable for any Guaranteed Obligation; (v) the adequacy of any rights which the Agents or any Bank may have against any collateral security or other means of obtaining repayment of any of the Guaranteed Obligations; (vi) the impairment of any collateral securing any of the Guaranteed Obligations, including without limitation the failure to perfect or preserve any rights which the Agents or any Bank might have in such collateral security or the substitution, exchange, surrender, release, loss or destruction of any such collateral security; or (vii) any other act or omission which might in any manner or to any extent vary the risk of the Borrower or otherwise operate as a release or discharge of the Borrower (other than the indefeasible payment in full, in cash, of all of the Guaranteed Obligations and the irrevocable termination of the Commitments), all of which may be done without notice to the Borrower. To 118 -109- the fullest extent permitted by law, the Borrower hereby expressly waives any and all rights or defenses arising by reason of (A) any "one action" or "anti-deficiency" law which would otherwise prevent either Agent or any Bank from bringing any action, including any claim for a deficiency, or exercising any other right or remedy (including any right of set-off), against the Borrower before or after such Agent's or such Bank's commencement or completion of any foreclosure action, whether judicially, by exercise of power of sale or otherwise, or (B) any other law which in any other way would otherwise require any election of remedies by either Agent or any Bank. (d) Unenforceability of Guaranteed Obligations. If for any reason the Canadian Borrower has no legal existence or is under no legal obligation to discharge any of the Guaranteed Obligations, or if any of the Guaranteed Obligations have become irrecoverable from the Canadian Borrower by reason of such Person's insolvency, bankruptcy or reorganization or by other operation of law or for any other reason (other than the indefeasible payment in full, in cash, of all of the Guaranteed Obligations and the irrevocable termination of the Total Canadian Commitment), to the extent permitted by law, this Canadian Guaranty shall nevertheless be binding on the Borrower to the same extent as if the Borrower at all times had been the principal obligor on all such Guaranteed Obligations. In the event that acceleration of the time for payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of the Canadian Borrower, or for any other reason, all such amounts otherwise subject to acceleration under the terms of this Agreement, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any Obligation shall be immediately due and payable by the Borrower. (e) Subrogation; Subordination. (i) Postponement of Rights. Until the final indefeasible payment in full in cash of all of the Guaranteed Obligations: the Borrower shall not exercise any rights against the Canadian Borrower arising as a result of payment by the Borrower hereunder, by way of subrogation, reimbursement, restitution, contribution or otherwise, and will not prove any claim in competition with either Agent or any Bank in respect of any payment hereunder in any bankruptcy, insolvency or reorganization case or proceedings of any nature; the Borrower will not claim any setoff, recoupment or counterclaim against the Canadian Borrower in respect of any liability of the Borrower to the Canadian Borrower; and the Borrower waives any benefit of and any right to participate in any collateral security which may be held by the Agents or any Bank. (ii) Subordination. The payment of any amounts due with respect to any indebtedness of the Canadian Borrower for money borrowed or credit received now or hereafter owed to the Borrower is hereby subordinated to the prior payment in full in cash of all of the Guaranteed Obligations; provided that, so long as no Event of Default has occurred and is continuing, the Canadian Borrower may pay, and the Borrower may receive, such payment. The Borrower agrees that, after the occurrence of any Event of Default, the Borrower will not demand, sue for or otherwise attempt to collect any such indebtedness of the Canadian Borrower to the Borrower until all of the Guaranteed Obligations shall have been irrevocably paid in full in 119 -110- cash. If, notwithstanding the foregoing sentence, the Borrower shall collect, enforce or receive any amounts in respect of such indebtedness while any Guaranteed Obligations are still outstanding, such amounts shall be collected, enforced and received by the Borrower as trustee for the Banks and the Agents and be paid over to the Agents, for the benefit of the Banks and the Agents, on account of the Guaranteed Obligations without affecting in any manner the liability of the Borrower under the other provisions of this Canadian Guaranty. (f) Provisions Supplemental. The provisions of this Section 28 shall be supplemental to and not in derogation of any rights and remedies of the Banks and the Agents under any separate subordination agreement which the Agents or any Bank may at any time and from time to time enter into with the Borrower for the benefit of the Banks and the Agents. (g) Further Assurances. The Borrower agrees that it will from time to time, at the request of the Agents, do all such things and execute all such documents as the Agents may reasonably consider necessary or desirable to give full effect to this Canadian Guaranty and to perfect and preserve the rights and powers of the Banks and the Agents hereunder. The Borrower acknowledges and confirms that it has established its own adequate means of obtaining from the Canadian Borrower on a continuing basis all information desired by it concerning the financial condition of such Persons and that it will look to such Persons and not to the Agents or any Bank in order for it to keep adequately informed of changes in any of such Person's financial condition. (h) Reinstatement. Notwithstanding any termination of this Canadian Guaranty upon the final and indefeasible payment in full, in cash, of the Guaranteed Obligations, this Canadian Guaranty shall continue to be effective or be reinstated, if at any time any payment made or value received with respect to any Obligation is rescinded or must otherwise be returned by either Agent or any Bank upon the insolvency, bankruptcy or reorganization of the Canadian Borrower, or otherwise, all as though such payment had not been made or value received. (i) Successors and Assigns. This Canadian Guaranty shall be binding upon the Borrower, its successors and assigns, and shall inure to the benefit of the Agents and the Banks and their respective successors, transferees and assigns. Without limiting the generality of the foregoing sentence, each Bank may, in accordance with the provisions of Section 18 and subject to the limitations set forth therein, assign or otherwise transfer this Agreement, the other Loan Documents or any other agreement or note held by it evidencing, securing or otherwise executed in connection with the Guaranteed Obligations, or sell participations in any interest therein, to any other entity or other person, and such other entity or other person shall thereupon become vested, to the extent set forth in the agreement evidencing such assignment, transfer or participation, with all the rights in respect thereof granted to such Bank herein. The Borrower may not assign any of its Guaranteed Obligations hereunder. (j) Currency of Payment. Except with respect to Revolving Credit Loans deemed made to the Borrower pursuant to Section 2.13(d) the Borrower shall pay the Guaranteed Obligations in the currency in which such Obligations were incurred by the Canadian Borrower. 120 -111- Section 29. GOVERNING LAW. THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE BORROWER AND THE CANADIAN BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN Section 21. EACH OF THE BORROWER AND THE CANADIAN BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT. Section 30. WITHHOLDING TAXES. The Borrower and Canadian Borrower hereby agree that (a) any and all payments made by the Borrower and/or the Canadian Borrower hereunder and under the other Loan Documents shall be made free and clear of, and without deduction for, any and all taxes, levies, fees, duties, imposts, deductions, charges or withholdings of any nature whatsoever, excluding, in the case of the Agents or the Banks or any holder of the Notes, (i) taxes imposed on, or measured by, its net income or profits, (ii) franchise taxes imposed on it, (iii) taxes imposed by any jurisdiction as a direct consequence of it, or any of its affiliates, having a present or former connection with such jurisdiction, including, without limitation, being organized, existing or qualified to do business, doing business or maintaining a permanent establishment or office in such jurisdiction, (iv) taxes imposed by reason of its failure to comply with any applicable certification, identification, information, documentation or other reporting requirement, or (v) any backup withholding (all such non-excluded taxes being hereinafter referred to as "Indemnifiable Taxes"). In the event that any withholding or deduction from any payment to be made by the Borrower or the Canadian Borrower hereunder is required in respect of any Indemnifiable Taxes pursuant to any applicable law, or governmental rule or regulation, then the Borrower or the Canadian Borrower will (i) direct to the relevant taxing authority the full amount required to be so withheld or deducted, (ii) forward to the applicable Agent for delivery to the applicable Bank an official receipt or other documentation satisfactory to the applicable Agent and the applicable Bank evidencing such payment to such taxing authority, and (iii) direct to the applicable Agent for the account of the applicable Banks such additional amount or amounts as is necessary to ensure that the net amount actually received by each relevant Bank will equal the full amount such Bank would have received had no such withholding or deduction (including any Indemnifiable Taxes on such additional amounts) been required. Moreover, if any Indemnifiable Taxes are directly asserted against the applicable Agent or any Bank with respect to any payment received by the Agents or such Bank by reason of the Borrower's or the Canadian Borrower's failure to properly deduct and withhold such Indemnifiable Taxes from such payment, the applicable Agent or such Bank may pay such 121 -112- Indemnifiable Taxes and the Borrower or the Canadian Borrower will promptly pay all such additional amounts (including any penalties, interest or reasonable expenses) as are necessary in order that the net amount received by such Person after the payment of such Indemnifiable Taxes (including any Indemnifiable Taxes on such additional amount) shall equal the amount such Person would have received had not such Indemnifiable Taxes been asserted. Any such payment shall be made promptly after the receipt by the Borrower or the Canadian Borrower from the applicable Administrative Agent or such Bank, as the case may be, of a written statement setting forth in reasonable detail the amount of the Indemnifiable Taxes and the basis of the claim. If the Borrower or the Canadian Borrower shall pay any taxes or make any payments with respect to any taxes which are not Indemnifiable Taxes, then the applicable Agent or the Bank which has received any such payment or with respect to which any such payment was made shall reimburse the Borrower or the Canadian Borrower, within five (5) Business Days of request by such Person, the amount so paid by such Person, together with interest at the rate then applicable to Base Rate Loans from the date such amounts were paid by such Person. (b) The Borrower and the Canadian Borrower shall pay any present or future stamp or documentary taxes or any other excise or any other similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Document ("Other Taxes"), it being expressly understood that the term "Other Taxes" does not include (without limitation) any taxes imposed on or measured by any Bank's or Agent's assets, property, net or gross income, franchise, receipts, gains or profits. (c) The Borrower and the Canadian Borrower hereby indemnify and hold harmless the Agents and each Bank for the full amount of Indemnifiable Taxes or Other Taxes (including, without limitation, any Indemnifiable Taxes or Other Taxes imposed on amounts payable under this Section 30) paid by the Agents or such Bank, as the case may be, and any liability (including penalties, interest and reasonable expenses) arising therefrom or with respect thereto, by reason of the Borrower's or the Canadian Borrower's failure to properly deduct and withhold Indemnifiable Taxes pursuant to paragraph (a) above or to properly pay Other Taxes pursuant to paragraph (b) above. Any indemnification payment from the Borrower and the Canadian Borrower under the preceding sentence shall be made promptly after receipt by the Borrower and the Canadian Borrower from the applicable Agent or Bank of a written statement setting forth in reasonable detail the amount of such Indemnifiable Taxes or such Other Taxes, as the case may be, and the basis of the claim. (d) If the Borrower or the Canadian Borrower pays any amount under this Section 30 to the Agents or any Bank and such payee knowingly receives a refund of any taxes with respect to which such amount was paid, the Agents or such Bank, as the case may be, shall pay to the Borrower or the Canadian Borrower the amount of such refund promptly following the receipt thereof by such payee. (e) In the event any taxing authority notifies the Borrower or the Canadian Borrower that either of them has improperly failed to deduct or withhold any taxes (other than 122 -113- Indemnifiable Taxes) from a payment made hereunder to the Agents or any Bank, the Borrower or the Canadian Borrower shall timely and fully pay such taxes to such taxing authority. (f) The Agents or the Banks shall, upon the request of the Borrower or the Canadian Borrower, take reasonable measures to avoid or mitigate the amount of Indemnifiable Taxes required to be deducted or withheld from any payment made hereunder (including, without limitation, the completion and delivery of appropriate forms evidencing such Agent's or such Bank's exemption from withholding taxes) if such measures can be taken without the imposition on such Person of any costs or expenses unless the Borrower or the Canadian Borrower has agreed to reimburse such Person therefor or result in such Person in its reasonable judgment suffering any material legal or regulatory disadvantage; provided that if after the date hereof, any change in applicable law, regulation or treaty results in the imposition on the Borrower or the Canadian Borrower of a deduction or withholding obligation with respect to amounts payable to banks or bank holding companies, to the extent that any such change in applicable law, regulation or treaty relates to amounts payable hereunder and to the extent that such change results in banks or bank holding companies receiving an undue benefit arising as a result of the payment of such additional amount by the Borrower or the Canadian Borrower, the Borrower, the Canadian Borrower and the Agents shall make a reasonable, good faith effort to negotiate a change in the terms of this Agreement that would allocate the benefits and costs (if any) of such deductions and withholdings among the affected parties in a manner equitable to the Borrower, the Canadian Borrower and the Banks. (g) Without prejudice to the survival of any other agreement of the parties hereunder, the agreements and obligations of the Borrower and the Canadian Borrower contained in this Section 30 shall survive the payment in full of the Obligations. Section 31. PARI PASSU TREATMENT. (a) Notwithstanding anything to the contrary set forth herein, each payment or prepayment of principal and interest received after the occurrence of an Event of Default hereunder shall be distributed pari passu among the Banks, in accordance with the aggregate outstanding principal amount of the Obligations owing to each Bank divided by the aggregate outstanding principal amount of all Obligations. (b) Following the occurrence and during the continuance of any Event of Default, each Bank agrees that if it shall, through the exercise of a right of banker's lien, setoff or counterclaim against the Borrower or the Canadian Borrower (pursuant to Section 15 or otherwise), including a secured claim under Section 506 of the Bankruptcy Code or other security or interest arising from or in lieu of, such secured claim, received by such Bank under any applicable bankruptcy, insolvency or other similar law or otherwise, obtain payment (voluntary or involuntary) in respect of the Notes, Loans, Bankers' Acceptances, and other Obligations held by it as a result of which the unpaid principal portion of the Notes and the Obligations held by it shall be proportionately less than the unpaid principal portion of the Notes and Obligations held by any other Bank, it shall be deemed to have simultaneously purchased from such other Bank a participation in the Notes and Obligations held by such other Bank, so that the aggregate unpaid principal amount of the Notes, Obligations and participations in Notes and Obligations held by each Bank shall be in the same proportion to the aggregate unpaid principal amount of the Notes 123 -114- and Obligations then outstanding as the principal amount of the Notes and other Obligations held by it prior to such exercise of banker's lien, setoff or counterclaim was to the principal amount of all Notes and other Obligations outstanding prior to such exercise of banker's lien, setoff or counterclaim; provided, however, that if any such purchase or purchases or adjustments shall be made pursuant to this Section 31 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustments restored without interest. (c) Following the occurrence and during the continuance of any Event of Default and unless and until the effectiveness of a transfer of Commitments pursuant to Section 31(d), each Bank agrees that it shall be deemed to have, automatically upon the occurrence of such Event of Default, purchased from each other Bank a participation in the risk associated with the Notes and Obligations held by such other Bank, so that the aggregate principal amount of the Notes and Obligations held by each Bank shall be equivalent to such Bank's Total Commitment Percentage. Upon demand by the Administrative Agent, made at the request of the Majority Banks, each Bank that has purchased such participation shall pay the amount of such participation to one or more Bank(s) whose outstanding Loans and participations in Letters of Credit and Bankers' Acceptances exceed their Total Commitment Percentages. (d) Upon the written instruction of the Majority Banks, the Total Canadian Commitment shall be immediately transferred by the Canadian Borrower and the Borrower to the Total Domestic Commitment; provided that prior to requesting any such transfer of Commitments, the Agents and the Banks shall utilize their reasonable best efforts to avoid the imposition of withholding tax liability on the Borrower and the Canadian Borrower which would arise as a result of any such transfer of Commitments (including, without limitation, to the extent useful, the use of participations pursuant to Section 31(c) and the use of fronting banks in Canada). Upon the effectiveness of any such transfer, the outstanding Canadian Revolving Credit Loans and Bankers' Acceptances shall be repaid with advances made to the Borrower under the Domestic Commitments, advanced by the Banks in such manner that after giving effect thereto, the percentage of the outstanding Loans and Obligations of each Bank will equal such Bank's Total Commitment Percentage of all outstanding Loans and Obligations. (e) Each of the Borrower and the Canadian Borrower expressly consents to the foregoing arrangements and agrees that any Person holding such a participation in the Notes and the Obligations deemed to have been so purchased may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by the Borrower and the Canadian Borrower to such Person as fully as if such Person had made a Loan directly to the Borrower and the Canadian Borrower in the amount of such participation. 124 -115- Signed, sealed and delivered, as of the date set forth at the beginning of this Agreement by the Borrower, the Canadian Borrower, the Administrative Agent and the Banks. ALLIED HOLDINGS, INC. By: -------------------------------------- Title: AUTO HAULAWAY INC. By: -------------------------------------- Title: BANKBOSTON, N.A., individually and as Administrative Agent By: -------------------------------------- Title: ABN AMRO BANK, N.V., individually and as Documentation Agent By: -------------------------------------- Title: By: -------------------------------------- Title: THE FIRST NATIONAL BANK OF CHICAGO, individually and as Co-Agent By: -------------------------------------- Title: 125 -116- NATIONSBANK, N.A., individually and as Co-Agent By: ----------------------------- Title: THE BANK OF NOVA SCOTIA By: ----------------------------- Title: CORESTATES BANK, N.A. By: ----------------------------- Title: CREDIT LYONNAIS ATLANTA AGENCY By: ----------------------------- Title: THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED By: ----------------------------- Title: ROYAL BANK OF CANADA By: ----------------------------- Title: UNION BANK OF CALIFORNIA, N.A. By: ----------------------------- Title: EX-12.1 6 STATEMENT REGARDING RATIO OF EARNINGS 1 EXHIBIT 12.1 ALLIED HOLDINGS, INC. AND SUBSIDIARIES STATEMENTS RE COMPUTATION OF EARNINGS TO FIXED CHARGES FOR THE YEARS ENDED DECEMBER 31, 1992, 1993, 1994, 1995, AND 1996 AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (In Thousands, Except Ratios)
For the years ended For the six months ended December 31, June 30, --------------------------------------------------------- ---------------------- 1992 1993 1994 1995 1996 1996 1997 -------- -------- -------- -------- -------- -------- -------- FIXED CHARGES: Interest expense * 6,963 6,042 5,462 11,260 10,720 5,396 5,408 Interest element of rentals 2,017 1,162 1,071 1,785 1,658 827 823 -------- -------- -------- -------- -------- -------- -------- 8,980 7,204 6,533 13,045 12,378 6,223 6,231 ======== ======== ======== ======== ======== ======== ======== EARNINGS: Net income 4,806 6,949 11,561 6,146 3,986 2,523 3,711 Extraordinary item - - 2,627 - 935 935 - Cumulative effect of an accounting change - 2,592 - - - - - Income taxes 3,249 4,183 9,393 4,222 3,557 2,504 2,688 Minority interest income (loss) (1,034) (858) - - - - - Fixed charges 8,980 7,204 6,533 13,045 12,378 6,223 6,231 -------- -------- -------- -------- -------- -------- -------- 18,069 21,786 30,114 23,413 20,856 12,185 12,630 ======== ======== ======== ======== ======== ======== ======== RATIO OF EARNINGS TO FIXED CHARGES 2.0x 3.0x 4.6x 1.8x 1.7x 2.0x 2.0x ======== ======== ======== ======== ======== ======== ========
* Includes amortization of debt expense. EX-23.2 7 CONSENT OF ARTHUR ANDERSEN 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our reports and to all references to our firm included in or made a part of this registration statement. /s/ Arthur Andersen LLP Atlanta, Georgia September 30, 1997 EX-23.3 8 CONSENT OF KPMG PEAT MARWICK 1 EXHIBIT 23.3 The Board of Directors Allied Holdings, Inc.: We consent to the use of our report included herein and to the reference to our firm under the heading "Experts" in the prospectus. /s/ KPMG PEAT MARWICK LLP Miami, Florida October 1, 1997 EX-99.1 9 LETTER OF TRANSMITTAL 1 EXHIBIT 99.1 LETTER OF TRANSMITTAL TO TENDER UNREGISTERED 8 5/8% SERIES A SENIOR NOTES DUE 2007 of ALLIED HOLDINGS, INC. PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1997 ======================================================================= THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1997 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS EXTENDED BY THE COMPANY. ======================================================================= THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: THE FIRST NATIONAL BANK OF CHICAGO For Information by Telephone: (212) 240-8801 By Registered or Certified Mail or Hand or Overnight Delivery Service: The First National Bank of Chicago c/o First Chicago Trust Company of New York 14 Wall Street, 8th Floor, Window 2 New York, New York 10005 By Facsimile Transmission (for Eligible Institutions only): (212) 240-8939 (Facsimile Confirmation) (212) 240-8801 (Originals of all documents sent by facsimile should be sent promptly by registered or certified mail, by hand, or by overnight delivery service.) Capitalized terms used but not defined herein shall have the same meaning given in the Prospectus (as defined below). The Letter of Transmittal is to be completed by holders (which term, for purposes of this document, shall include any participant in the The Depository Trust Company ("DTC") 2 either if (a) certificates are to be forwarded herewith or (b) tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth under "The Exchange Offer--Procedures for Tendering Old Notes in the Prospectus and an Agent's Message (as defined below) is not delivered. Certificates, or book-entry confirmation of a book-entry transfer of Old Notes into the Exchange Agent's account at DTC, as well as this Letter of Transmittal (or facsimile thereof or delivery of an Agent's Message in lieu thereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date. Tenders by book-entry transfer may also be made by delivering an Agent's Message in lieu of this Letter of Transmittal. The term "book-entry confirmation" means a confirmation of a book-entry transfer of Old Notes into the Exchange Agent's account at DTC. The term "Agent's Message" means a message transmitted by DTC to and received by the Exchange Agent and forming part of book-entry confirmation, which states that DTC has received an express acknowledgment from the tendering participant, which acknowledgment states that such participant has received and agrees to be bound by this Letter of Transmittal and that the Company may enforce this Letter of Transmittal against such participant. Holders of Old Notes whose certificates (the "Certificates") for such Old Notes are not immediately available or who cannot deliver their Certificates and all other required documents to the Exchange Agent on or prior to the Expiration Date (as defined in the Prospectus) or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Old Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for Tendering" in the Prospectus. DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. IF YOU WISH TO EXCHANGE UNREGISTERED 8 5/8% SERIES A SENIOR NOTES DUE 2007 FOR AN EQUAL AGGREGATE PRINICIPAL AMOUNT OF REGISTERED 8 5/8% SERIES B SENIOR NOTES DUE 2007, PURSUANT TO THE EXCHANGE OFFER, YOU MUST VALIDLY TENDER (AND NOT WITHDRAW) OLD NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. SIGNATURES MUST BE PROVIDED DESCRIPTION OF TENDERED OLD NOTES Name(s) and Address(es) of Registered Owner(s) Certificate as it appears on the 8 5/8% Series A Senior Notes Number(s) due 2007 ("Old Notes") of Old Notes (Please fill in, if blank) ================================================================================ -------------- 3 -------------- -------------- -------------- -------------- Total Principal Amount of Old Notes Tendered (BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY) [ ] CHECK HERE IF TENDERED ORIGINAL CAPITAL SECURITIES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution ---------------------------------------------- DTC Account Number -------------------------------------------------------- Transaction Code Number ---------------------------------------------------- [ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED ORIGINAL CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name of Registered Holder(s) ----------------------------------------------- Window Ticket Number (if any) ----------------------------------------------- Date of Execution of Notice of Guaranteed Delivery ------------------------ Name of Institution which Guaranteed Delivery ------------------------------ If Guaranteed Delivery is to be made by Book-Entry Transfer: Name of Tendering Institution --------------------------------------- DTC Account Number -------------------------------------------------- Transaction Code Number -------------------------------------------- [ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED ORIGINAL CAPITAL SECURITIES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE. [ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE ORIGINAL CAPITAL SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ---------------------------------------------------------------------- Address: ------------------------------------------------------------------- 4 LADIES AND GENTLEMEN: 1. The undersigned hereby tenders to Allied Holdings, Inc., a Georgia corporation (the "Company"), the unregistered 8 5/8% Series A Senior Notes due 2007 (the "Old Notes"), described above pursuant to the Company's offer of $1,000 principal amount of registered 8 5/8% Series B Senior Notes due 2007 (the "New Notes"), in exchange for each $1,000 principal amount of the Old Notes, upon the terms and subject to the conditions contained in the Prospectus date , 1997 (the "Prospectus"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the "Exchange Offer"). 2. The undersigned hereby represents and warrants that it has full authority to tender the Old Notes described above. The undersigned will, upon request, execute and deliver any additional documents deemed by the Company to be necessary or desirable to complete the tender of Old Notes. 3. If any tendered Original Capital Securities are not exchanged pursuant to the Exchange Offer for any reason, or if Certificates are submitted for more Original Capital Securities than are tendered or accepted for exchange, Certificates for such nonexchanged or nontendered Original Capital Securities will be returned (or, in the case of Original Capital Securities tendered by book-entry transfer, such Original Capital Securities will be credited to an account maintained at DTC), without expense to the tendering holder, promptly following the expiration or termination of the Exchange Offer. 4. The undersigned understands that the tender of the Old Notes pursuant to all of the procedures set forth in the Prospectus will constitute an agreement between the undersigned and the Company as to the terms and conditions set forth in the Prospectus. 5. Unless the box under the heading "Special Registration Instructions" is checked, the undersigned hereby represents and warrants that: (i) the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the undersigned, whether or not the undersigned is the holder; (ii) neither the undersigned nor any such other person is engaging in or intends to engage in a distribution of such New Notes; (iii) neither the undersigned nor any such other person has an arrangement or understanding with any person to participate in the distribution of such New Notes; and (iv) neither the holder nor any such other person is an "affiliate," as such term is defined under Rule 405 promulgated under the Securities Act of 5 1933, as amended (the "Securities Act"), of the Company or any Guarantor (as hereinafter defined). 6. The undersigned may, if, and only if, unable to make all of the representations and warranties contained in Item 4 above, elect to have its Old Notes registered in the shelf registration described in the Registration Rights Agreement, dated as of _________, 1997, among the Company, certain guarantors of the obligations under the Old Notes (the "Guarantors") and the initial purchaser of the Old Notes in the form filed as an exhibit to the Registration Statement (the "Registration Agreement") (all terms used in this Item 6 with their initial letters capitalized, unless otherwise defined herein, shall have the meanings given them in the Registration Agreement). Such election may be made by checking the box under "Special Registration Instructions" on page __. By making such election, the undersigned agrees, as a holder of Transfer Restricted Securities participating in a Shelf Registration, to indemnify and hold harmless the Company, the Guarantors, their respective directors and officers and each person, if any, who controls the Company or any of the Guarantors within the meaning of either Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and against any loss, claim, damage or liability (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim), joint or several, or any action in respect thereof, to which the Company, any Guarantor or any such director, officer or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus or in any amendment or supplement thereto, (ii) or the omission or alleged omission to the statements therein not misleading, but only with reference to such information relating to the undersigned furnished in writing by or on behalf of the undersigned expressly for use in the Registration Statement, the Prospectus or any amendments or supplements thereto. Any such indemnification shall be governed by the terms and subject to the conditions set forth in the Registration Agreement, including, without limitation, the provisions regarding notice, retention of counsel, contribution and payment of expenses set forth therein. The above summary of the indemnification provision of the Registration Agreement is not intended to be exhaustive and is qualified in its entirety by the Registration Agreement. 7. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of New Notes. If the undersigned is a broker-dealer that will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such New Notes; however, by so acknowledging and delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. If the undersigned is a broker-dealer and Old Notes held for its own account were not acquired as a result of market-making or other trading activities, such Old Notes cannot be exchanged pursuant to the Exchange Offer. 6 8. Any obligation of the undersigned hereunder shall be binding upon the successors, assigns, executors, administrators, trustees in bankruptcy and legal and personal representatives of the undersigned. 9. Unless otherwise indicated herein under "Special Delivery Instructions," please issue the certificates for the New Notes in the name of the undersigned. 7 SPECIAL DELIVERY INSTRUCTIONS (See Instruction 1) To be completed ONLY IF the New Notes are to be issued or sent to someone other than the undersigned or to the undersigned at an address other than that provided above. Mail [ ] Issue [ ] (check appropriate boxes) certificates to: Name: ------------------------------------------------------------- Address: ------------------------------------------------------------- ------------------------------------------------------------- ------------------------------------------------------------- (INCLUDING ZIP CODE) 8 SPECIAL REGISTRATION INSTRUCTIONS (See Item 6) To be completed ONLY IF (i) the undersigned satisfies the conditions set forth in Item 6 above, (ii) the undersigned elects to register its Old Notes in the shelf registration described in the Registration Agreement, and (iii) the undersigned agrees to indemnify certain entities and individuals as set forth in Item 6 above. [ ] By checking this box the undersigned hereby (i) represents that it is unable to make all of the representations and warranties set forth in Item 5 above, (ii) elects to have its Old Notes registered pursuant to the shelf registration described in the Registration Agreement, and (iii) agrees to indemnify certain entities and individuals identified in, and to the extent provided in, Item 6 above. 9 SPECIAL BROKER-DEALER INSTRUCTIONS (See Item 6) [ ] Check here if you are a broker-dealer and wish to receive 10 additional copies of the Prospectus and 10 copies of any amendments or supplements thereto. Name: ---------------------------------------------------- (PLEASE PRINT) Address: ---------------------------------------------------- ---------------------------------------------------- --------------------------------------------------- (INCLUDING ZIP CODE) 10 SIGNATURE To be completed by all exchanging noteholders. Must be signed by registered holder exactly as name appears on Old Notes. If signature is by trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 3. X ------------------------------------------------------------------- X ------------------------------------------------------------------- SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATURE Dated: --------------------------------------------------------------- Name(s): --------------------------------------------------------------- ---------------------------------------------------------------------- (PLEASE TYPE OR PRINT) Capacity: ---------------------------------------------------------------------- Address: -------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- (INCLUDING ZIP CODE) Area Code and Telephone No.: ------------------------------------------ SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 1) Certain Signatures Must be Guaranteed by an Eligible Institution - ------------------------------------------------------------------------------- (NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES) - ------------------------------------------------------------------------------- (ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF FIRM) ------------------------------------------------------------------- (AUTHORIZED SIGNATURE) ------------------------------------------------------------------- (PRINTED NAME) --------------------------------------------------------------------- (TITLE) Dated: -------------------------------------------------------------- 11 PLEASE READ THE INSTRUCTIONS BELOW, WHICH FORM A PART OF THIS LETTER OR TRANSMITTAL. INSTRUCTIONS 1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal must be guaranteed by an eligible guarantor institution that is a member of or participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program, the Stock Exchange Medallion Program, or by an "eligible guarantor institution" within the meaning of Rule 17Ad-15 promulgated under the Exchange Act (an "Eligible Institution") unless the box entitled "Special Registration Instructions" or "Special Delivery Instructions" above has not been completed or the Old Notes described above are tendered for the account of an Eligible Institution. 2. PROCEDURES FOR TENDERING Only a holder of Old Notes may tender the Old Notes in the Exchange Offer. Except as set forth under "The Exchange Offer - Book Entry Transfer," to tender in the Exchange Offer a holder must complete, sign, and date the Letter of Transmittal, or copy thereof, have the signatures thereon guaranteed if required by the Letter of Transmittal, and deliver the Letter of Transmittal or a copy to the Exchange Agent prior to the Expiration Date. In addition, either (i) certificates for such Old Notes must be received by the Exchange Agent along with the Letter of Transmittal, (ii) a timely confirmation of book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if the procedure is available, into the Exchange Agent's account at DTC (the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry transfer described below, must be received by the Exchange Agent prior to the Expiration Date, or (iii) the holder must comply with the guaranteed delivery procedures described below. To be tendered effectively, the Letter of Transmittal and other required documents must be received by the Exchange Agent at the address set forth under "The Exchange Offer - Exchange Agent" prior to the Expiration Date. The tender by a holder is not withdrawn before the Expiration Date will constitute an agreement between that holder and the Company in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OR TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS. 12 3. SIGNATURE ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by a person other than a registered holder of any Old Notes, such Old Notes must be endorsed or accompanied by appropriate bond powers, signed by such registered holder exactly a such registered holder's name appears on such Old Notes. If this Letter of Transmittal or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers or corporations, or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted with this Letter of Transmittal. 4. MISCELLANEOUS. All question as to the validity, form, eligibility (including time of receipt), acceptance, and withdrawal of tendered Old Notes will be determined by the Company in its sole discretion, which determination will be final and binding on all parties. The Company reserves the absolute right to reject any or all Old Notes not properly tendered or any Old Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any defects, irregularities, or conditions of tender as to particular Old Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) will be final and binding. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent, nor any other person shall be under any duty to give notification of defects in such tenders or shall incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holder thereof as soon as practicable following the Expiration Date. EX-99.2 10 NOTICE OF GUARANTEED DELIVERY 1 EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY TO TENDER UNREGISTERED 8 5/8% SERIES A SENIOR NOTES DUE 2007 (INCLUDING THOSE IN BOOK-ENTRY FORM) OF ALLIED HOLDINGS, INC. PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED _______, 1997 As set forth in the Exchange Offer (as defined in the Prospectus (as defined below)), this form or one substantially equivalent hereto must be used to accept the Exchange Offer if certificates for unregistered 8 5/8% Series A Senior Notes due 2007 (the "old Notes"), of Allied Holdings, Inc., are not immediately available or time will not permit a holder's Old Notes or other requirements documents to reach the Exchange Agent on or prior ot the Expiration Date (as defined below), or the procedure for book-entry transfer cannot be completed on a timely basis. This form may be delivered by facsimile transmission, by registered or certified mail, by hand, or by overnight delivery service to the Exchange Agent. See "The Exchange Offer - Procedures for Tendering" in the Prospectus. ================================================================================ THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ______________, 1997 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS EXTENDED BY THE COMPANY. ================================================================================ THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: THE FIRST NATIONAL BANKOF CHICAGO By Registered or Certified Mail or Hand or Overnight Delivery Service The First National Bank of Chicago c/o First Chicago Trust Company of New York 14 Wall Street, 8th Floor, Window 2 New York, New York 10005 By Facsimile Transmission (for Eligible Institutions only): FAX 212/240-8938 (Facsimile Confirmation) 212/240-8801 (Originals of all documents sent by facsimile should be sent promptly by registered or certified mail, by hand, or by overnight delivery service.) DELIVERY OF THIS NOTICE TO AN ADDRESS OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. 2 Gentlemen: The undersigned hereby tenders to Allied Holdings, Inc., a Georgia corporation (the "Company"), in accordance with the Company's offer, upon the terms and subject to the conditions set forth in the prospectus dated _______, 1997 (the "Prospectus"), and in the accompanying Letter of Transmittal, receipt of which is hereby acknowledge, $_____ ________ in the aggregate principal amount of Old Notes pursuant to the guaranteed delivery procedures described in the Prospectus. ================================================================================ Name(s) of Registered Holder(s): ------------------------------------------------ (Please Type of Print) Address: ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- Area Code and Telephone Number: ------------------------------------------------- Certificate Number(s) for Old Notes (if available): ----------------------------- Total Principal Amount Tendered and Represented by Certificate(s): $ ------------------------------------------------ Signature of Registered Holder(s): ---------------------------------------------- Date: ------------------------- [ ] The Depository Trust Company (check if Old Notes will be tendered by book-entry transfer) Account Number ----------------------------------- ================================================================================ 3 THE GUARANTEE BELOW MUST BE COMPLETED GUARANTEE [Not to be used for signature guarantee] The undersigned, being a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office in the United States, hereby guarantees (a) that the above-named person(s) "own(s)" the Old Notes tendered hereby within the meaning of Rule 14e-4 ("Rule 14e-4") under the Securities Exchange Act of 1934, as amended, (b) that such Old Notes complies with Rule 14e-4, and (c) to deliver to the Exchange Agent the certificates representing the Old Notes tendered hereby or confirmation of book-entry transfer of such Old Notes into the Exchange Agent's account at The Depository Trust Company, in proper form for transfer, together with the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other required documents, within three New York Stock Exchange trading days after the Expiration Date. ================================================================================ Name of Firm: ------------------------------------------------------------------- Address: ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- Area Code and Telephone Number: ------------------------------------------------- Authorized Signature: ----------------------------------------------------------- Name: --------------------------------------------------------------------------- Title: ----------------------------------- Date: ----------------------------------- ================================================================================ NOTE: DO NOT SEND CERTIFICATES OF OLD NOTES WITH THIS FORM. CERTIFICATES OF OLD NOTES SHOULD BE SENT ONLY WITH A LETTER OF TRANSMITTAL. -----END PRIVACY-ENHANCED MESSAGE-----