-----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, HrH59YofkhTUEiLOg0IdI36KXKPPTrxTgDVymnr9iTfLkJ53/QOKRnxMzoC4gey/ R5PrpVVHlC2NtzKJxsofug== 0000931763-98-003044.txt : 19981124 0000931763-98-003044.hdr.sgml : 19981124 ACCESSION NUMBER: 0000931763-98-003044 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981004 FILED AS OF DATE: 19981123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METROTRANS CORP CENTRAL INDEX KEY: 0000920464 STANDARD INDUSTRIAL CLASSIFICATION: TRUCK & BUS BODIES [3713] IRS NUMBER: 581393777 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23808 FILM NUMBER: 98757753 BUSINESS ADDRESS: STREET 1: 777 GREENBELT PKWY CITY: GRIFFIN STATE: GA ZIP: 30223 BUSINESS PHONE: 7702295995 MAIL ADDRESS: STREET 1: 777 GREENBELT PKWY CITY: GRIFFIN STATE: GA ZIP: 30223 10-Q 1 FOR PERIOD ENDED OCTOBER 4, 1998 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended October 4, 1998 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to ------ ------ Commission File Number 0-23808 METROTRANS CORPORATION (Exact name of Registrant as specified in its charter) GEORGIA 58-1393777 (State of Incorporation) (I.R.S. Employer Identification No.) 777 GREENBELT PARKWAY, GRIFFIN, GEORGIA 30223 (Address of principal executive offices, including zip code) (770) 229-5995 (Registrant's telephone number, including area code) --------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: Class Outstanding at November 18, 1998 - -------------------------------------- -------------------------------- Common Stock, $.01 Par Value 4,098,044 shares Page 1 of 18 METROTRANS CORPORATION QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED OCTOBER 4, 1998 TABLE OF CONTENTS ----------------- ITEM PAGE NUMBER NUMBER - ------ ------ PART I. FINANCIAL INFORMATION 1. Financial Statements: Consolidated Balance Sheets as of October 4, 1998 and December 31, 1997.............................................. 3 Consolidated Statements of Income for the three and nine months ended October 4, 1998 and September 28, 1997................... 4 Consolidated Statements of Cash Flows for the nine months ended October 4, 1998 and September 28, 1997......................... 5 Notes to Consolidated Financial Statements..................... 6 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................... 8 3. Quantitative and Qualitative Disclosures about Market Risk..... 13 PART II. OTHER INFORMATION 1. Legal Proceedings.............................................. 14 3. Defaults Upon Senior Securities................................ 14 5. Other Information.............................................. 15 6. Exhibits and Reports on Form 8-K............................... 16 Signature...................................................... 17 Index of Exhibits.............................................. 18 2 PART I. FINANCIAL INFORMATION - ------------------------------ ITEM 1. FINANCIAL STATEMENTS METROTRANS CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
OCTOBER 4, DECEMBER 31, 1998 1997 ---------- ----------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash............................................................ $ 0 $ 50 Accounts receivable, net of allowance for doubtful accounts of $74 and $77 in 1998 and 1997, respectively......... 14,458 9,151 Current portion of net investment in sales-type leases.......... 296 877 Inventories..................................................... 31,456 20,932 Prepaid expenses and other...................................... 1,482 1,333 ------- ------- Total current assets........................................... 47,692 32,343 PROPERTY, PLANT AND EQUIPMENT, net............................... 8,283 6,922 NET INVESTMENT IN SALES-TYPE LEASES.............................. 156 405 INTANGIBLES...................................................... 510 536 DEPOSITS AND OTHER............................................... 334 302 ------- ------- $56,975 $40,508 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses........................... $ 16,895 $ 7,726 Current portion of long-term debt............................... 19,121 1,087 Customer deposits............................................... 1,367 238 ------- ------- Total current liabilities...................................... 37,383 9,051 -------- ------- LONG-TERM DEBT, net of current portion........................... 1,636 11,945 -------- ------- OTHER NONCURRENT LIABILITIES..................................... 300 300 ------- ------- DEFERRED INCOME TAXES............................................ 183 183 ------- ------- STOCKHOLDERS' EQUITY: Preferred stock, no par value; 10,000,000 shares authorized..... 0 0 Common stock, $.01 par value; 20,000,000 shares authorized, 4,085,544 and 4,084,294 shares issued and outstanding in 1998 and 1997, respectively..................... 41 41 Additional paid-in capital...................................... 10,586 10,577 Deferred compensation........................................... (131) (210) Retained earnings............................................... 6,977 8,621 ------- ------- 17,473 19,029 ------- ------- $56,975 $40,508 ======= =======
The accompanying notes are an integral part of these balance sheets. 3 METROTRANS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Data) (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED --------------------------- --------------------------- OCTOBER 4, SEPTEMBER 28, OCTOBER 4, SEPTEMBER 28, 1998 1997 1998 1997 -------- ------- ------- ------- NET REVENUE $20,282 $21,731 $59,199 $58,716 COST OF SALES 18,835 17,482 51,159 48,351 -------- ------- ------- ------- Gross Profit 1,447 4,249 8,040 10,365 SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 4,063 2,426 9,828 7,156 -------- ------- ------- ------- Operating (Loss) Income (2,616) 1,823 (1,788) 3,209 INTEREST EXPENSE, net 365 256 919 1,048 -------- ------- ------- ------- (LOSS) INCOME BEFORE INCOME TAXES (2,981) 1,567 (2,707) 2,161 INCOME TAX (BENEFIT) PROVISION (1,170) 615 (1,063) 848 -------- ------- ------- ------- NET (LOSS) INCOME $(1,811) $ 952 $(1,644) $ 1,313 ======== ======= ======= ======= NET (LOSS) INCOME PER SHARE - BASIC $ (0.44) $ 0.23 $ (0.40) $ 0.32 ======== ======= ======= ======= - DILUTED $ (0.44) $ 0.23 $ (0.40) $ 0.32 ======== ======= ======= ======= WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 4,085 4,083 4,084 4,082 ======== ======= ======= ======= - DILUTED 4,085 4,109 4,084 4,111 ======== ======= ======= =======
The accompanying notes are an integral part of these statements. 4 METROTRANS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
NINE MONTHS ENDED ------------------------------ OCTOBER 4, SEPTEMBER 28, 1998 1997 -------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (1,644) $ 1,313 Adjustments to reconcile net (loss) income to net cash used in operating activities: Depreciation and amortization 492 499 Compensation under restricted stock award 79 78 Changes in assets and liabilities: Accounts receivable (5,307) (1,334) Inventories (10,524) (2,393) Other assets (181) 176 Accounts payable and accrued expenses 9,169 1,443 Customer deposits 1,129 (44) -------- ------- Total adjustments (5,143) (1,575) -------- ------- Net cash used in operating activities (6,787) (262) -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (1,852) (1,476) Net decrease in property held for lease 25 64 Net decrease in investment in sales-type leases 830 553 -------- ------- Net cash used in investing activities (997) (859) -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net (repayments) under line of credit 0 (7,297) Net (decrease) in collateralized borrowings (711) 0 Net borrowing of long-term debt 8,436 9,050 Net proceeds from issuance of common stock 9 0 -------- ------- Net cash provided by financing activities 7,734 1,753 -------- ------- (DECREASE) INCREASE IN CASH (50) 632 CASH AT BEGINNING OF PERIOD 50 22 -------- ------- CASH AT END OF PERIOD $ 0 $ 654 ======== ======= CASH PAID FOR INTEREST $ 845 $ 1,032 ======== ======= CASH PAID FOR TAXES $ 0 $ 88 ======== =======
The accompanying notes are an integral part of these statements. 5 METROTRANS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 4, 1998 (UNAUDITED) 1. Basis of Presentation --------------------- The financial statements include the accounts of Metrotrans Corporation and Subsidiaries (the "Company"). The financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and, therefore, omit certain information and footnotes required by generally accepted accounting principles for complete financial statements. Accordingly, these statements should be read in conjunction with the Company's audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 1997, filed with the Securities and Exchange Commission. In the opinion of management, the financial statements contain all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The adjustments were of a normal recurring nature. Results presented for the three-month and nine-month periods ended October 4, 1998, are not necessarily indicative of results that may be expected for the full fiscal year. 2. Inventories ----------- Inventories consist of (in thousands): October 4, 1998 December 31, 1997 --------------- ----------------- Chassis awaiting conversion.. $ 2,778 $ 3,437 Raw materials................ 5,484 4,549 Work in process.............. 3,878 1,524 Finished goods............... 12,019 6,287 Used vehicles................ 7,297 5,135 ------- ------- $31,456 $20,932 ======= ======= 6 3. Commitments and Contingencies ----------------------------- The Company enters into various leasing arrangements with customers and leasing companies. Certain leases contingently obligate the Company to indemnify the leasing company for any losses it incurs up to a specified amount on the lease in the event the lessee defaults. In addition, the Company enters into certain agreements with financial institutions whereby the Company guarantees varying amounts of customers' purchase debt obligations. The Company's obligation under these guarantees becomes effective in the case of default in payments or certain other defined conditions. The Company's aggregate potential liability under these arrangements as of October 4, 1998 and December 31, 1997 was $13.6 million and $12.0 million, respectively. During the nine months ended October 4, 1998, the Company purchased buses totaling approximately $2.0 million related to 1997 lease defaults and litigation settlements. Purchases to date have been or are expected to be sold to third parties for amounts approximating the purchase price. The Company is involved in certain legal matters primarily arising in the normal course of business. In the opinion of management, the Company's liability in any of these matters will not have a material adverse effect on its financial condition or results of operations. 4. New Accounting Pronouncements ----------------------------- The Company has no Other Comprehensive Income Items as defined by SFAS No. 130. In July 1998, the Financial Accounting Standards Board (the "FASB") issued SFAS No. 133 "Accounting for Derivative Instruments and for Hedging Activities". The Company must adopt the provisions of SFAS No. 133 January 1, 2000. The Company has not yet determined the impact of the adoption of SFAS No. 133. In 1997, the FASB issued SFAS No. 131, "Disclosure About Segments of an Enterprise and Related Information." The Company must adopt the provisions of SFAS No. 131 December 31, 1998. The Company believes the application of SFAS No. 131 will not significantly affect its financial statement disclosures. 5. Long-Term Debt -------------- As a result of the third quarter loss, the Company was not in compliance with certain financial covenants contained in its unsecured credit facility. The Company is in discussions with its lender seeking a waiver of the non-compliance and a forbearance of the lender's rights and remedies under the credit facility with respect to the non-compliance. Unless the Company obtains the waiver and forbearance agreement, the lender will be entitled to exercise its rights and remedies under the credit facility which include ceasing additional advances under the credit facility and/or demanding payment in full of the outstanding borrowings under the credit facility. If the lender were to take any of these actions, the Company's operations and financial condition will be materially and adversely affected unless it is able to secure new third party financing under terms and conditions reasonably satisfactory to the Company. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS The Private Securities Litigation Act of 1995 provides for the use of cautionary statements. Disclosures provided in this Report contain forward looking statements concerning among other things, production issues and year 2000 issues. Important factors that could cause actual results to differ materially from those in the forward looking statements include, but are not limited to the following: changes in price and demand for the Company's products; the effects of competition; changes in accounting policies and practices; inability to accurately estimate costs to achieve year 2000 issues; inability to obtain raw materials particularly chassis, on a timely and cost effective basis; inability to complete implementation of a manufacturing cost accounting system; and other related matters. OVERVIEW The Company was incorporated in 1982 for the purpose of designing, manufacturing and marketing shuttle and mid-size buses. Since the introduction of the Classic(R) in 1986, the Company has experienced significant growth in unit sales and revenues. The Company's product development strategy is to design and introduce new products after clearly identifying a market need based, in large part, on suggestions made by existing and potential customers. This approach resulted in the introduction of the Eurotrans(R) in 1990, the Eurotrans XLT(R) and the Classic II(R) in 1992, the Classic Commuter(R) in 1993, the Legacy LJ by Metrotrans(TM) in 1996 the Anthem(TM) in 1997 and the Classic XLT(TM) in 1998. Metrotrans began exclusive marketing of the Irizar Century in 1997 with the first deliveries occurring in the second quarter of 1998. 8 RESULTS OF OPERATIONS The following table sets forth, as a percentage of net revenue, the relationship of selected items included in the Company's income statement for the periods indicated. Three Months Ended Nine Months Ended ------------------ ----------------- Oct.4, Sept.28, Oct.4, Sept.28, 1998 1997 1998 1997 ----- ----- ----- ----- Net revenue................. 100.0 % 100.0% 100.0 % 100.0% Cost of sales............... 92.9 80.4 86.4 82.3 ----- ----- ----- ----- Gross profit................ 7.1 19.6 13.6 17.7 Selling, general and administrative expenses.... 20.0 11.2 16.6 12.2 ----- ----- ----- ----- Operating (loss) income..... (12.9) 8.4 (3.0) 5.5 Interest expense............ 1.8 1.2 1.6 1.8 ----- ----- ----- ----- (Loss) income before income taxes............... (14.7) 7.2 (4.6) 3.7 Income tax (benefit) provision.................. (5.8) 2.8 (1.8) 1.4 ----- ----- ----- ----- Net (loss) income........... (8.9)% 4.4% (2.8)% 2.3% ===== ===== ===== ===== NET REVENUE. Net revenue decreased 6.7% to $20.3 million for the three months ended October 4, 1998 from $21.7 million for the comparable prior year period and increased 0.8% during the first nine months of 1998 over the same nine-month period in 1997 to $59.2 million from $58.7 million. The decrease in net revenue for the 1998 quarter over the prior year third quarter resulted primarily from the inability of the Company to build and ship orders in the backlog. Work in process was at an all time high of approximately $3.9 million at October 4, 1998, resulting from the inability to timely resolve normal production related problems, and provide efficient throughput. The increase in net revenue for the first nine months of 1998 compared to the first nine months of 1997 resulted primarily from sales of the full-size Irizar Century motorcoach introduced in the second quarter of 1998. The increase for the nine-month period was offset by both a reduction in the unit volume of cutaway and other rear- engine models and by an increase during the current year third quarter in the mix of smaller and lesser-priced models versus the prior year third quarter. 9 Sales of cutaway models during the third quarter of 1998 were 221 units totaling $11.1 million compared with 282 units totaling $13.7 million in the same prior year period. The reduced sales are attributable to the production issues referred to above. Sales of cutaway models during the first nine months of 1998 were 673 units totaling $33.3 million compared with 763 units totaling $37.9 million in the first nine months of 1997. Sales of rear-engine models during the third quarter were 38 units totaling $5.8 million compared with 53 units totaling $5.1 million during the third quarter of 1997 and included $2.8 million from the sale of 8 units of the full- size Irizar Century motorcoach. Sales of rear engine models during the first nine months of 1998 were 96 units totaling $14.5 million, including 19 units of the Irizar Century, as compared to 115 units totaling $12.7 million in the first nine months of 1997. Sales of rear engine units manufactured by the Company were adversely affected by the inability of Spartan Motors, currently the Company's sole source vendor of rear engine chassis, to deliver units in accordance with the agreed delivery schedule. Production backlog at October 4, 1998 was approximately $38 million, including approximately $12 million in orders for the new Irizar Century full- size coach, compared with $16 million at the end of the third quarter of 1997. Sales of used buses by the Company's wholly-owned subsidiary, Bus Pro, in the third quarter of 1998 of $1.7 million were 15.0% below sales for the third quarter of 1997 of $2.0 million due to the change of Bus Pro's management information system to software more compatible with the processing of data necessary for capturing refurbishment costs for used vehicles. Due to these changes management had less time to focus on Bus Pro's selling efforts. Bus Pro orders have returned to traditional levels the first month of the fourth quarter. Sales of used buses by Bus Pro were $7.5 million for the nine months ended October 4, 1998, up 32.2% over comparable period year-to-date sales in 1997 of $5.7 million. The increase in year-to-date Bus Pro sales is, in part, a result of the greater capacity and operating efficiency brought about by the business unit's move to its newly-constructed sales, refurbishment and service facility in 1997. COST OF SALES AND GROSS PROFIT. Cost of sales increased 7.7% in the third quarter of 1998 to $18.8 million from $17.5 in the third quarter of 1997. Cost of sales increased 5.8% in the first nine months of 1998 to $51.2 million from $48.4 million in the first nine months of 1997. Cost of sales in the third quarter was adversely affected by production delays, an increase in labor costs, abnormal materials costs and higher than normal plant overhead. Labor costs in the third quarter of $1.8 million versus $1.5 million for the prior year quarter resulted from a higher headcount, a four-percent increase in hourly wage rate and more frequent use of overtime than in previous quarters. This increase in labor costs combined with lower sales had a dramatic impact on cost of sales. Materials costs increased from 30.6% of sales to 34.9% of sales as a result of price increases awarded numerous key vendors and inefficiencies created by a change of key personnel in the purchasing and materials control areas without implementation of succession planning and specialized training. Plant overhead 10 increased 40% from $1.0 million to $1.4 million due to increased headcount in engineering, plant maintenance and plant supervisory personnel. Also included in the plant overhead was extensive training necessary for the conversion of engineering design software from Auto-cad to the Pro E three-dimensional solid modeling system. For the foregoing reasons, the Company's gross profit decreased 65.9% to $1.4 million for the quarter ended October 4, 1998 from $4.2 million for the comparable period in 1997. The Company's gross profit for the first nine months of 1998 decreased 22.4% to $8.0 million from $10.4 million for the first nine months of 1997. Gross profit as a percent of net revenue was 7.1% during the third quarter of 1998 versus 19.6% in the third quarter of 1997. Gross profit, as a percent of net revenue for the nine months ended October 4, 1998 was 13.6%, down from 17.7% during the first nine months of 1997. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES AND OPERATING INCOME. Selling, general and administrative expenses ("SG&A") increased 67.5% to $4.0 million in the third quarter of 1998 from $2.4 million in the third quarter of 1997. SG&A increased 37.3% in the first nine months of 1998 to $9.8 million from $7.2 million in the first nine months of 1997. SG&A as a percentage of net revenue increased to 20.0% and 16.6% in the third quarter and first nine months of 1998, respectively, from 11.2% and 12.2%. Increases in SG&A were due primarily to increased legal expenses, abnormal expenditures for advertising , promotion and sales software, abnormal travel expenses, signing bonuses and relocation expenses for secondary level managers and costs related to the new position of Chief Operating Officer. The Company had an operating loss of $2.6 million for the third quarter of 1998 as compared to operating income of $1.8 million in the third quarter of 1997. The Company had an operating loss of $1.8 million for the first nine months of 1998 as compared to the operating income of $3.2 million in the first nine months of 1997. INTEREST EXPENSE. Interest expense of $365,000 in the third quarter of 1998 increased 42.6% from $256,000 for the third quarter of 1997. The increase for the quarter primarily was the net result of an increase in the average balance outstanding under the Company's revolving credit facility during the quarter resulting from higher inventory levels and higher accounts receivable partially offset by a reduction in the amount of interest paid to Ford Motor Credit Corporation for chassis held under the consignment pool agreement in excess of an initial 90-day non-interest bearing period resulting from the institution of procedures to better control chassis inventory levels. 11 LIQUIDITY AND CAPITAL RESOURCES Net cash used in operating activities during the nine months ended October 4, 1998 totaled $6.8 million compared with cash used in operating activities of $0.3 million in the comparable period in 1997. Increases in accounts receivable and inventory of $5.3 million and $10.5 million, respectively, offset in part by a $9.2 million increase in accounts payable, were primarily responsible for the cash used in operating activities during the period. The increase in inventory resulted primarily from an increase in finished goods and inventory related to Irizar sales and production, an increase in work in process, an increase in used coach inventory related to 1997 lease defaults and litigation settlements, and an increase in Legacy LJ by Metrotrans demonstrator units. The increases in inventory levels and in accounts receivable have caused the Company to draw down substantially all of the available limit on its line of credit. The Company has initiated steps to reduce inventory levels and to accelerate the collection of accounts receivable. In the first half of November 1998, the Company took positive steps to immediately reduce overhead by an annualized amount in excess of $3.5 million. Anticipated capital expenditures and increases in working capital are expected to be financed primarily through internally generated funds and through the Company's $20.0 million revolving credit facility. The three-year unsecured credit facility provides interest rate pricing at spreads over LIBOR that vary based on leverage. At October 4, 1998, the Company had approximately $18.7 million of borrowings outstanding under the revolving credit facility. Additionally, in accordance with an agreement dated August 21, 1998, between Mayflower Corporation plc and the Company, an unsecured credit facility of $15.0 million is available to the Company for working capital and capital asset expenditures; $4.5 million of this facility is scheduled for use in the Company's 1998 fiscal year. As a result of the third quarter loss, the Company was not in compliance with certain financial covenants contained in its unsecured credit facility. The Company is in discussions with its lender seeking a waiver of the non-compliance and a forbearance of the lender's rights and remedies under the credit facility with respect to the non-compliance. Unless the Company obtains the waiver and forbearance agreement, the lender will be entitled to exercise its rights and remedies under the credit facility which include ceasing additional advances under the credit facility and/or demanding payment in full of the outstanding borrowings under the credit facility. If the lender were to take any of these actions, the Company's operations and financial condition will be materially and adversely affected unless it is able to secure new third party financing under terms and conditions reasonably satisfactory to the Company. YEAR 2000 ISSUES. Like many other companies, the year 2000 computer issue creates risks for the Company. If internal systems do not correctly recognize and process date information beyond the year 1999, there could be an adverse impact on the Company's operations. There are two other related issues which could also lead to incorrect calculations or failures; (i) some systems' programming assigns special meaning to certain dates, such as 9/9/99, and (ii) the fact that the year 2000 is a leap year. The Company's manufacturing and distribution operations are not critically dependent on any mainframe, mini- computer or personal computer-based systems or software 12 applications. The Company has developed a plan to modify its information technology for the year 2000. During the past two years, the Company has implemented a program designed to update its information systems. Although the implementation of the program primarily is intended to provide better operating systems and accounting, inventory and production controls, the Company has been aware of the year 2000 issues in its selection of hardware and software. The third party vendors that have supplied new hardware and software have informed the Company that the new systems and software are year 2000 compliant. The Company has experienced delays in the implementation and integration of the new systems; however, the Company anticipates that the new systems will be operational prior to December 31, 1999. The Company also is conducting a review of other systems, which will be substantially completed by March 31, 1999, at a cost not material to its business, financial condition, or results of operations. As of October 4, 1998, the Company anticipates it will incur up to $50,000 in replacing and converting the Company's data processing and management information systems. The amount may increase as additional information is obtained to complete the replacement and conversion process. The Company believes that its most reasonably likely worst case year 2000 scenarios would relate to problems with the systems of third parties rather than with the Company's internal systems or its products. It is clear that the Company has the least ability to assess and remediate the year 2000 problems of third parties and the Company believes the risks are greatest with infrastructure (e. g. electricity supply, water and sewer service), telecommunications, transportation supply chains and suppliers of materials. While the Company is taking steps that it believes to be reasonable and prudent to assess the year 2000 readiness of third parties with whom the Company does business, the failure of any of these third parties to correct a material year 2000 problem could result in an interruption in, or a failure of, certain normal business activities or operations. Due to the general uncertainty inherent in the year 2000 problem, resulting in part from the uncertainty of the year 2000 readiness of third party suppliers and customers, the Company is unable to determine at this time whether the consequences of year 2000 failures will have a material impact on the Company's results of operations, liquidity, or financial condition. Readers are cautioned that forward-looking statements contained in this year 2000 update should be read in conjunction with the Company's disclosures regarding forward-looking statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FOREIGN CURRENCY RISK MANAGEMENT A third party foreign vendor constructs the Company's newly introduced full- size Irizar Century motorcoach. Fluctuations in the value of the Spanish Peseta create 13 exposure which can adversely affect the cost of the bus. The Company attempts to manage its foreign exchange exposure by entering into forward exchange contracts to hedge firm purchase commitments denominated in Pesetas. The Company does not enter into foreign currency forward contracts for speculative trading purposes. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is involved in certain other legal matters primarily arising in the normal course of business. In the opinion of management, the Company's liability in any of these matters will not have a material adverse effect on its financial condition or results of operations. ITEM 3. DEFAULTS UPON SENIOR SECURITIES As a result of the third quarter loss, the Company was not in compliance with certain financial covenants in its unsecured credit facility. The Company currently is in discussions with its lender seeking a waiver of the non- compliance and a forbearance of rights and remedies under the credit facility with respect to the non-compliance. Unless the Company obtains the waiver and forbearance agreement the lender will be entitled to exercise its rights and remedies under the credit facility which include ceasing additional advances under the credit facility and/or demanding payment in full of the outstanding borrowings under the credit facility. If the lender were to take any of these actions, the Company's operations and financial condition will be materially and adversely affected unless it is able to secure new third party financing under terms and conditions reasonably satisfactory to the Company. 14 ITEM 5. OTHER INFORMATION Recent Events - ------------- On November 18, 1998, the Company gave notice of termination of Jerry J. Schweiner's employment as the President and Chief Operating Officer of the Company. In an unrelated event in early September 1998, Richard M. Bruno delivered his resignation as the Chief Financial Officer, Treasurer and Secretary of the Company effective September 30, 1998. There were no disputes with Mr. Bruno who resigned to pursue opportunities closer to his residence. Shareholders' Proposals for Presentation at the 1999 Annual Meeting - ------------------------------------------------------------------- The Securities and Exchange Commission has made recent changes to the proxy rules in Regulation 14A under the Securities Exchange Act of 1934, as amended, including Rule 14a-4 and Rule 14a-5. Shareholders are entitled to submit proposals on matters appropriate for shareholder action consistent with the rules and regulations of the Securities and Exchange Commission and with the Company's Bylaws. Shareholders who wish to present business at the 1999 Annual Meeting of Shareholders (1999 Annual Meeting) are required to provide notice to the Corporate Secretary of their intent to do so on or before December 25, 1998, and such notice must provide the information set forth in the Company's Amended and Restated Bylaws. A copy of the Bylaw requirements will be provided upon written request to the Corporate Secretary, Metrotrans Corporation, 777 Greenbelt Parkway, Griffin, Georgia 30223. This deadline applies to all shareholder proposals sought to be considered at the 1999 Annual Meeting (including those sought to be included in the Proxy Statement for the 1999 Annual Meeting). 15 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed with this report: 3.1 Amended and Restated Bylaws of the Registrant. 10.1 Second Amendment to Loan Agreement dated as of August 21, 1998, by and between Metrotrans Corporation and NationsBank, N.A. 10.2 Third Amendment to Loan Agreement dated as of September 15, 1998, by and between Metrotrans Corporation and NationsBank, N.A. (b) The Company filed the following Current Reports on Form 8-K during the Quarter ended October 4, 1998: 1) Current Report on Form 8-K dated August 25, 1998 with respect to the execution of the Agreement (the "Mayflower Agreement") dated August 21, 1998, between Mayflower Corporation plc ("Mayflower"), Mayflower (U.S. Holdings), Inc., the Company, D. Michael Walden, Terri B. Hobbs, M. Earl Meck and Randy B. Stanley, pursuant to which, among other things, Mayflower agreed to purchase from M. Earl Meck and Randy B. Stanley all of their shares of Metrotrans Common Stock at a purchase price of $15.00 per share and to loan to the Company up to $15 million. 2) Current Report on Form 8-K dated September 28, 1998 with respect to the consummation of the transactions contemplated by the Mayflower Agreement. 16 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. METROTRANS CORPORATION (Registrant) Date: November 23, 1998 /s/ D. Michael Walden --------------------------------- D. Michael Walden Chairman of the Board and Chief Executive Officer (Duly Authorized Officer) 17 INDEX OF EXHIBITS EXHIBIT NO. - ----------- 3.1 Amended and Restated Bylaws of the Registrant. 10.1 Second Amendment to Loan Agreement dated as of August 21, 1998, by and between Metrotrans Corporation and NationsBank, N.A. 10.2 Third Amendment to Loan Agreement dated as of September 15, 1998, by and between Metrotrans Corporation and NationsBank, N.A. 18 EX-3.1 2 AMENDED AND RESTATED BY-LAWS EXHIBIT 3.1 AMENDED AND RESTATED -------------------- BYLAWS ------ OF -- METROTRANS CORPORATION ---------------------- ARTICLE I SHAREHOLDERS SECTION 1.1. Annual Meetings. The annual meeting of the shareholders of --------------- the corporation shall be held each year for the purposes of electing directors and of transacting such other business as properly may be brought before the meeting. To be properly brought before the meeting, business, including nominations for director, must be brought before the meeting (i) by or at the direction of the board of directors or (ii) by any shareholder of the corporation who complies with the notice procedures set forth in this Section 1.1; provided, in each case, that such business proposed to be conducted is, under the law, an appropriate subject for shareholder action. For business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation, in accordance with Securities and Exchange Commission Rule 14a-8(a)(3)(i), not less than 120 calendar days prior to the first anniversary of the date of the corporation's proxy statement released to shareholders in connection with the previous year's annual meeting of shareholders, except that if no annual meeting of shareholders was held in the previous year or if the date of the annual meeting of shareholders has been changed by more than 30 calendar days from the date contemplated at the time of the previous year's proxy statement, the notice shall be received at the principal executive offices of the corporation not less than 150 calendar days prior to the date of the annual meeting. A shareholder's notice to the Secretary shall set forth as to each matter such shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the corporation's books, of the shareholder proposing such business, (iii) the class and number of shares of the corporation which are beneficially owned by such shareholder, (iv) the dates upon which the shareholder acquired such shares, (v) documentary support for any claim of beneficial ownership, (vi) any material interest of such shareholder in such business and (vii) a statement in support of the matter and any other information required by said Rule 14a-8. In the case of nominations for director, in addition to the foregoing, a shareholder's notice to the Secretary shall set forth as to each person whom such shareholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected). The chairman of an annual meeting may, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 1.1, and, if he should so determine, he shall so declare to the meeting and any such business so determined to be not properly brought before the meeting shall not be transacted. SECTION 1.2. Special Meetings. The corporation shall hold a special ---------------- meeting of shareholders on call of the board of directors, the Chairman of the Board, the President, or, upon delivery to the corporation's Secretary of a signed and dated written request setting out the purpose or purposes for the meeting, on call of the holders of 50% of the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. Only business within the purpose or purposes described in the notice of special meeting required by Section 1.4 below may be conducted at a special meeting of the shareholders. SECTION 1.3. Date, Time and Place of Meetings. All meetings of -------------------------------- shareholders shall be held on such date and at such time and place, within or without the State of Georgia, as may be fixed from time to time by the board of directors. The date, time and place of all meetings shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. If no designation is made, the place of the meeting shall be the principal business office of the corporation. SECTION 1.4. Notice of Meetings. The Secretary or an Assistant Secretary ------------------ shall deliver, either personally or by first-class mail, a written notice of the place, day, and time of all meetings of the shareholders not less than ten (10) nor more than sixty (60) days before the meeting date to each shareholder of record entitled to vote at such meeting. Written notice is effective when mailed, if mailed with first-class postage prepaid and correctly addressed to the shareholder's address shown in the corporation's current record of shareholders. In the case of a special meeting, the purpose or purposes for which the meeting is called shall be included in the notice of the special meeting. If an annual or special shareholders' meeting is adjourned to a different date, time, or place, notice of the new date, time, or place need not be given if the new date, time, or place is announced at the meeting before adjournment. However, if a new record date for the adjourned meeting is or must be fixed under Section 1.5 herein, notice of the adjourned meeting must be given to persons who are shareholders as of the new record date. SECTION 1.5. Record Date. The board of directors, in order to determine ----------- the shareholders entitled to notice of or to vote at any meeting of the shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, shall fix in advance a record date that may not be more than seventy (70) days before the meeting or action requiring a determination of shareholders. Only such shareholders as shall be shareholders of record on the date fixed shall be entitled to such notice of or to vote at such meeting or any adjournment thereof, or to receive payment of any such dividend or other distribution or allotment of any rights, or to exercise any such rights in respect of stock, or to take any such other lawful action, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. The record date shall apply to any adjournment of the meeting except that the board of directors shall fix a new record date for the adjourned meeting if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. SECTION 1.6. Shareholders' List for Meeting. After fixing a record date ------------------------------ for a meeting, the corporation shall prepare an alphabetical list of the names of all shareholders who are entitled to notice of the shareholders' meeting. The list shall be arranged by voting group (and within each voting group by class or series of shares) and show the address of and number of shares held by each shareholder. The corporation shall make the shareholders' list available for inspection by any shareholder, his agent, or his attorney at the time and place of the meeting. SECTION 1.7. Quorum. Subject to any express provision of law or the ------ articles of incorporation, a majority of the votes entitled to be cast by all shares voting together as a group shall constitute a quorum for the transaction of business at all meetings of the shareholders. Whenever a class of shares or series of shares is entitled to vote as a separate voting group on a matter, a majority of the votes entitled to be cast by each voting group so entitled shall constitute a quorum for purposes of action on any matter requiring such separate voting. Once a share is represented, either in person or by proxy, for any purpose at a meeting other than solely to object to holding a meeting or transacting business at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is set for the adjourned meeting. SECTION 1.8. Adjournment of Meetings. The holders of a majority of the ----------------------- voting shares represented at a meeting, or the Chairman of the Board or the President, whether or not a quorum is present, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the adjourned meeting. SECTION 1.9. Vote Required. When a quorum exists, action on a matter ------------- (other than the election of directors) by a voting group is approved if the -2- votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the articles of incorporation, a bylaw authorized by the articles of incorporation or express provision of law requires a greater number of affirmative votes. Unless otherwise provided in the articles of incorporation, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. Shareholders do not have the right to cumulate their votes unless the articles of incorporation so provide. SECTION 1.10. Voting Entitlement of Shares. Unless otherwise provided in ---------------------------- the articles of incorporation, each shareholder, at every meeting of the shareholders, shall be entitled to cast one vote, either in person or by written proxy, for each share standing in his or her name on the books of the corporation as of the record date. A shareholder may vote his shares in person or by proxy. An appointment of proxy is effective when received by the Secretary of the corporation or other officer or agent authorized to tabulate votes and is valid for eleven (11) months unless a longer period is expressly provided in the appointment of proxy form. An appointment of proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. SECTION 1.11. Action by Shareholders Without a Meeting. Any action ---------------------------------------- required or permitted to be taken at a shareholders' meeting may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action, or, if so provided in the articles of incorporation, by persons who would be entitled to vote at a meeting shares having voting power to cast not less than the minimum number (or numbers, in the case of voting by groups) of votes that would be necessary to authorize or take the action at a meeting at which all shareholders entitled to vote were present and voted. The action must be evidenced by one or more written consents describing the action taken, signed by shareholders entitled to take action without a meeting and delivered to the corporation for inclusion in the minutes or for filing with the corporate records. No written consent shall be valid unless the consenting shareholder has been furnished the same material that would have been required to be sent to the shareholders in a notice of a meeting at which the proposed action would have been submitted to the shareholders for action, including notice of any applicable dissenters' right, or the written consent contains an express waiver of the right to receive the material otherwise required to be furnished. Action with respect to any election of directors as to which shareholders would be entitled to cumulative voting may be taken without a meeting only by written consent of all the shareholders entitled to vote on the action. Written notice, together with the materials that would have been required to be sent in a notice of meeting, shall be given within ten (10) days of the taking of the corporate action without a meeting by less than unanimous written consent to all persons who are voting shareholders on the date the consent is first executed and who have not consented in writing. ARTICLE II. BOARD OF DIRECTORS ------------------ SECTION 2.1. General Powers. Subject to the articles of incorporation, -------------- bylaws approved by the shareholders and any lawful agreement between the shareholders, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, the board of directors. SECTION 2.2. Number and Tenure. The board of directors shall consist of ----------------- eight members, nominated in accordance with Section 2.15 hereof. No decrease in the number or minimum number of directors, through amendment of the articles of incorporation or of the bylaws or otherwise, shall have the effect of shortening the term of any incumbent director. Directors shall be elected at the annual meeting of shareholders and their terms shall expire at the next annual shareholders' meeting (unless the board of directors is divided into classes pursuant to the articles of incorporation in which case each director's term will expire when the term of such director's class expires); provided, however, that despite the expiration of a director's term he or she shall continue to serve until a successor is elected and qualified or until there is a decrease in the number of directors. The number of directors shall not be increased or decreased without the approval of (a) a majority of the Non-Mayflower Directors (as defined in Section 2.15 of these Bylaws) and (b) a majority of the Mayflower Nominated Directors (as defined in Section 2.15 of these Bylaws). Any amendment to this Section 2.2 shall require the approval of (y) a majority of the directors and (z) of a majority of the Mayflower Nominated Directors. -3- SECTION 2.3. Qualifications of Directors. Directors shall be natural --------------------------- persons who have attained the age of 18 years but need not be residents of the State of Georgia or shareholders of the corporation. SECTION 2.4. Vacancy on the Board. Unless the articles of incorporation -------------------- provide otherwise and subject to the following sentence, if a vacancy occurs on the board of directors, including a vacancy resulting from an increase in the number of directors, the vacancy may be filled by the shareholders, board of directors, or, if the directors remaining in office constitute fewer than a quorum of the Board, by the affirmative vote of a majority of all directors remaining in office. In the event any Non-Mayflower Director (as defined in Section 2.15 of these Bylaws) who is not a Continuing Director (as defined below) ceases to serve as a director of the corporation, whether as a result of his or her resignation, removal or otherwise, such Non-Mayflower Director's successor shall be named by majority vote of the remaining Non-Mayflower Directors to serve until the next annual meeting of stockholders of the corporation and such successor shall thereafter be treated as a Non-Mayflower Director for purposes of Sections 2.2, 2.4 and 2.15. In the event any Continuing Director ceases to serve as a director of the corporation, whether as a result of his or her resignation, removal or otherwise, such Continuing Director's successor shall be named by majority vote of the remaining Continuing Directors to serve until the next annual meeting of stockholders of the corporation and such successor shall thereafter be treated as a Continuing Director for purposes of Sections 2.2, 2.4, 7.4 and 7.5 hereof. In the event any Mayflower Nominated Director (as defined in Section 2.15 of these Bylaws) ceases to serve as a director of the corporation, whether as a result of his or her resignation, removal or otherwise, such Mayflower Nominated Director's successor shall be named by majority vote of the remaining Mayflower Nominated Directors to serve until the next annual meeting of stockholders of the corporation and such successor shall thereafter be treated as a Mayflower Nominated Director for purposes of this Bylaw. The term "Continuing Directors" shall mean D. Michael Walden, Patrick L. Flinn, George W. Mathews and William C. Pitt III, and their successors elected in accordance with this Bylaw. The Continuing Directors also are deemed to be Non-Mayflower Directors. Any amendment to this Bylaw shall require the approval of (a) a majority of the directors and (b) of a majority of the Mayflower Nominated Directors. SECTION 2.5. Committees. The board of directors may, by resolution, ---------- designate from among its members one or more committees, each committee to consist of one or more directors, except that committees appointed to take action with respect to indemnification of directors, directors' conflicting interest transactions or derivative proceedings shall consist of two or more directors qualified to serve pursuant to the Georgia Business Corporation Code. Any such committee, to the extent specified by the board of directors, articles of incorporation or bylaws, shall have and may exercise all of the authority of the board of directors in the management of the business affairs of the corporation, except that it may not (1) approve or propose to shareholders action that the Georgia Business Corporation Code requires to be approved by shareholders, (2) fill vacancies on the board of directors or any of its committees, (3) amend the articles of incorporation, (4) adopt, amend, or repeal bylaws or (5) approve a plan of merger not requiring shareholder approval. The creation of, delegation of authority to or action by a committee does not alone constitute compliance by a director with the standards of conduct described in Georgia Business Corporation Code Section 14-2-830 or successor provisions regarding standards for directors. -4- SECTION 2.6. Meetings. The board of directors shall meet annually, -------- without notice, immediately following and at the same place as the annual meeting of shareholders. Regular meetings of the board of directors or any committee may be held between annual meetings without notice at such time and at such place, within or without the State of Georgia, as from time to time shall be determined by the Board or committee, as the case may be. Any director may call a special meeting of the directors at any time by giving each director two (2) days notice. Such notice may be given orally or in writing. If given in writing, it is effective when received or five days after its deposit in the mail if mailed with first-class postage pre-paid and correctly addressed. Neither the business to be transacted at, nor the purpose of, any regular or special meeting need be specified in the notice or any waiver of notice. SECTION 2.7. Quorum and Voting. At all meetings of the board of directors ----------------- or any committee thereof, a majority of the number of directors prescribed, or if no number is prescribed, the number in office immediately before the meeting begins, shall constitute a quorum for the transaction of business. The affirmative vote of a majority of the directors present at any meeting at which there is a quorum at the time of such act shall be the act of the Board or of the committee, except as might be otherwise specifically provided by statute or by the articles of incorporation or bylaws. SECTION 2.8. Action Without Meeting. Unless the articles of incorporation ---------------------- or bylaws provide otherwise, any action required or permitted to be taken at any meeting of the board of directors or any committee thereof may be taken without a meeting if the action is taken by all members of the Board or committee, as the case may be. The action must be evidenced by one or more written consents describing the action taken, signed by each director, and filed with the minutes of the proceedings of the Board or committee or filed with the corporate records. SECTION 2.9. Remote Participation in a Meeting. Unless otherwise --------------------------------- restricted by the articles of incorporation or the bylaws, any meeting of the board of directors may be conducted by the use of any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. SECTION 2.10. Compensation of Directors. The board of directors may fix ------------------------- the compensation of the directors for their services as directors. No provision of these bylaws shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefore. SECTION 2.11. Removal of Directors by Shareholders. Subject to the ------------------------------------ requirements of Georgia Business Corporation Code for the removal of directors elected by voting groups or staggered terms, and the articles of incorporation, any one or more directors may be removed from office, with or without cause, at any meeting of shareholders with respect to which notice of such purpose has been given, by the affirmative vote of the holder or holders of a majority of the outstanding shares of the corporation. A removed director's successor may be elected at the same meeting or time to serve the unexpired term. SECTION 2.12 Reserved. -------- SECTION 2.13 Reserved. -------- SECTION 2.14 Reserved. -------- SECTION 2.15. Nomination of Directors. Only persons who are nominated in ----------------------- accordance with the following procedures shall be eligible for election as directors. Nominations of persons for election to the board of directors of the corporation may be made at a meeting of shareholders by the board of directors or at the direction of the Board in accordance with the provisions of this Section 2.15. Any shareholder of the corporation entitled to vote for the election of directors may recommend to the Board any person for the Board to consider as a nominee. For so long as the Agreement dated August 21, 1998, among The Mayflower Corporation plc ("Mayflower"), Mayflower (U.S. Holdings), Inc., the corporation, D. Michael Walden, Terri B. Hobbs, Randolph B. Stanley, and M. Earl Meck remains in force and effect, and Mayflower is not in breach of its obligations thereunder, Mayflower shall be entitled to nominate three -5- persons for election as directors of the corporation (the "Mayflower Nominated Directors") at each annual meeting of stockholders. The remaining five directors of the corporation (the "Non-Mayflower Directors") shall be nominated by majority vote of the Non-Mayflower Directors then serving as directors of the corporation. Nominations shall be made by or at the direction of the board of directors, the Mayflower Nominated Directors, the Non-Mayflower Directors or the Continuing Directors. A shareholder's recommendation to the board of a proposed nominee shall be delivered to or mailed and received at the principal executive offices of the corporation, in the case of an annual meeting, in accordance with the provisions of Section 1.1 of these bylaws and, in the case of a special meeting, pursuant to Sections 1.2 and 1.4 of these bylaws. The corporation may require any proposed nominee to furnish such information as reasonably may be required by the corporation to determine the eligibility of such proposed nominee to serve as a director of the corporation. The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a recommendation was not made in accordance with the foregoing procedures, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Any amendment to this Section 2.15 shall require the approval of (y) a majority of the directors and (z) of a majority of the Mayflower Nominated Directors. ARTICLE III NOTICES SECTION 3.1. Notice. Whenever, under the provisions of the articles of ------ incorporation or of these bylaws or by law, notice is required to be given to any director or shareholder, it shall not be construed to require personal notice, but such notice may be given in writing, by mail, or by telegram, telex or facsimile transmission and such notice shall be deemed to be effective when received, or when delivered, properly addressed, to the addressee's last known principal place of business or residence, or five days after the same shall be deposited in the United States mail if mailed with first-class postage prepaid and correctly addressed or on the date shown on the return receipt, if sent by registered or certified mail, and the receipt is signed by or on behalf of the addressee. Notice to any director or shareholder may also be oral if oral notice is reasonable under the circumstances. If these forms of personal notice are impractical, notice may be communicated by a newspaper of general circulation in the area where published, or by radio, television, or other form of public broadcast communication. SECTION 3.2. Waiver of Notice. Whenever any notice is required to be ---------------- given under provisions of the articles of incorporation or of these bylaws or by law, a waiver thereof, signed by the person entitled to notice and delivered to the corporation for inclusion in the minutes or filing with the corporate records, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting and of all objections to the place or time of the meeting or the manner in which it has been called or convened, except when the person attends a meeting for the express purpose of stating, at the beginning of the meeting, any such objection and, in the case of a director, does not thereafter vote for or assent to action taken at the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of the shareholders, directors or a committee of directors need be specified in any written waiver of notice; provided, however, that any waiver of notice of a meeting of shareholders required with respect to a plan of merger or a plan of consolidation shall be effective only upon compliance with Section 14- 2-706(c) of the Georgia Business Corporation Code or successor provisions. ARTICLE IV OFFICERS SECTION 4.1. Appointment. The board of directors at each Annual Meeting ----------- of directors shall elect such officers as it shall deem necessary, including a Chairman of the Board, a President, a Secretary, a Treasurer, one or more Vice President (one or more of whom may be designated Executive Vice President or Senior Vice President), Assistant -6- Vice Presidents, Assistant Secretaries and Assistant Treasurers, who shall exercise such powers and perform such duties as shall be determined from time to time by the board of directors. The board of directors may designate any such officer as the Chief Executive Officer, Deputy Chief Executive Officer, Chief Operating Officer or Chief Financial Officer, as from time to time shall be determined by the board of directors. Any number of offices may be held by the same person, unless the Articles of Incorporation or these Bylaws otherwise provide. The appointment of an officer does not itself create contract rights. SECTION 4.2. Resignation and Removal of Officers. An officer may resign ----------------------------------- at any time by delivering notice to the corporation and such resignation is effective when the notice is delivered unless the notice specifies a later effective date. The board of directors may remove any officer at any time with or without cause. SECTION 4.3. Vacancies. Any vacancy in office resulting from any cause --------- may be filled by the board of directors or by any officer authorized by the board of directors or these bylaws to appoint such officer. SECTION 4.4. Powers and Duties. Each officer has the authority and shall ----------------- perform the duties set forth below or, to the extent consistent with these bylaws, the duties prescribed by the board of directors or by direction of an officer authorized by the board of directors to prescribe the duties of other officers. (a) Chairman of the Board. The Chairman of the Board shall be the Chief --------------------- Executive Officer of the corporation, unless otherwise designated by the board of directors and shall be responsible for the general supervision of the policies of the Corporation and provide active management of the business affairs of the corporation. He or she shall preside at all meetings of the shareholders, meetings of the board of directors and shall be an ex officio member of any committee of the board of directors. He or she also shall have such powers and perform such duties as are specifically imposed by law and as may be assigned, from time to time, by the board of directors. The Deputy Chief Executive Officer, if so designated, shall report to the Chief Executive Officer and have such duties and responsibilities as shall be assigned, from time to time, by the Chief Executive Officer or the board of directors. (b) President. The President may be the Chief Operating Officer of the --------- corporation, if so designated by the board of directors, and shall be responsible for the administration of the corporation and for general and active management of the operations of the corporation as well as such other duties as shall be assigned by the Chairman of the Board and by the board of directors. He or she shall have the power to make and execute contracts on behalf of the corporation and to delegate such power to others. He or she also shall have such powers and perform such duties as are specifically imposed by law and as may be assigned to him, from time to time, by the board of directors or the Chief Executive Officer. (c) Vice Presidents. The Vice Presidents, if any, shall perform such --------------- duties as vice presidents customarily perform and shall perform such other duties and shall exercise such other powers as the President or the board of directors may from time to time designate. The Vice President, in the absence or disability or at the direction of the President, shall perform the duties and exercise the powers of the President. If the corporation has more than one Vice President, the one designated by the board of directors shall act in lieu of the President, or, in the absence of any such designation, then the Vice President first elected shall act in lieu of the President. -7- (d) Secretary. The Secretary shall attend all meetings of the --------- shareholders and all meetings of the board of directors and shall record all votes and minutes of all proceedings in books to be kept for that purpose, and shall perform like duties for the standing committees when required. He or she shall have custody of the corporate seal of the corporation, shall have the authority to affix the same to any instrument the execution of which on behalf of the corporation under its seal is duly authorized and shall attest to the same by his signature whenever required. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest to the same by his signature. The Secretary shall give, or cause to be given, any notice required to be given of any meetings of the shareholders, the board of directors and of the standing committees when required. The Secretary shall cause to be kept such books and records as the board of directors, the Chairman of the Board or the President may require and shall cause to be prepared, recorded, transferred, issued, sealed and cancelled certificates of stock as required by the transactions of the corporation and its shareholders. The Secretary shall attend to such correspondence and shall perform such other duties as may be incident to the office of a Secretary of a corporation or as may be assigned to him by the board of directors, the Chairman of the Board or the President. (e) Treasurer. The Treasurer shall be charged with the management of --------- financial affairs of the corporation. He or she shall perform such duties as treasurers usually perform and shall perform such other duties and shall exercise such other powers as the board of directors, the Chairman of the Board or the President may from time to time designate and shall render to the Chairman of the Board, the President and to the board of directors, whenever requested, an account of the financial condition of the corporation. (f) Assistant Vice President, Assistant Secretary and Assistant Treasurer. --------------------------------------------------------------------- The Assistant Vice President, Assistant Secretary and Assistant Treasurer, in the absence or disability of any Vice President, the Secretary or the Treasurer, respectively, shall perform the duties and exercise the powers of those offices, and, in general, they shall perform such other duties as shall be assigned to them by the board of directors or by the person appointing them. Specifically the Assistant Secretary may affix the corporate seal to all necessary documents and attest the signature of any officer of the corporation. SECTION 4.5. Delegation of Authority. In case of the absence of any ----------------------- officer of the corporation or for any other reason that the board of directors may deem sufficient, the board of directors may delegate, for the time being, any or all of the powers or duties of such officer to any other officer or to any director. SECTION 4.6 Appointment by Officers. A duly appointed officer may appoint ----------------------- one or more officers or assistant officers if authorized by the board of directors. ARTICLE V CAPITAL STOCK SECTION 5.1. Share Certificates. Unless the articles of incorporation or ------------------ these bylaws provide otherwise, the board of directors may authorize the issue of some or all of the shares of any or all of its classes or series with or without certificates. Unless the Georgia Business Corporation Code provides otherwise, there shall be no differences in the rights and obligations of shareholders based on whether or not their shares are represented by certificates. -8- In the event that the board of directors authorizes shares with certificates, each certificate representing shares of stock of the corporation shall be in such form as shall be approved by the board of directors and shall set forth upon the face thereof the name of the corporation and that it is organized under the laws of the State of Georgia, the name of the person to whom the certificate is issued, and the number and class of shares and the designation of the series, if any, the certificate represents. The board of directors may designate any one or more officers to sign each share certificate, either manually or by facsimile. In the absence of such designation, each share certificate must be signed by the President or a Vice President and the Secretary or an Assistant Secretary. If the person who signed a share certificate, either manually or in facsimile, no longer holds office when the certificate is issued, the certificate is nevertheless valid. SECTION 5.2. Record of Shareholders. The corporation or an agent ---------------------- designated by the board of directors shall maintain a record of the corporation's shareholders in a form that permits preparation of a list of names and addresses of all shareholders, in alphabetical order by class or shares showing the number and class of shares held by each shareholder. SECTION 5.3. Lost Certificates. In the event that a share certificate is ----------------- lost, stolen or destroyed, the board of directors may direct that a new certificate be issued in place of such certificate. When authorizing the issue of a new certificate, the board of directors may require such proof of loss as it may deem appropriate as a condition precedent to the issuance thereof, including a requirement that the owner of such lost, stolen or destroyed certificate, or his legal representative, advertise the same in such manner as the Board shall require and/or that he give the corporation a bond in such sum as the Board may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. SECTION 5.4. Transfers of Shares. ------------------- (a) Transfers of shares of the capital stock of the corporation shall be made only upon the books of the corporation by the registered holder thereof, or by his duly authorized attorney, or with a transfer clerk or transfer agent appointed as provided in Section 5.5 hereof, and, in the case of a share represented by certificate, on surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon. (b) The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, to vote as such owner, and for all other purposes, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. SECTION 5.5. Transfer Agents and Registrars. The board of directors may ------------------------------ establish such other regulations as it deems appropriate governing the issue, transfer, conversion and registration of stock certificates, including appointment of transfer agents, clerks or registrars. ARTICLE VI INDEMNIFICATION SECTION 6.1. Indemnification of Officers, Employees and Agents. The ------------------------------------------------- corporation may indemnify and advance expenses to an officer, employee or agent who is not a director to the extent permitted by the articles of incorporation, the bylaws or by law. SECTION 6.2. Insurance. The corporation may purchase and maintain --------- insurance, at its expense, on behalf of an individual who is or was a director, officer, employee or agent of the corporation or who, while a director, officer, employee or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, -9- employee benefit plan, or other enterprise, against liability asserted against or incurred by him or her in any such capacity or arising from his status as a director, officer, employee or agent, whether or not the corporation would have power to indemnify him or her against the same liability under this Article. ARTICLE VII GENERAL PROVISIONS SECTION 7.1. Seal. The corporation may have a seal, which shall be in ---- such form as the board of directors may from time to time determine. In the event that the use of the seal is at any time inconvenient, the signature of an officer of the corporation, followed by the word "Seal" enclosed in parenthesis, shall be deemed the seal of the corporation. SECTION 7.2. Voting Shares in Subsidiaries. In the absence of other ----------------------------- arrangements by the board of directors, shares of stock issued by another corporation and owned or controlled by the corporation, whether in a fiduciary capacity or otherwise, may be voted by the President or any Vice President, in the absence of action by the President, in the same order as they preside in the absence of the President, or, in the absence of action by the President or any Vice President, by any other officer of the corporation, and such person may execute the aforementioned powers by executing proxies and written waivers and consents on behalf of the corporation. SECTION 7.3. Amendment of Bylaws. These bylaws may be amended or repealed ------------------- and new bylaws may be adopted by the board of directors at any regular or special meeting of the board of directors unless the articles of incorporation or the Georgia Business Corporation Code reserve this power exclusively to the shareholders in whole or in part or the shareholders, in amending or repealing the particular bylaw, provide expressly that the board of directors may not amend or repeal that bylaw. Unless the shareholders have fixed a greater quorum or voting requirement, these bylaws also may be altered, amended or repealed and new bylaws may be adopted by a majority vote of all shares voted at any annual or special meeting of the shareholders. A bylaw limiting the authority of the board of directors or establishing staggered terms for directors may only be adopted, amended, or repealed by the shareholders. Except as provided in Sections 14-2-1113 and - 1133 of the Georgia Business Corporation Code, a bylaw that fixes a greater quorum or voting requirement for shareholders may be adopted, amended or repealed only by the shareholders. A bylaw that fixes a greater quorum or voting requirement for the board of directors may be adopted only by the affirmative vote of holders of a majority of the shares entitled to be cast or by a majority of the entire board of directors. SECTION 7.4 Fair Price Requirements. All of the requirements of Sections ----------------------- 14-2-1110 to 14-2-1113, inclusive, of the Georgia Business Corporation Code, as now in effect and as hereafter from time to time amended, shall be applicable to the corporation and to any business combination approved or recommended by the board of directors. SECTION 7.5 Business Combinations. All of the requirements of Section 14- --------------------- 2-1131 to 14-2-1133, inclusive, of the Georgia Business Combination Code, as now in effect and as hereafter from time to time amended, shall be applicable to the corporation and to any business combination with an interested shareholder. ARTICLE VIII EMERGENCY BYLAWS SECTION 8.1. Emergency Bylaws. This Article shall be operative during any ---------------- emergency resulting from some catastrophic event that prevents a quorum of the board of directors or any committee thereof from being readily assembled (an "emergency"), notwithstanding any different or conflicting provisions set forth -10- elsewhere in these bylaws or in the articles of incorporation. To the extent not inconsistent with the provisions of this Article, the bylaws set forth elsewhere herein and the provisions of the articles of incorporation shall remain in effect during such emergency, and upon termination of such emergency, the provisions of this Article shall cease to be operative. SECTION 8.2. Meetings. During any emergency, a meeting of the board of -------- directors or any committee thereof may be called by any director, or by the President, any Vice President, the Secretary or the Treasurer (the "Designated Officers") of the corporation. Notice of the time and place of the meeting shall be given by any available means of communication by the person calling the meeting to such of the directors and/or designated officers as may be feasible to reach. Such notice shall be given at such time in advance of the meeting as, in the judgement of the person calling the meeting, circumstances permit. SECTION 8.3 Quorum. At any meeting of the board of directors or any ------ committee thereof called in accordance with this Article, the presence or participation of two directors, one director and a designated officer, or two designated officers shall constitute a quorum for the transaction of business. SECTION 8.4. Bylaws. At any meeting called in accordance with this ------ Article, the board of directors or committee thereof, as the case may be, may modify, amend or add to the provisions of this Article so as to make any provision that may be practical or necessary for the circumstance of the emergency. SECTION 8.5. Liability. Corporate action taken in good faith in --------- accordance with the emergency bylaws may not be used to impose liability on a director, officer, employee or agent of the corporation. SECTION 8.6. Repeal or Change. The provisions of this Article shall be ---------------- subject to repeal or change by further action of the board of directors or by action of shareholders, but no such repeal or change shall modify the provisions of the immediately proceeding Section of this Article with regard to action taken prior to the time of such repeal or change. -11- EX-10.1 3 SECOND AMENDMENT TO LOAN AGREEMENT EXHIBIT 10.1 SECOND AMENDMENT TO LOAN AGREEMENT THIS SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and entered into as of this 21st day of August, 1998, by and between METROTRANS CORPORATION, a Georgia corporation, as borrower (the "Borrower"), and NATIONSBANK, N.A., a national banking association, as lender (the "Lender"). W I T N E S S E T H: ------------------- WHEREAS, the Borrower and the Lender are parties to that certain Loan Agreement, dated as of September 5, 1997, as amended by First Amendment to Loan Agreement dated as of May 18th, 1998 (as amended, the "Loan Agreement"), pursuant to which the Lender extended certain financial accommodations to the Borrower; and WHEREAS, the Borrower has requested, and the Lender has agreed, subject to the terms hereof, to amend certain provisions of the Loan Agreement, to permit the Borrower to incur $15,000,000 of subordinated debt; and NOW, THEREFORE, in consideration of the premises, the terms and conditions contained herein, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. DEFINITIONS. All capitalized terms used herein and not expressly defined herein shall have the same respective meanings given to such terms in the Loan Agreement. 2. AMENDMENTS TO ARTICLE 1. (a) Section 1.1 of the Loan Agreement is hereby amended by deleting the definitions of "Leverage Ratio," "Maturity Date" and "Note" in their entirety -------------- ------------- and substituting in lieu thereof the following definitions to read as follows: "'Maturity Date' shall mean December 31, 2000 or such earlier date as ------------- payment of the remaining outstanding principal amount of the Loans or of all remaining outstanding Obligations shall be due (whether by acceleration or otherwise)." "'Note' shall mean that certain promissory note dated as of August 21, ---- 1998 in the original principal amount of Twenty Million Dollars ($20,000,000.00) issued to the Lender by the Borrower, substantially in the form of Exhibit D attached hereto, and any other notes executed and --------- delivered by the Borrower to the Lender with respect to the Loan, and any amendments, renewals or extensions of the foregoing." "'Senior Leverage Ratio' shall mean, as of any date, the ratio of (a) --------------------- Senior Debt on such date to (b) EBITDA for the most recently completed four (4) fiscal quarter period." (b) Section 1.1 of the Loan Agreement is hereby amended by adding the following new definitions in appropriate alphabetical order: "'Mayflower" shall mean Mayflower Corporation plc or its --------- Affiliates. "Mayflower Purchase Agreement" shall mean that certain Agreement ---------------------------- between Mayflower, the Borrower, D. Michael Walden, Terri B. Hobbs, Randolph B. Stanley and M. Earl Meck. "Mayflower Subordinated Loan Documents" shall mean that certain ------------------------------------- Loan Agreement dated as of August 21, 1998 between the Borrower and Mayflower and any notes, security agreements, deeds to secure debt, loan agreements, or other instruments previously, simultaneously or hereafter executed and delivered by the Borrower to Mayflower. "Mayflower Subordinated Debt" shall mean the unsecured --------------------------- subordinated revolving credit loans in a maximum principal amount not to exceed $15,000,000 made Mayflower to the Borrower pursuant to the Mayflower Subordinated Loan Documents. "Senior Debt" shall mean, with respect to the Borrower and the ----------- Subsidiaries on a consolidated basis as of any calculation date, the sum, without duplication, of Indebtedness for Money Borrowed other than Subordinated Debt, all as determined in accordance with GAAP. "Subordinated Debt" shall mean, for the Borrower and the ----------------- Subsidiaries on a consolidated basis as of any calculation date, all Indebtedness for Money Borrowed permitted hereunder which is expressly subordinated by its terms to the Obligations pursuant to subordination terms satisfactory to the Lender, including, without limitation, the Mayflower Subordinated Debt. "Total Leverage Ratio" shall mean, as of any date, the ratio of -------------------- (a) Indebtedness for Money Borrowed with respect to the Borrower and the Subsidiaries on a consolidated basis on such date to (b) EBITDA for the most recently completed four (4) fiscal quarter period. (c) The Loan Agreement is hereby further amended by deleting all references to "Leverage Ratio" wherever they appear and substituting in lieu thereof "Senior Leverage Leverage." 3. AMENDMENTS TO ARTICLE 7. (a) The Loan Agreement is hereby further amended by deleting Section 7.3 in its entirety and substituting in lieu thereof the following to read as follows: 2 "Section 7.3 Amendment and Waiver. The Borrower shall not, and shall -------------------- not permit any of its Subsidiaries to, enter into any amendment of, or agree to or accept or consent to any waiver of any of the material provisions of its articles or certificate of incorporation, by-laws or partnership agreement, as appropriate, which amendment or waiver is adverse to the interest of the Lender, or any amendment of the Mayflower Subordinated Loan Documents, the Mayflower Purchase Agreement, or any other document relating to any Subordinated Debt." (a) The Loan Agreement is hereby further amended by deleting Section 7.9 in its entirety and substituting in lieu thereof the following to read as follows: "Section 7.9 Senior Leverage Ratio. As of the end of any fiscal --------------------- quarter, the Borrower shall not permit the Senior Leverage Ratio to exceed the ratios set forth below during the periods indicated: Period Senior Leverage Ratio ------ --------------------- March 31, 1998 through 4.25:1.0 September 30, 1998 October 1, 1998 through 3.75:1.0 December 31, 1998 January 1, 1999 and thereafter 2.50:1.0" (b) The Loan Agreement is hereby further amended by adding a new Section 7.15 to read as follows: "Section 7.15 Total Leverage Ratio. As of the end of any fiscal -------------------- quarter, the Borrower shall not permit the Total Leverage Ratio to exceed the ratios to be mutually agreed upon by the Borrower and the Lender on or before September 15, 1998." 4. AMENDMENT TO ARTICLE 8. The Loan Agreement is hereby further amended by deleting Section 8.1(k) in its entirety and substituting in lieu thereof the following to read as follows: "(k) There shall occur (i) any default under any other document, instrument or agreement relating to any Indebtedness of the Borrower or any of the Borrower's Subsidiaries having an aggregate principal amount exceeding $500,000; or (ii) any event which directly or indirectly causes the Borrower or any of its Subsidiaries to be required to offer to prepay any Indebtedness or which directly or indirectly gives any holder of any Indebtedness of the Borrower or any of its Subsidiaries the right to require the Borrower or any of its Subsidiaries to prepay any such Indebtedness under any other document, instrument or agreement relating to any Indebtedness of the Borrower or any 3 of the Borrower's Subsidiaries having an aggregate principal amount exceeding $500,000; or (iii) any default under any Interest Rate Hedge Agreement having a notional principal amount of $250,000 or more; or (iv) any default under any of the Mayflower Subordinated Loan Documents, the Mayflower Purchase Agreement or any other document relating to Subordinated Debt; or" 5. EXHIBIT. The Loan Agreement is further amended by deleting Exhibit D in its entirety and substituting in lieu thereof Exhibit D attached hereto. --------- 6. CONSENT. Subject to the terms and conditions hereof, the Lender hereby consents to the Mayflower Subordinated Debt, the Mayflower Purchase Agreement, the Mayflower Subordinated Loan Documents and the transactions contemplated by all of the foregoing (collectively, the "Mayflower Transactions"). On or prior to consummation of the Mayflower Transactions, the Borrower shall provide to the Lender form and substance satisfactory to the Lender (i) certification to the Lender of the Borrower's compliance with Sections 7.9, 7.10, 7.11, 7.12 and 7.14 of the Loan Agreement both before and after giving effect to the Mayflower Transactions; (ii) pro forma projections both before and after giving effect to the Mayflower Transactions; (iii) certification to the Lender that a Default does not exist and will not be caused by the Mayflower Transactions, (iv) evidence that the documentation evidencing the Mayflower Transactions shall be on substantially the same terms and conditions set forth in the drafts reviewed by the Lender on August 20, 1998, (v) execution and delivery of the Subordination Agreement dated as of even date herewith (the "Subordination Agreement") and (vi) prior to any funding of the Mayflower Subordinated Debt, an opinion of counsel as to the due authorization, execution and delivery by Mayflower of the Subordination Agreement. 7. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants to and in favor of the Lender as follows: (a) Each representation and warranty set forth in Article 4 of the Loan Agreement, as amended hereby, is hereby restated and affirmed as true and correct in all material respects as of the date hereof, except to the extent previously fulfilled in accordance with the terms of the Loan Agreement, as amended hereby, and to the extent relating specifically to the Agreement Date or otherwise inapplicable; (b) The Borrower has the corporate power and authority (i) to enter into this Amendment, and (ii) to do all acts and things as are required or contemplated hereunder to be done, observed and performed by it; (c) This Amendment has been duly authorized, validly executed and delivered by one or more Authorized Signatories of the Borrower, and constitutes the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with its terms, subject, as to enforcement of remedies, to the following qualifications: (i) an order of specific performance and an injunction are discretionary remedies and, in particular, may not be available where damages are considered an adequate remedy at law, and (ii) enforcement may be 4 limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws affecting enforcement of creditors' rights generally (insofar as any such law relates to the bankruptcy, insolvency or similar event of the Borrower); and (d) The execution and delivery of this Amendment and performance by the Borrower under the Loan Agreement, as amended hereby, does not and will not require the consent or approval of any regulatory authority or governmental authority or agency having jurisdiction over the Borrower which has not already been obtained, nor be in contravention of or in conflict with the Certificate of Incorporation or By-Laws of the Borrower, or any provision of any statute, judgment, order, indenture, instrument, agreement, or undertaking, to which the Borrower is party or by which the Borrower's assets or properties are bound. 8. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT. The effectiveness of this Amendment is subject to: (a) all of the representations and warranties of the Borrower under Section 7 hereof which are made as of the date hereof, shall be true and correct in all material respects; (b) receipt by the Lender of a certificate of the chief executive officer of the Borrower certifying that no Default exists both before and after giving effect to this Amendment; (c) receipt by the Lender of a the duly executed Note, substantially in the form of Exhibit D attached hereto; and --------- (d) receipt of any other documents or instruments that the Lender may reasonably request, certified by an officer of the Borrower if so requested. 9. EFFECT OF AMENDMENT; NO NOVATION. Except as expressly set forth herein, the Loan Agreement shall remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligation of Borrower to the Lenders, and Borrower hereby restates, ratifies and reaffirms each and every term and condition set forth in the Loan Agreement, as amended hereby. The terms of this Amendment are not intended to and do not serve as a novation as to the Loan Agreement or the Notes or the indebtedness evidenced thereby. The parties hereto expressly do not intend to extinguish any debt or security interest created pursuant to the Loan Agreement or any document executed in connection therewith. Instead it is the express intention to affirm the Loan Agreement and the security created thereby. 10. COUNTERPARTS. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. 5 11. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties hereto. 12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. 12. MEDIATION. The Lender and Borrower agree that any and all disputes arising out of or related to the execution of this Amendment, or the performance thereunder shall be submitted to non-binding mediation. The cost of the mediation is to be shared equally by the Lender and Borrower. The parties further agree as follows: (a) They each will make a good faith effort to resolve any and all disputes pursuant to the mediation provision. (b) They each will have parties present at the mediation session who have authority to resolve any pending disputes between the parties. (c) That they will devote and set aside whatever time is needed to seek a resolution of any disputes between the parties. [Remainder of page intentionally left blank] 6 IN WITNESS WHEREOF, the parties hereto have executed this Amendment under seal as of the day and year first above written. BORROWER: METROTRANS CORPORATION By: /s/ D. Michael Walden ____________________________________ D. Michael Walden Chairman and Chief Executive Officer [CORPORATE SEAL] LENDER: NATIONSBANK, N.A. By: /s/ Scot Turner --------------------------------- Scot Turner Assistant Vice President 7 EX-10.2 4 THIRD AMENDMENT TO LOAN AGREEMENT EXHIBIT 10.2 THIRD AMENDMENT TO LOAN AGREEMENT THIS THIRD AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and entered into as of this 15th day of September, 1998, by and between METROTRANS CORPORATION, a Georgia corporation, as borrower (the "Borrower"), and NATIONSBANK, N.A., a national banking association, as lender (the "Lender"). W I T N E S S E T H: ------------------- WHEREAS, the Borrower and the Lender are parties to that certain Loan Agreement, dated as of September 5, 1997, as amended by First Amendment to Loan Agreement dated as of May 18th, 1998 and by Second Amendment to Loan Agreement dated as of August 21st, 1998 (as amended, the "Loan Agreement"), pursuant to which the Lender extended certain financial accommodations to the Borrower; and WHEREAS, the Borrower has requested, and the Lender has agreed, subject to the terms hereof, to amend certain provisions of the Loan Agreement; and NOW, THEREFORE, in consideration of the premises, the terms and conditions contained herein, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. DEFINITIONS. All capitalized terms used herein and not expressly defined herein shall have the same respective meanings given to such terms in the Loan Agreement. 2. AMENDMENTS TO ARTICLE 1. (a) Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of "Total Leverage Ratio." --------------------- (b) The Loan Agreement is hereby further amended by deleting all references to "Total Leverage Ratio" wherever they appear. 3. AMENDMENTS TO ARTICLE 7. (a) The Loan Agreement is hereby further amended by deleting Section 7.12 in its entirety and substituting in lieu thereof the following to read as follows: "Section 7.12 Fixed Charge Ratio. As of the end of any fiscal quarter, the ------------------ Borrower shall not permit the Fixed Charge Ratio to be less than 1.9:1.0" (b) The Loan Agreement is hereby further amended by deleting Section 7.15 in its entirety. 4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants to and in favor of the Lender as follows: (a) Each representation and warranty set forth in Article 4 of the Loan Agreement, as amended hereby, is hereby restated and affirmed as true and correct in all material respects as of the date hereof, except to the extent previously fulfilled in accordance with the terms of the Loan Agreement, as amended hereby, and to the extent relating specifically to the Agreement Date or otherwise inapplicable; (b) The Borrower has the corporate power and authority (i) to enter into this Amendment, and (ii) to do all acts and things as are required or contemplated hereunder to be done, observed and performed by it; (c) This Amendment has been duly authorized, validly executed and delivered by one or more Authorized Signatories of the Borrower, and constitutes the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with its terms, subject, as to enforcement of remedies, to the following qualifications: (i) an order of specific performance and an injunction are discretionary remedies and, in particular, may not be available where damages are considered an adequate remedy at law, and (ii) enforcement may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws affecting enforcement of creditors' rights generally (insofar as any such law relates to the bankruptcy, insolvency or similar event of the Borrower); and (d) The execution and delivery of this Amendment and performance by the Borrower under the Loan Agreement, as amended hereby, does not and will not require the consent or approval of any regulatory authority or governmental authority or agency having jurisdiction over the Borrower which has not already been obtained, nor be in contravention of or in conflict with the Certificate of Incorporation or By-Laws of the Borrower, or any provision of any statute, judgment, order, indenture, instrument, agreement, or undertaking, to which the Borrower is party or by which the Borrower's assets or properties are bound. 5. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT. The effectiveness of this Amendment is subject to: (a) all of the representations and warranties of the Borrower under Section 4 hereof which are made as of the date hereof, shall be true and correct in all material respects; (b) receipt by the Lender of a certificate of the chief executive officer of the Borrower certifying that no Default exists both before and after giving effect to this Amendment; and (c) receipt of any other documents or instruments that the Lender may reasonably request, certified by an officer of the Borrower if so requested. 2 6. EFFECT OF AMENDMENT; NO NOVATION. Except as expressly set forth herein, the Loan Agreement shall remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligation of Borrower to the Lenders, and Borrower hereby restates, ratifies and reaffirms each and every term and condition set forth in the Loan Agreement, as amended hereby. The terms of this Amendment are not intended to and do not serve as a novation as to the Loan Agreement or the Notes or the indebtedness evidenced thereby. The parties hereto expressly do not intend to extinguish any debt or security interest created pursuant to the Loan Agreement or any document executed in connection therewith. Instead it is the express intention to affirm the Loan Agreement and the security created thereby. 7. COUNTERPARTS. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. 8. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties hereto. 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. 12. MEDIATION. The Lender and Borrower agree that any and all disputes arising out of or related to the execution of this Amendment, or the performance thereunder shall be submitted to non-binding mediation. The cost of the mediation is to be shared equally by the Lender and Borrower. The parties further agree as follows: (a) They each will make a good faith effort to resolve any and all disputes pursuant to the mediation provision. (b) They each will have parties present at the mediation session who have authority to resolve any pending disputes between the parties. (c) That they will devote and set aside whatever time is needed to seek a resolution of any disputes between the parties. [Remainder of page intentionally left blank] 3 IN WITNESS WHEREOF, the parties hereto have executed this Amendment under seal as of the day and year first above written. BORROWER: METROTRANS CORPORATION By: /s/ Richard M. Bruno _________________________________ Richard M. Bruno Vice President and Chief Financial Officer [CORPORATE SEAL] LENDER: NATIONSBANK, N.A. By: /s/ Scot Turner _________________________________ Scot Turner Assistant Vice President 4 -----END PRIVACY-ENHANCED MESSAGE-----