Exhibit 10.43
CONGRESS FINANCIAL CORPORATION
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As of March 1, 2002
Atlantic Express Transportation Corp.
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▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Fourth Amendment to Loan Agreement
Ladies and Gentlemen:
We refer to the Loan and Security Agreement dated December 22, 2000
between Congress Financial Corporation ("Lender"), Atlantic Express
Transportation Corp. and each of the parties listed on the signature pages
hereto (each individually, a "Borrower" and any two or more collectively,
"Borrowers"), as the same may be amended from time to time (the "Loan
Agreement"). Unless otherwise defined in this letter, all capitalized terms used
in this letter have the same meanings as set forth in the Loan Agreement.
Borrowers have requested that Lender make certain amendments to the Loan
Agreement as set forth herein.
Accordingly, each Borrower hereby agrees with Lender as follows:
1. Amendments to Loan Agreement. Subject to the terms and conditions
hereof, the Loan Agreement is amended as follows:
(a) Section 1 of the Loan Agreement is amended by adding the
following defined terms in their appropriate alphabetical order:
"Applicable Vehicle CapEx Availability Sublimit" shall mean the amount of
$90,000,000, as reduced on the first day of each month, commencing April
1, 2002, by $1,000,000 per month.
"GSCP" shall mean GSCP II (AE) Holdings, LLC.
"Participation Agreement" shall mean that certain Junior Participation
Agreement dated as of March 1, 2002 by and between Lender and GSCP.
"Special Supplemental Loans" shall mean the loans now or hereafter made by
Lender to or for the benefit of a Borrower in accordance with the terms
set forth in Section 2.4 hereof.
(b) Section 1 of the Loan Agreement is amended by amending and
restating the following defined terms in their entirety to read as follows:
"Adjusted Net Worth" shall mean as to any Person, at any date, in
accordance with GAAP (except as otherwise specifically set forth below),
on a consolidated basis for such Person and its subsidiaries (if any), the
amount equal to the difference between: (a)(i) the aggregate net book
value of all assets of such Person and its subsidiaries, calculating the
book value of inventory for this purpose on a first-in-first-out basis,
after deducting from such book values all appropriate reserves in
accordance with GAAP (including all reserves for doubtful receivables,
obsolescence, depreciation and amortization) plus (ii) an amount equal to
eighty percent (80%) of the outstanding principal balance of (A) the
Special Supplemental Loans at such date or (B) if designated by an
election in writing from Parent to Lender in connection with the
determination of Adjusted Net Worth as at the end of any fiscal quarter or
fiscal year of Parent, the Special Supplemental Loans on a date which is
(1) not more 45 days after the end of any fiscal quarter of Parent other
than the fourth quarter of a fiscal year or (2) not more than 90 days
after the end of any fiscal year of Parent, (iii) an amount equal to any
reductions or elimination of previously recorded deferred tax assets and
(iv) an amount equal to any reductions or elimination of previously
recorded assets due to impairment of such assets under Statement of
Financial Accounting Standard No. 141 or No. 142, and (b) the aggregate
amount of the indebtedness and other liabilities of such Person and its
subsidiaries (including tax and other proper accruals).
"EBITDA" shall mean, for any period, net income or loss of the Parent and
its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP, plus (a) to the extent deducted in computing such
consolidated net income or loss, without duplication, the sum of (i)
income tax expense, (ii) Interest Expense, (iii) depreciation and
amortization expense, and (iv) non-cash extraordinary or nonrecurring
losses or expenses, minus (b) to the extent added in computing such
consolidated net income or loss, without duplication, extraordinary or
non-recurring income or gains, plus (c) an amount equal to the sum of (i)
eighty percent (80%) of the aggregate principal balance of Special
Supplemental Loans made during such period (net of any payments of such
Special Supplemental Loans paid during such period) and (ii) capital
contributions to the Parent from its stockholders received in the form of
cash made available to Borrowers to use as working
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capital during such period and, with respect to clauses (i) and (ii)
above, if designated by an election in writing from Parent to Lender,
eighty percent (80%) of the aggregate principal balance of Special
Supplemental Loans (net of repayments) and cash capital contributions made
(A) within 45 days after the end of any period ending on the last day of
fiscal quarter of Parent (other than the fourth quarter of a fiscal year)
or (B) within 90 days after the end of any period ending on the last day
of any fiscal year of Parent, provided, that, any such loan or
contribution designated to be included in a prior period may not be
included in any subsequent calculation of EBITDA for the period in which
it was made or received, and provided further that, the maximum cumulative
amount that may be included pursuant to clause (c) for all periods shall
not exceed $25,000,000."
"Existing Holders" shall mean GSCP, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Wafra Acquisition
Fund.
"Interest Rate" shall mean, as to Prime Rate Loans, a rate of
three-quarters of one (3/4%) percent per annum in excess of the Prime Rate
and, as to Special Supplemental Loans, a rate of eighteen percent (18%)
per annum and, as to Eurodollar Rate Loans, a rate of two and
three-quarter (2-3/4%) percent per annum in excess of the Adjusted
Eurodollar Rate (based on the Eurodollar Rate applicable for the Interest
Period selected by a Borrower as in effect three (3) Business Days after
the date of receipt by Lender of the request of such Borrower for such
Eurodollar Rate Loans in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously quoted to such Borrower);
provided, that, the Interest Rate shall mean the rate of two and
three-quarters (2 3/4%) percent per annum in excess of the Prime Rate as
to Prime Rate Loans and all other non-contingent Obligations (other than
Eurodollar Rate Loans and Special Supplemental Loans), the rate of
eighteen (18%) percent per annum as to Special Supplemental Loans, and the
rate of four and three-quarters (4 3/4%) percent per annum in excess of
the Adjusted Eurodollar Rate as to Eurodollar Rate Loans, at Lender's
option, without notice, (a) for the period on and after the date of
termination or non-renewal hereof, or the date of the occurrence of any
Event of Default or event which with notice or passage of time or both
would constitute an Event of Default, and for so long as such Even of
Default or other event is continuing and until such time as all
Obligations are indefeasibly paid in full (notwithstanding entry of any
judgment against any Borrower) and (b) on the Loans at any time
outstanding in excess of the amounts available to Borrowers under Section
2 (whether or not such excess(es) arise or are made with or without
Lender's knowledge or consent and whether made before or after an Event of
Default).
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"Loans" shall mean the Revolving Loans and the Loans made pursuant to
Sections 2.3 and 2.4.
"Maximum Credit" shall mean the amount of $143,000,000; provided, that,
the maximum credit available pursuant to Section 2.1 hereof shall not
exceed $125,000,000 and the maximum credit available pursuant to Section
2.4 hereof shall not exceed $18,000,000.
(c) The term "Obligations" in Section 1 of the Loan Agreement is
amended by deleting the word "Revolving" on the first line thereof.
(d) Section 2.1(a)(iii)(A) of the Loan Agreement is amended by
substituting the term "Applicable Vehicle CapEx Availability Sublimit" in place
of "$90,000,000".
(e) Section 2 of the Loan Agreement is amended by adding the
following as Section 2.4 thereof and renumbering existing Sections 2.4 and 2.5
as Sections 2.5 and 2.6, respectively:
2.4 Special Supplemental Loans. Subject to, and upon the terms and
conditions contained herein, Lender agrees, commencing March __, 2002, to
make non-revolving loans (the "Special Supplemental Loans") to each
Borrower from time to time; provided that the Participant under the
Participation Agreement shall have agreed to purchase additional
Participations in an amount sufficient to fund the Special Supplemental
Loan. Any Special Supplemental Loan requested by a Borrower or Borrowers'
Representative shall not exceed the amount by which the Participant's
Interest (as defined in the Participation Agreement) then exceeds the then
outstanding principal balance of the Special Supplemental Loans. The
Special Supplemental Loans (a) are to be repaid, together with interest
and other amounts, in accordance with this Agreement, and the other
Financing Agreements, (b) are secured by all the Collateral and (c) may
not be reborrowed to the extent that all or any part thereof has been
repaid. The aggregate principal amount of the Special Supplemental Loans
outstanding to all Borrowers at any time shall not exceed the lesser of
the Maximum Credit applicable to the Special Supplemental Loans or the
amount of the then outstanding amount of the Participant's Interest. In
the event that the outstanding amount of the Special Supplemental Loans at
any time exceeds the then outstanding amount of the Participant's Interest
or the Maximum Credit applicable to Special Supplemental Loans, such event
shall not limit, waive or otherwise affect any rights of Lender in that
circumstance or on any future occasions and Borrowers shall, upon demand
by Lender, which may be made at any time or from time to time, immediately
repay to Lender the
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entire amount of any such excess(es) for which payment is demanded.
(f) Section 4 of the Loan Agreement is amended by adding the
following as Section 4.3 to be inserted following Section 4.2 thereof:
4.3 Conditions Precedent to Special Supplemental Loans. In addition
to the conditions precedent contained in Section 4.2 applicable to all
Loans and Letter of Credit Accommodations, each of the following is an
additional condition precedent to Lender making any Special Supplemental
Loan to any Borrower hereunder:
(a) Lender shall have received the Participation Agreement, duly
executed and delivered by GSCP in form and substance satisfactory to
Lender and the Participation Agreement shall be in full force and effect;
(b) after giving effect to such Special Supplemental Loan, the
outstanding principal balance of the Special Supplemental Loans will be
equal to or less than the outstanding Participant's Interest and will not
exceed the Maximum Credit applicable to Special Supplemental Loans; and
(c) Lender and the Participant shall have received a certificate
from an authorized officer of Borrowers' Representative, in form and
substance satisfactory to Lender, certifying that the conditions set forth
herein to the making of the Special Supplemental Loans have been complied
with.
(g) Section 6.6 of the Loan Agreement is amended by inserting the
following after the last sentence thereof:
Notwithstanding the foregoing, Borrowers shall use the proceeds of Special
Supplemental Loans solely (i) to pay insurance premiums (and to fund
initial premium deposits in connection with obtaining insurance coverage
and to fund loss funds required by insurance carriers to be established
prospectively at the time of the renewal of insurance coverage) and
otherwise for working capital purposes, (ii) to pay interest on the
Special Supplemental Loans, (iii) for expenditures of Borrowers in the
ordinary course of Borrowers' business not otherwise permitted in this
sentence; provided that no single expenditure shall exceed $20,000 for any
Special Supplemental Loan or $200,000 in the aggregate as to all such
expenditures, (iv) to pay costs, expenses and fees in connection with (A)
the placement, preparation, negotiation, execution and delivery of the
Fourth Amendment to Loan Agreement dated as of March 1, 2002 (the "Fourth
Amendment") and the Participation Agreement, and (B) the solicitation of
consents under the Indenture governing the Senior Notes to permit the
Fourth Amendment and the Participation Agreement, or (v) for such other
purposes as
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the Participant shall consent from time to time; and, without limiting the
generality of the foregoing limitation, except with the consent of the
Participant, Special Supplemental Loans shall not be made or used to fund
or repay any other Loans or Obligations.
(h) Section 9.12 of the Loan Agreement is amended and restated in
its entirety to read as follows:
9.12 Transactions with Affiliates. Neither Parent nor any Borrower shall,
or permit its Subsidiaries to, enter into any transaction for the
purchase, sale or exchange of property or the rendering of any service to
or by any affiliate, except (a) in the ordinary course of and pursuant to
the reasonable requirements of Parent's or such Borrower's or Subsidiary's
business and upon fair and reasonable terms no less favorable to Parent or
such Borrower or Subsidiary than it would obtain in a comparable arm's
length transaction with an unaffiliated person; (b) existing and future
employment agreements entered into by Parent or any Subsidiary of Parent
in the ordinary course of business with the approval of a majority of the
disinterested members of Parent's Board of Directors; (c) transactions
between or among Parent, Borrowers, and Guarantors; (d) reasonable and
customary fees and compensation paid to and indemnity provided on behalf
of, officers, directors, employees or consultants of the Parent or any
Subsidiary of Parent as determined in good faith by a majority of the
disinterested directors of Parent's Board of Directors or, if none,
unanimously by such Board of Directors; (e) the "Park & Ride Lease"
between Showplace Bowling Center Inc., as lessor, and Atlantic Express
Coachway Inc., as lessee, and the lease between Dom Rich Associates, Inc.,
as lessor, and Staten Island Bus Inc., as lessee, in each case as in
effect of the date hereof; (f) annual premiums paid to Atlantic North in
the ordinary course of business for insurance, provided, that such
premiums do not exceed the annual aggregate deductibles on Parent's
insurance policies then in effect; and (g) the transactions contemplated
by the Participation Agreement or in connection with any Special
Supplemental Loans (whether made directly pursuant to the Participation
Agreement or otherwise made directly to Borrowers).
(i) Section 9.13 of the Loan Agreement is amended and restated in
its entirety to read as follows:
9.13 Adjusted Net Worth. At the end of each fiscal quarter, beginning with
the quarter ending March 31, 2002, Parent shall maintain Adjusted Net
Worth of not less than $42,000,000.
(j) Section 10.1(i) of the Loan Agreement is amended and restated in
its entirety to read as follows:
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(i) Any Event of Default, or event which with notice or the
passage of time or both, would become an Event of Default, under and
as defined in the Indenture (provided that, a default under Section
6.1(1) of the Indenture shall not constitute an Event of Default
hereunder unless and until such default continues for more than the
applicable cure period with respect thereto), or any agreement
securing or guaranteeing payment of the Senior Notes, or (ii)
default by any Borrower, any Subsidiary of a Borrower or any Obligor
under any agreement, document or instrument relating to any other
indebtedness for borrowed money owing to any person other than
Lender, or any capitalized lease obligations, contingent
indebtedness in connection with any guarantee, letter of credit,
indemnity or similar type of instrument in favor of any person other
than Lender, in any case in an amount in excess of $500,000, which
default continues for more than the applicable cure period, if any,
with respect thereto, or any default by any Borrower, any such
Subsidiary or any Obligor under any material contract, lease,
license or other obligation to any person other than Lender, which
default continues for more than the applicable cure period, if any,
with respect thereto;
2. Conditions Precedent. The agreements set forth herein shall become
effective only if and when the following conditions precedent have been
satisfied as determined by Lender:
(a) each of Borrowers shall have executed and delivered to Lender
this letter;
(b) Lender shall have received, in form and substance satisfactory
to Lender, the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ as to the satisfaction of all
conditions precedent to the effectiveness of the Eighth Supplemental Indenture
(the "Supplemental Indenture") dated as of March 1, 2002, including without
limitation, the consent of the requisite percentage of the holders of the Senior
Notes to such amendments and such other matters as Lender may request;
(c) Lender shall have received evidence satisfactory to it that the
requisite number of holders of the Senior Notes have consented, in a manner
acceptable to Lender, to the terms and conditions of the Supplemental Indenture
and the transactions contemplated thereby, and such supplemental indenture and
other amendments shall have been executed and delivered and be in full force and
effect and all conditions precedent to the effectiveness thereof shall have been
satisfied;
(d) Lender shall have received an amendment to the Intercreditor
Agreement amending the term "Priority Amount" therein to include the Special
Supplemental Loans made hereunder, and otherwise in form and substance
satisfactory to Lender, duly executed by the collateral agent for the holders of
the Senior Notes, and in full force and effect;
(e) each of Borrowers shall have delivered to Lender copies of
requisite corporate action and proceedings in connection with this letter, in
form and substance satisfactory to Lender and, where requested by Lender or
Lender's counsel, certified by appropriate corporate officers or governmental
authorities;
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(f) each of the representations and warranties of Borrowers set
forth in the Loan Agreement and each of the other Financing Agreements is true
and correct in all material respects as of such date; and
(g) immediately prior to, and immediately after giving effect to,
the amendments and agreements set forth herein, there shall exist no Event of
Default or event or condition which, with the giving of notice or the passage of
time or both, would constitute an Event of Default.
3. Real Property. Within a reasonable period of time following the date
hereof, as determined by Lender, Borrowers shall deliver or cause to be
delivered to Lender, in form and substance satisfactory to Lender, (i)
appraisals of all of the Real Property located in the State of New York
appraised by appraisers satisfactory to Lender, and (ii) in connection with each
of the Mortgages, a valid and effective title insurance policy issued by a
company and agent acceptable to Lender (A) insuring the priority, amount and
sufficiency of the Mortgages, (B) insuring against matters that would be
disclosed by surveys and (C) containing any legally available endorsements,
assurances or affirmative coverage requested by Lender for protection of its
interests. Borrowers acknowledge and agree that the failure to provide the
foregoing will constitute an Event of Default and Lender may exercise its
remedies set forth in this Loan Agreement and/or establish Availability Reserves
in amounts and upon terms and conditions to be determined by Lender in its sole
discretion. Borrowers further agree, upon Lender's request, to execute and
deliver (or cause to be executed and delivered) such amendments to the Mortgages
relating to Real Property located in the State of New York and to take or cause
to be taken such other action as may be necessary or desirable to increase the
amount secured by such Mortgages up to an amount that is equal to eighty-five
(85%) percent of the appraised value of such Real Property.
4. No Other Modification. Except as expressly set forth herein, the
Financing Agreements are not amended or otherwise affected in any way by this
letter and continue in full force and effect.
5. No Waiver of Compliance. By entering into this letter, Lender has not
and shall not be deemed to have (a) waived any Event of Default now existing or
which may occur at any time hereafter or (b) limited any of Lender's rights and
remedies with respect to any Event of Default or (c) except as otherwise
expressly set forth herein, limited Lender's right to require Borrowers to
comply strictly with each term and condition of the Financing Agreements.
6. This Letter a Financing Agreement. This letter constitutes one of the
Financing Agreements and is subject to all of the provisions of the Loan
Agreement applicable to the Financing Agreements.
7. Fees and Expenses. In consideration of Lender's agreements contained
herein and in order to induce Lender to enter into this letter, Borrowers shall
herewith pay Lender a fee of $300,000, which Lender is authorized to charge to
Borrowers' loan account with Lender. Borrowers confirm that, under the Loan
Agreement, it shall pay Lender's attorneys' fees and expenses incurred in
connection with this letter and the transactions contemplated hereby.
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8. Ratification.
(a) Except as expressly set forth herein, the Loan Agreement and the
other Financing Agreements are not modified hereby and each shall remain in full
force and effect in accordance with the respective provisions thereof on the
date hereof, and the Loan Agreement and the other Financing Agreements are each
in all respects ratified and affirmed. Lender's agreements herein shall not be
construed to require Lender to make or permit any other supplemental loans or
make any other amendments not expressly contemplated by the Loan Agreement on
any other occasion, regardless of the similarity of circumstances.
(b) Guarantors hereby (i) acknowledge notice of the terms and
conditions of this letter, (ii) confirm and agree that the Guaranteed
Obligations under and as defined in the Guarantee, includes all Borrowers'
Obligations for or in respect of the principal of, accrued interest in, and
other charges now or hereafter payable in connection with the Loans, including,
without limitation, those made or continuing after giving effect to the
amendments in this letter, and (iii) confirm that, after giving effect to this
letter and to the making of the amendments to the Loan Agreement provided
herein, the Guaranty is each of their valid and binding obligation, enforceable
against each of them in accordance with its terms, without defenses, offsets, or
counterclaims, and continues in full force and effect.
9. Representations and Warranties. Without limiting any other provision of
this letter, and as an inducement to Lender to enter into this letter, each
Borrower hereby: (a) represents, warrants and agrees that the Loan Agreement and
the other Financing Agreements are its valid and binding obligations enforceable
against it in accordance with their terms, without the right to interpose any
claims, deductions, offsets or counterclaims of any nature (other than
compulsory counterclaims); and (b) represents and warrants that:
(i) each of the representations and warranties of Borrowers set
forth in the Loan Agreement and the other Financing Agreements
is true and correct in all material respects, as of the date
hereof; and
(ii) after giving effect to this letter, no Event of Default, or
event or condition which with notice or the passage of time or
both would become an Event of Default, has occurred and is
continuing.
10. Governing Law. This letter shall be construed in accordance with and
be governed by the laws (without giving effect to the conflicts of laws
principles that would require the application of the laws of a different
jurisdiction) of the State of New York.
11. Counterparts. This letter may be executed in one or more counterparts,
and by Lender and each other party hereto in separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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Please indicate Borrowers' agreement to the terms of this letter by
countersigning it in the space provided below and returning it to Lender.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
Accepted and Agreed:
BORROWERS
ATLANTIC EXPRESS
TRANSPORTATION CORP.
AMBOY BUS CO., INC.
ATLANTIC-CHITTENANGO REAL
PROPERTY CORP.
ATLANTIC-CONN. TRANSIT, INC.
ATLANTIC EXPRESS COACHWAYS,
INC.
ATLANTIC-▇▇▇▇▇▇, INC.
ATLANTIC MEDFORD INC.
ATLANTIC PARATRANS, INC.
ATLANTIC PARATRANS OF
KENTUCKY, INC.
BLOCK 7932, INC.
ATLANTIC EXPRESS OF MISSOURI
INC.
ATLANTIC EXPRESS OF
PENNSYLVANIA, INC.
BROOKFIELD TRANSIT, INC.
COURTESY BUS CO., INC.
GVD LEASING, INC.
180 JAMAICA CORP.
▇. ▇▇▇▇, INC.
JERSEY BUSINESS LAND CO., INC.
MERIT TRANSPORTATION, CORP.
METRO AFFILIATES, INC.
METROPOLITAN ESCORT SERVICE,
INC.
MIDWAY LEASING, INC.
▇▇▇▇▇▇▇ BUS SERVICE, INC.
▇▇▇▇▇▇▇ CAPITAL CORP.
▇▇▇▇▇▇▇ EQUITY CORP.
STATEN ISLAND BUS, INC.
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ATLANTIC EXPRESS OF L.A., INC.
CENTRAL NEW YORK COACH SALES
AND SERVICE, INC.
JERSEY BUS SALES, INC.
WRIGHTHOLM BUS LINE INC.
ATLANTIC PARATRANS OF
COLORADO, INC.
ATLANTIC PARATRANS OF
PENNSYLVANIA, INC.
ATLANTIC EXPRESS OF
NEW JERSEY, INC.
ATLANTIC PARATRANS OF
ARIZONA, INC.
TEMPORARY TRANSIT SERVICE,
INC.
201 WEST ▇▇▇▇▇▇▇ REALTY, INC.
ATLANTIC TRANSIT, CORP.
AIRPORT SERVICES, INC.
ATLANTIC EXPRESS NEW ENGLAND,
INC.
ATLANTIC EXPRESS OF
CALIFORNIA, INC.
ATLANTIC EXPRESS OF
ILLINOIS, INC.
ATLANTIC EXPRESS OF
SOUTH CAROLINA, INC.
▇▇▇▇▇ BUS SERVICE, INC.
GROOM TRANSPORTATION, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMO SERVICE,
INC.
▇▇▇▇▇▇▇▇ TRANSPORTATION, INC.
MOUNTAIN TRANSIT, INC.
▇. ▇▇▇▇▇ BUS SERVICE, INC.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ & SON, INC.
T-NT BUS SERVICE, INC.
TRANSCOMM, INC.
WINSALE, INC.
ATLANTIC PARATRANS OF NYC, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Title: Chief Financial Officer of each of the
Companies Listed above
Chief Executive ▇▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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