INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT, dated as of September 30,
1996 (as amended from time to time, the " AGREEMENT"), is entered
into by and among those "Lenders" under the Bank Credit Agreement
(as defined below) listed on Annex I attached hereto (the
"BANKS"), NBD Bank, as contractual representative for the Banks
(the "AGENT"), and the holders of the Company s 9.02% Senior
Notes due 2002 (the "NOTES") listed on Annex II attached hereto
(the "NOTEHOLDERS"; the Banks and the Noteholders are herein
sometimes collectively called the LENDERS and individually
called a "LENDER").
W I T N E S S E T H:
WHEREAS, Transportation Manufacturing Operations, Inc.,
a Delaware corporation (herein called the" COMPANY"), the Banks
and the Agent have entered into or are about to enter into that
certain Credit Agreement dated as of the date hereof (herein, as
amended from time to time, called the "BANK CREDIT AGREEMENT"),
pursuant to which, among other things, the Banks have agreed or
will agree to make certain advances to the Company (the "LOANS")
and to issue Letters of Credit for the account of the Company
(the "LETTERS OF CREDIT");
WHEREAS, the Company has executed and delivered to the
Noteholders $125,000,000 principal amount of the Notes pursuant
to the Note Agreement, dated as of November 15, 1994, by and
among the Company and the Noteholders (herein, as amended from
time to time, called the "NOTE AGREEMENT");
WHEREAS, in connection with the Bank Credit Agreement
the Noteholders have entered into or are about to enter into an
amendment to the Note Agreement (the "AMENDMENT") to, among other
things, permit the transactions contemplated by the Bank Credit
Agreement;
WHEREAS, in connection with the Bank Credit Agreement
and the Amendment Motor Coach Industries, Inc., a Delaware
corporation, Universal Coach Parts, Inc., a Delaware corporation,
Bus Lease, Inc., a Delaware corporation, Hausman Bus Sales, Inc.,
a Delaware corporation, MCI Acceptance Corp., a Delaware
corporation, Motor Coach Industries - China, a Delaware
corporation, Transit Bus International, Inc., a Delaware
corporation, Custom Assets Corp., a California corporation and
Transport Technology Corporation, an Arizona corporation
(collectively, along with any Subsidiaries (as hereinafter
defined) that may become parties to the Bank Guaranty or the Note
Guaranty referred to below the "GUARANTORS") are entering into
that certain Subsidiary Guaranty, dated as of the date hereof
(herein, as amended from time to time, the "BANK GUARANTY"),
under which the Guarantors are guarantying the obligations of the
Company to the Banks under the Bank Credit Agreement, and that
certain Guarantee Agreement, dated as of the date hereof (herein,
as amended from time to time, the "NOTE GUARANTY") under which
the Guarantors are guarantying the obligations of the Company
under the Note Agreement and the Notes; and
WHEREAS, it is an express condition precedent to the
Bank s obligations to make the Loans under the Bank Credit
Agreement and to the effectiveness of the Amendment that this
Agreement be executed, delivered and become effective.
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein contained, the Agent and the Lenders
hereby agree as follows:
1. (a) If any Sharing Event has occurred, any amounts
received by the Bank Agent or any Bank from any setoff of any
deposits of the Company or any of its Subsidiaries (as defined in
the Bank Credit Agreement and herein the "SUBSIDIARIES")or other
indebtedness of the Bank Agent or any Bank held by or owing to
the Company or any of its Subsidiaries and any amounts received
by the Bank Agent or any Bank under the Bank Guaranty shall be
distributed as provided in subsection (c) of this Section 1.
(b) If any Sharing Event has occurred, any amounts
received by any Noteholder under the Note Guaranty shall be
distributed as provided in subsection (c) of this Section 1.
"SHARING EVENT" shall mean (i) for the Loans to become
immediately due and payable pursuant to Section 6.01 of the Bank
Credit Agreement, (ii) for the Notes to become immediately due
and payable pursuant to paragraph 7A of the Note Agreement, (iii)
for the Company to default in the payment of the principal of or
interest on the Loans or the Notes when such payment is due which
payment default continues for at least 20 days, in which event
the "Sharing Event" shall be deemed to have occurred on the date
such payment default first occurred, (iv) for the Bank Agent or
any Bank to setoff any deposits of the Company or any of its
Subsidiaries or other indebtedness of the Bank Agent or any Bank
held by or owing to the Company or any Subsidiary, or (v) the
commencement by, against or with respect to the Company or any
Subsidiary of any proceeding under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar law or for the
appointment of a receiver for the Company or any Subsidiary or
any of its assets.
(c) The amounts referred to in subsection (a) and (b)
of this Section 1 (the "SHARED AMOUNTS") shall be distributed to
the Lenders pro rata in proportion to the respective amounts owed
by the Company to the Lenders under the Bank Credit Agreement,
the Note Agreement and the Notes or the Guarantors under the Bank
Guaranty and the Note Guaranty (the "OBLIGATIONS"), including (1)
the outstanding principal amount of, accrued and unpaid interest
on, any unpaid Yield-Maintenance Amount (as defined in the Note
Agreement) due with respect to, the Loans and the Notes, (2) any
unpaid reimbursement obligations with respect to any Letters of
Credit, (3) any undrawn amounts of any outstanding Letters of
Credit, (4) any unpaid obligations of the Company arising under
any Currency Agreement or Interest Rate Agreement (both as
defined in the Bank Credit Agreement) with any Lender or any
affiliate of any Lender, and (5) any other unpaid amounts due
from the Company under the Note Agreement, the Notes or the Bank
Credit Agreement (and, for this purpose, the undrawn amounts of
any outstanding Letters of Credit shall be considered to have
been reduced to the extent of any amount then on deposit with the
Agent as provided in subsection (d) of this Section 1).
(d) Any distribution pursuant to subsection (c) above
with respect to the undrawn amount of any outstanding Letter of
Credit shall be paid to the Agent to be held as collateral for
the Lenders and disposed of as provided in this subsection (d).
On each date on which a payment is made to a beneficiary pursuant
to a draw on a Letter of Credit, the Agent shall distribute to
the Banks from the amounts held pursuant to this subsection (d)
for application to the payment of the reimbursement obligation
due to the Banks with respect to such draw an amount equal to the
product of (1) the total amount then held pursuant to this
subsection (d), and (2) a fraction, the numerator of which is the
amount of such draw and the denominator of which is the aggregate
undrawn amount of all outstanding Letters of Credit immediately
prior to such draw. On each date on which a reduction in the
undrawn amount of any outstanding Letter of Credit occurs other
than on account of a payment made to a beneficiary pursuant to a
draw on such Letter of Credit, then the Agent shall distribute
from the amounts held pursuant to this subsection (d) an amount
equal to the product of (1) the total amount then held pursuant
to this subsection (d) and (2) a fraction the numerator of which
is the amount of such reduction and the denominator of which is
the aggregate undrawn amount of all outstanding Letters of Credit
immediately prior to such reduction, which amount shall be
distributed as provided in subsection (c) above. At such time as
no Letters of Credit are outstanding, any remaining amount held
pursuant to this subsection (d), after the distribution therefrom
as provided above, shall be distributed as provided in subsection
(c) above.
(e) The distribution provisions of this Section 1 are
for the purpose of determining the relative amounts of any Shared
Amounts to be distributed to the Lenders and not for the purpose
of creating an agreement among the parties as to the manner in
which any Shared Amounts are actually to be applied to pay the
Obligations which are owed to each Lender. Each Lender shall be
free, each in its own discretion, to apply any amounts
distributed to it pursuant to subsection (c) hereof to the
Obligations owed to it in such order as it may determine.
Notwithstanding the foregoing, (1) for all purposes of this
Agreement the Obligations shall be deemed paid to the same extent
that payments are distributed with respect thereto pursuant to
subsection (c) hereof notwithstanding the actual application
thereof, and (2) as between the Company and the Guarantors, on
one hand, and the Lenders, on the other hand, no portion of any
Shared Amount distributed to the Lenders pursuant to subsection
(c) hereof shall discharge the Obligations as to which such
Shared Amount was distributed or applied.
(f) Any Lender distributing any Shared Amount to the
other Lenders pursuant to subsection (c) of this Section 1 shall
be subrogated to the rights of such other Lenders with respect to
the Obligations with respect to which such Shared Amount was
distributed, including the rights with respect to the Bank
Guaranty or the Note Guaranty, as the case may be, relating to
such Obligations.
2. Each Lender agrees to use its best efforts to give
to the others (a) copies of any notice of the occurrence or
existence of an Event of Default (as defined in the Bank Credit
Agreement or the Note Agreement) sent to the Company or any
Guarantor, simultaneously with the sending of such notice to the
Company or any Guarantor, and (b) notice of any acceleration of
the Loans or the Notes, promptly upon such acceleration, but the
failure to give any of the foregoing notices shall not affect the
validity of such notice of an Event of Default or such
acceleration or create a cause of action against or cause a
forfeiture of any rights of the party failing to give such notice
or create any claim or right on behalf of any third party.
3. Neither the Agent nor any Lender shall take or
receive a security interest in or lien upon any of the property
or assets of the Company or any Guarantor as security for the
Obligations, nor shall the Agent or any Lender retain or obtain
the primary or secondary obligation of any other obligor or
obligors with respect to any of the Obligations other than
pursuant to the Bank Guaranty or the Note Guaranty. The
existence of a common law lien on deposit accounts shall not be
prohibited by the provisions of this section provided that any
realization on such lien and the application of the proceeds
thereof shall be subject to the provisions of this Agreement.
4. Neither the Agent nor any Lender shall contest the
validity or enforceability of or seek to avoid, have declared
fraudulent or have set aside any of the Obligations.
5. (a) The Agent and each Lender agrees to render an
accounting to any of the others of the outstanding amounts of the
Obligations, receipts of payments from the Company and the
Guarantors and of other items relevant to the provisions of this
Agreement upon the reasonable request from one of the others as
soon as reasonably practicable after such request.
(b) To the extent any Shared Amount received by
any Lender which was distributed to the other Lenders pursuant to
Section 1(c) hereof is subsequently invalidated, declared
fraudulent or preferential, set aside or required to be paid to a
trustee, receiver, or any other party under any bankruptcy act,
state or federal law, common law or equitable cause, then each
such other Lender shall repay to the distributing Lender, at such
time as the distributing Lender is required to return or repay
such Shared Amount, the portion of the Shared Amount so
distributed to it.
6. This Agreement shall in all respects be a
continuing, absolute, unconditional and irrevocable agreement,
and shall remain in full force and effect until all Obligations
shall have been satisfied in full and all obligations of all
Lenders to the other Lenders hereunder shall have been satisfied
in full. Without limiting the generality of the foregoing, this
Agreement shall survive the commencement of any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar proceeding
involving the Company or any Guarantor. Each Lender agrees that
this Agreement shall continue to be effective or be reinstated,
as the case may be, if at any time any payment (in whole or in
part) of any of the obligations of the Company or any Guarantor
is rescinded or must otherwise be restored by any Lender, upon
the insolvency, bankruptcy or reorganization of the Company or
any Guarantor or otherwise, as though such payment had not been
made.
7. (a) In order to induce the Banks and the Agent to
enter into this Agreement, each of the Noteholders severally
represents and warrants to the Banks and the Agent that it has
full corporate power, and has taken all action necessary, to
execute and deliver this Agreement and to fulfill its obligations
hereunder, and that no governmental or other authorizations are
required in connection herewith, and that this Agreement
constitutes its legal, valid and binding obligation, enforceable
in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium, regulatory and similar
laws of general application and by general principles of equity.
(b) In order to induce the Noteholders to enter
into this Agreement, each of the Banks and the Agent severally
represents and warrants to the Noteholders that it has full
corporate power, and has taken all action necessary, to execute
and deliver this Agreement and to fulfill its respective
obligations hereunder, and that no governmental or other
authorizations are required in connection herewith, and that this
Agreement constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium, regulatory
and similar laws of general application and by general principles
of equity.
8. This Agreement shall be binding upon, and inure to
the benefit of and be enforceable by, the Lenders and each of
their respective successors, transferees and assigns. Without
limiting the generality of the foregoing sentence, if any Lender
assigns or otherwise transfers (in whole or in part) to any other
person or entity the Obligations to such Lender under the Bank
Credit Agreement or the Note Agreement, such other person or
entity shall thereupon become vested with all rights and
benefits, and become subject to all the obligations, in respect
thereof granted to or imposed upon such Lender under this
Agreement.
9. None of the provisions of this Agreement shall
inure to the benefit of the Company, any Guarantor or any other
person than the Lenders; consequently, the Company and any and
all other persons shall not be entitled to rely upon, or to raise
as a defense, in any manner whatsoever, the provisions of this
Agreement or the failure of any Lender to comply with such
provisions.
10. Nothing contained herein shall limit or restrict
the independent right of any Lender to initiate an action or
actions in any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar proceeding in its individual capacity and
to appear or to be heard on any matter before the bankruptcy or
other applicable court in any such proceeding, including, without
limitation, with respect to any question concerning the post-
petition usage of collateral and post-petition financing
arrangement.
11. No amendment to or waiver of any provision of this
Agreement, nor consent to any departure by any Lender herefrom,
shall in any event be effective unless the same shall be in
writing and signed by all the Lenders, and then such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given.
12. All notices and other communications provided to
any Lender under this Agreement shall be in writing or by
facsimile and addressed, delivered or transmitted to such Lender
at its address or facsimile number set forth (a) in the case of
each of the Noteholders, on Annex II hereto and (b) in the case
of the Agent and each of the Banks on Annex I hereto, or (c) in
any case, at such other address or facsimile number as may be
designated by such Lender in a notice to the other Lenders. Any
notice, if mailed and properly addressed with postage prepaid or
if properly addressed and sent by prepaid courier service, shall
be deemed given when received; any notice, if transmitted by
facsimile, shall be deemed given when transmitted if actually
received, and the burden or proving receipt shall be on the
transmitting Lender.
13. No failure or delay on the part of any Lender in
exercising any power or right under this Agreement shall operate
as a waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further exercise
thereof of the exercise of any other power or right. The
remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
14. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under such law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THIS
AGREEMENT CONSTITUTES THE ENTIRE UNDERSTANDING BETWEEN THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
SUPERSEDES ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
16. This Agreement may be separately executed in
counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to
constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers.
NBD BANK, as Agent and as a Bank
By: /s/
Title:
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By: /s/
Title:
PRUCO LIFE INSURANCE COMPANY
By: /s/
Title:
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
By: /s/
Title:
THE TRAVELERS INSURANCE COMPANY
By: /s/
Title:
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
By: /s/
Title:
THE FRANKLIN LIFE INSURANCE COMPANY
By: /s/
Title:
PAN-AMERICAN LIFE INSURANCE COMPANY
By: /s/
Title:
GENERAL AMERICAN LIFE INSURANCE COMPANY
By: /s/
Title:
The Company and the Guarantors
hereby agree to be bound by the
terms of this Agreement to the
extent relating to it:
TRANSPORTATION MANUFACTURING
OPERATIONS, INC.
By: /s/
Title:
MOTOR COACH INDUSTRIES, INC.
By: /s/
Title:
UNIVERSAL COACH PARTS, INC.
By: /s/
Title:
BUS LEASE, INC.
By: /s/
Title:
HAUSMAN BUS SALES, INC.
By: /s/
Title:
MCI ACCEPTANCE CORP.
By: /s/
Title:
MOTOR COACH INDUSTRIES - CHINA
By: /s/
Title:
TRANSIT BUS INTERNATIONAL, INC.
By: /s/
Title:
CUSTOM ASSETS CORP.
By: /s/
Title:
TRANSPORT TECHNOLOGY CORPORATION
By: /s/
Title:
ANNEX I
NBD Bank
611 Woodward Avenue
Detroit, MI 48226
Attention: James B. Junker
Fax: 313/225-2649
ANNEX II
The Prudential Insurance Company of America
Pruco Life Insurance Company
c/o Prudential Capital Group
Four Embarcadero Center - Suite 2700
San Francisco, CA 94111
Attention: Managing Director
The Equitable Life Assurance Society of the United States
c/o Alliance Capital Management Corp.
Fixed Income Research/Private Placements
1345 Avenue of the Americas, 37th Floor
New York, New York 10105
Attention: Beatrice M. Cuervo
Vice President
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Securities Department Private Placement
Division - 9P.B.
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
3rd Floor, Tower 2
Englewood, Colorado 80111
Attention: U.S. Private Placements
The Franklin Life Insurance Company
Franklin Square
Springfield, Illinois 62713
Attention: Investment Division
Pan-American Life Insurance Company
Pan American Life Center
601 Poydras Street
New Orleans, Louisiana 70130
Attention: Investment Department - 28th Floor
Fixed Income Securities
General American Life Insurance Company
Attention: Securities Division
P.O. Box 396
St. Louis, Missouri 63166