EXHIBIT 10.5
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$125,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF
AUGUST 3, 1998
AMONG
QUANTA SERVICES, INC., AS BORROWER
AND
BANK ONE, TEXAS, NATIONAL ASSOCIATION,
NATIONAL CITY BANK AND THE OTHER FINANCIAL
INSTITUTIONS PARTIES HERETO, AS LENDERS
AND
BANK ONE, TEXAS, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT
AND
NATIONAL CITY BANK, AS CO-AGENT
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS; INTERPRETATION............................................................. 1
Section 1.1 Definitions.................................................................. 1
Section 1.2 Interpretation............................................................... 13
SECTION 2. THE CREDIT FACILITY..................................................................... 13
Section 2.1 Loans........................................................................ 13
Section 2.2 Letters of Credit............................................................ 14
Section 2.3 Types of Loans and Minimum Borrowing Amounts................................. 17
Section 2.4 Manner of Borrowing.......................................................... 17
Section 2.5 Interest Periods............................................................. 19
Section 2.6 Interest Payments............................................................ 20
Section 2.7 Default Rates................................................................ 20
Section 2.8 Maturity of Loans............................................................ 22
Section 2.9 Optional Prepayments......................................................... 22
Section 2.10 Mandatory Prepayments of Loans............................................... 22
Section 2.11 The Notes.................................................................... 22
Section 2.12 Breakage Fees................................................................ 23
Section 2.13 Commitment Terminations...................................................... 24
SECTION 3. FEES AND PAYMENTS....................................................................... 24
Section 3.1 Fees......................................................................... 24
Section 3.2 Place and Application of Payments............................................ 25
Section 3.3 Withholding Taxes............................................................ 25
SECTION 4. CONDITIONS PRECEDENT.................................................................... 28
Section 4.1 Conditions Precedent to Initial Borrowing.................................... 28
Section 4.2 Conditions Precedent to all Borrowings....................................... 29
SECTION 5. REPRESENTATIONS AND WARRANTIES.......................................................... 31
Section 5.1 Organization................................................................. 31
Section 5.2 Power and Authority; Validity................................................ 31
Section 5.3 No Violation................................................................. 31
Section 5.4 Litigation................................................................... 32
Section 5.5 Use of Proceeds; Margin Regulations.......................................... 32
Section 5.6 Investment Company Act....................................................... 32
Section 5.7 Public Utility Holding Company Act........................................... 32
Section 5.8 True and Complete Disclosure................................................. 32
Section 5.9 Financial Statements......................................................... 33
Section 5.10 No Material Adverse Change................................................... 33
Section 5.11 Labor Controversies.......................................................... 33
Section 5.12 Taxes........................................................................ 33
Section 5.13 ERISA........................................................................ 33
Section 5.14 Consents..................................................................... 33
Section 5.15 Capitalization............................................................... 34
Section 5.16 Ownership of Property........................................................ 34
Section 5.17 Compliance with Statutes..................................................... 34
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TABLE OF CONTENTS
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Section 5.18 Environmental Matters........................................................ 34
Section 5.19 Year 2000 Compliance......................................................... 35
Section 5.20 Existing Indebtedness and Liens.............................................. 35
SECTION 6. COVENANTS............................................................................... 36
Section 6.1 Existence.................................................................... 36
Section 6.2 Maintenance.................................................................. 36
Section 6.3 Taxes........................................................................ 36
Section 6.4 ERISA........................................................................ 36
Section 6.5 Insurance.................................................................... 37
Section 6.6 Financial Reports and Other Information...................................... 37
Section 6.7 Lenders' Inspection Rights................................................... 39
Section 6.8 Conduct of Business.......................................................... 39
Section 6.9 New Subsidiaries............................................................. 39
Section 6.10 Dividends and Negative Pledges............................................... 39
Section 6.11 Restrictions on Fundamental Changes.......................................... 40
Section 6.12 Environmental Laws........................................................... 41
Section 6.13 Liens........................................................................ 41
Section 6.14 Indebtedness................................................................. 42
Section 6.15 Loans, Advances and Investments.............................................. 43
Section 6.16 Transfer of Assets........................................................... 44
Section 6.17 Transactions with Affiliates................................................. 44
Section 6.18 Compliance with Laws......................................................... 44
Section 6.19 Capital Expenditures......................................................... 44
Section 6.20 Minimum Consolidated Net Worth............................................... 44
Section 6.21 Fixed Charge Coverage Ratio.................................................. 45
Section 6.22 Funded Debt to EBITDA Ratio.................................................. 45
Section 6.23 Senior Debt to EBITDA........................................................ 45
Section 6.24 Tangible Assets to Senior Debt Ratio......................................... 45
SECTION 7. EVENTS OF DEFAULT AND REMEDIES.......................................................... 45
Section 7.1 Events of Default............................................................ 45
Section 7.2 Non-Bankruptcy Defaults...................................................... 47
Section 7.3 Bankruptcy Defaults.......................................................... 47
Section 7.4 Collateral for Undrawn Letters of Credit..................................... 48
Section 7.5 Notice of Default............................................................ 48
SECTION 8. CHANGE IN CIRCUMSTANCES................................................................. 49
Section 8.1 Change of Law................................................................ 49
Section 8.2 Unavailability of Deposits or Inability to Ascertain LIBOR Rate.............. 49
Section 8.3 Increased Cost and Reduced Return............................................ 49
Section 8.4 Lending Offices.............................................................. 51
Section 8.5 Discretion of Lender as to Manner of Funding................................. 51
Section 8.6 Substitution of Lender....................................................... 51
SECTION 9. THE AGENT............................................................................... 51
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TABLE OF CONTENTS
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Section 9.1. Appointment and Authorization of Agent and Co-Agent.......................... 51
Section 9.2. Rights and Powers............................................................ 52
Section 9.3. Action by Agent and Co-Agent................................................. 52
Section 9.4. Consultation with Experts.................................................... 52
Section 9.5. Indemnification Provisions; Credit Decision.................................. 52
Section 9.6. Indemnity.................................................................... 53
Section 9.7. Resignation of Agent and Successor Agent..................................... 53
Section 9.7. Co-Agent..................................................................... 54
SECTION 10. MISCELLANEOUS........................................................................... 54
Section 10.1 No Waiver of Rights.......................................................... 54
Section 10.2 Non-Business Day............................................................. 54
Section 10.3 Documentary Taxes............................................................ 54
Section 10.4 Survival of Representations.................................................. 55
Section 10.5 Survival of Indemnities...................................................... 55
Section 10.6 Setoff....................................................................... 55
Section 10.7 Notices...................................................................... 56
Section 10.8 Counterparts................................................................. 56
Section 10.9 Successors and Assigns....................................................... 56
Section 10.10 Sales and Transfers of Borrowings and Notes; Participations in Borrowings and
Notes........................................................................ 57
Section 10.11 Amendments................................................................... 59
Section 10.12 Headings..................................................................... 59
Section 10.13 Legal Fees, Other Costs and Indemnification.................................. 60
Section 10.14 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.............. 60
Section 10.15 Confidentiality.............................................................. 62
Section 10.16 Severability................................................................. 63
Section 10.17 Change in Accounting Principles or Tax Laws.................................. 63
Section 10.18 Loans Under Prior Credit Agreement........................................... 63
Section 10.19 Effectiveness................................................................ 63
Section 10.20 Notice....................................................................... 63
EXHIBITS
Exhibit 2.2A Form of Borrowing Request
Exhibit 2.2B Form of Application
Exhibit 2.11 Form of Note
Exhibit 4.1A Form of Subsidiary Guaranty
Exhibit 4.1B Form of Stock Pledge Agreement
Exhibit 4.1C Form of Financial Condition Certificate
Exhibit 6.6 Form of Compliance Certificate
Exhibit 10.10 Form of Assignment Agreement
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SCHEDULES
Schedule 5.1 List of Subsidiaries
Schedule 5.4 List of Litigation
Schedule 5.12 List of Outstanding Tax Issues
Schedule 5.20 List of Existing Liens and Indebtedness
Schedule 6.13 List of Permitted Liens and Indebtedness
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 3, 1998, between
Quanta Services, Inc., a Delaware corporation (the "Borrower"), Bank One, Texas,
National Association ("Bank One"), National City Bank and the other lenders from
time to time parties hereto (each a "Lender" and collectively, the "Lenders"),
Bank One as administrative agent for the Lenders (in such capacity, the "Agent")
and National City Bank as co-agent for the Lenders (in such capacity, the
"Co-Agent").
WITNESSETH:
WHEREAS, the Borrower, certain of the Lenders and the Agent have previously
entered into that certain Credit Agreement dated as of April 9, 1998 (the "Prior
Credit Agreement"); and
WHEREAS, the parties to the Prior Credit Agreement desire to amend and
restate such agreement in its entirety as provided herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
Section 1.1 Definitions. Unless otherwise defined herein, the following
terms shall have the following meanings:
"Acquisition" means a direct or indirect purchase by the Borrower or any of
its Subsidiaries after the Effective Date hereof for cash, stock or other
securities or other property, whether in one or more related transactions, of
all or substantially all of the assets or voting securities or other equity
interests of a Person or a business unit, division or group of a Person.
"Adjusted LIBOR Rate" means, for any Borrowing of LIBOR Loans, a rate per
annum determined in accordance with the following formula:
Adjusted LIBOR Rate = LIBOR Rate
-----------------------
1.00 - Eurodollar Reserve Percentage
"Affiliate" means, for any Person, (i) any other Person that directly or
indirectly through one or more intermediaries controls, or is under common
control with, or is controlled by, such Person, and (ii) any other Person owning
beneficially or controlling ten percent (10%) or more of the equity interests in
such Person; provided that any investor in connection with any Subordinated Debt
Investment shall not be considered an Affiliate hereunder. As used in this
definition, "control" means the power, directly or indirectly, to direct or
cause the direction of management or policies of a Person (through ownership of
voting securities or other equity interests, by contract or otherwise).
"Agent" means Bank One acting in its capacity as administrative agent for
the Lenders, and any successor agent appointed hereunder pursuant to Section
9.7.
"Agent Loans" means the loans made by the Agent, in its sole discretion,
described in Section 2.1(b).
"Agent Swing Line" means the uncommitted credit facility in an amount of
$5,000,000 for making Agent Loans described in Section 2.1(b).
"Agreement" means this Credit Agreement, as amended, restated or
supplemented from time to time.
"Applicable Margin" means for Base Rate Loans or LIBOR Loans, as
applicable, for any day at such times as the relevant Funded Debt to EBITDA
Ratio is in one of the following ranges, the percentage per annum set forth
opposite such Funded Debt to EBITDA Ratio for such Loans as follows:
Funded Debt to
EBITDA Ratio LIBOR Loans Base Rate Loans
---------------- ------------ ---------------
Less than or equal to 1.5 to 1.0 0.75% 0.00%
Greater than 1.5 to 1.0 but less 1.00% 0.00%
than or equal to 1.75 to 1.0
Greater than 1.75 to 1.0 but less 1.25% 0.00%
than or equal to 2.25 to 1.0
Greater than 2.25 to 1.0 but less 1.50% 0.00%
than or equal to 2.75 to 1.0
Greater than 2.75 to 1.0 1.75% 0.25%
For the period from the Effective Date through the earlier of the date the
Borrower is to provide the Agent with the financial statements for the fiscal
quarter ended June 30, 1998, as required by Section 6.6(a)(i) or the date such
financial statements are provided to the Agent, the Applicable Margin for LIBOR
Loans shall be 0.75% and the Applicable Margin for Base Rate Loans shall be 0%,
and thereafter, the Applicable Margin shall be set according to the above grid
upon receipt by the Agent of the applicable financial statements and Compliance
Certificate as required by Section 6.6(a)(i) or (ii) and Section 6.6(b) from the
Borrower to be effective as of the date one (1) Business Day after the earlier
of the date such financial statements are required to be provided or the date
such financial
2
statements are provided to the Agent. Upon the closing of Subordinated Debt
Investment(s) with proceeds aggregating at least $30,000,000, the percentages in
the LIBOR Loans column above shall each be reduced by 0.125%.
"Application" means an application for a Letter of Credit as defined in
Section 2.2(b).
"Arranger" means Bank One Capital Markets.
"Assignment Agreement" means an agreement in substantially the form of
Exhibit 10.10 whereby a Lender conveys part or all of its Commitments, Loans and
participations in Letters of Credit to another Person that thereupon becomes a
Lender, or that increases its Commitments, outstanding Loans and outstanding
participations in Letters of Credit pursuant to Section 10.10.
"Base Rate" means, for any day, the fluctuating commercial loan rate
announced by the Agent from time to time as its base rate for Dollar loans in
the United States of America in effect on such day (which base rate may not be
the lowest rate charged by the Agent on loans to any of its customers), with any
change in the Base Rate resulting from a change in such announced rate to be
effective on the date of the relevant change.
"Base Rate Loan" means (i) a Revolving Loan bearing interest prior to
maturity at the Base Rate plus the Applicable Margin, or (ii) an Agent Loan
bearing interest prior to maturity at the Base Rate minus 0.625%, as applicable.
"Borrower" means Quanta Services, Inc., a Delaware corporation.
"Borrowing" means any extension of credit made by the Lenders or the Agent,
as the case may be, by way of Loans or Letters of Credit, including any
Borrowings advanced, continued or converted. A Borrowing is "advanced" on the
day the Lenders or the Agent, as the case may be, advances funds comprising such
Borrowing to the Borrower or a Letter of Credit is issued, is "continued" (in
the case of LIBOR Loans) on the date a new Interest Period commences for such
Borrowing and is "converted" when such Borrowing is changed from one type of
Loan to the other, all as requested by the Borrower pursuant to Section 2.4(a).
"Borrowing Request" means a request for a Borrowing as defined in Section
2.2(b).
"Business Day" means any day other than a Saturday or Sunday on which banks
are not authorized or required to close in Houston, Texas, and, if the
applicable Business Day relates to the advance or continuation of, conversion
into or payment on a LIBOR Loan, on which banks are dealing in Dollar deposits
in the interbank eurocurrency market in London, England.
"Capital Expenditures" means, for any period, the sum, without duplication,
of all expenditures of the Borrower and its Subsidiaries for fixed or capital
assets made during such period which, in accordance with GAAP, are required to
be classified as capital expenditures, in each case
3
excluding all such expenditures incurred by any entity or business acquired in
an Acquisition prior to the date of such Acquisition.
"Capitalized Lease Obligations" means, for any Person, the amount of such
Person's liabilities under all leases of real or personal property (or any
interest therein) which is required to be capitalized on the balance sheet of
such Person as determined in accordance with GAAP.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than twelve (12) months
from the date of acquisition; (ii) U.S. Dollar denominated time deposits and
certificates of deposit maturing within one (1) year from the date of
acquisition thereof with any Lender or any other financial institution whose
short-term senior unsecured debt rating is at least A-1 from S&P or P-1 from
▇▇▇▇▇'▇; (iii) LIBOR denominated time deposits and certificates of deposit
maturing within six (6) months from the date of acquisition thereof with any
Lender or any other financial institution whose short-term senior unsecured debt
rating is at least A-1 from S&P or P-1 from ▇▇▇▇▇'▇; (iv) commercial paper or
Eurocommercial paper with a rating of at least A-1 from S&P or P-1 from ▇▇▇▇▇'▇,
with maturities of not more than twelve (12) months from the date of
acquisition; (v) repurchase obligations entered into with any Lender or any
other financial institution whose short-term senior unsecured debt rating is at
least A-1 from S&P or P-1 from ▇▇▇▇▇'▇, which are secured by a fully perfected
security interest in any obligation of the type described in (i) above and has a
market value of the time such repurchase is entered into of not less than 100%
of the repurchase obligation of such Lender or such other Person thereunder;
(vi) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within twelve (12) months from the date of
acquisition thereof or providing for the resetting of the interest rate
applicable thereto not less often than annually and, at the time of acquisition,
having one of the two highest ratings obtainable from either S&P or ▇▇▇▇▇'▇; and
(vii) money market funds which have at least $1,000,000,000 in assets and which
invest primarily in securities of the types described in clauses (i) through
(vi) above.
"Co-Agent" means National City Bank acting in its capacity as co-agent for
the Lenders, and any successor co-agent appointed hereunder pursuant to Section
9.7.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property and assets of the Borrower and its
Subsidiaries in which the Agent is granted a Lien for the benefit of the
Lenders.
"Collateral Account" means the cash collateral account for outstanding
undrawn Letters of Credit as defined in Section 7.4(b).
"Commitment" means, relative to any Lender, such Lender's obligation to
make Revolving Loans and participate in Letters of Credit issued pursuant to
Sections 2.1 and 2.2 in the percentage
4
set forth opposite its signature hereto or pursuant to Section 10.10, as such
commitment may be reduced from time to time pursuant to this Agreement, provided
that the obligation of the Agent to make Revolving Loans and participate in
Letters of Credit shall be limited to $100,000,000 (subject to any reduction
thereof pursuant to Section 10.10) minus the outstanding principal amount of the
Agent Loans from time to time outstanding.
"Commitment Amount" means an amount equal to $125,000,000 minus the
outstanding amount of Agent Loans, as such amount may be reduced from time to
time pursuant to the terms of this Agreement.
"Commitment Termination Date" means the earliest of (i) the Maturity Date;
(ii) the date on which the Commitments are terminated in full or reduced to zero
pursuant to Section 2.13; or (iii) the occurrence of any Event of Default
described in Section 7.1(f) or (g) with respect to the Borrower or the
occurrence and continuance of any other Event of Default and either (x) the
declaration of the Loans to be due and payable pursuant to Section 7.2, or (y)
in the absence of such declaration, the giving of written notice by the Agent,
acting at the direction of the Majority Lenders, to the Borrower pursuant to
Section 7.2 that the Commitments have been terminated.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit 6.6.
"Consolidated Interest Expense" means, for any period, total interest
expense of the Borrower and its Subsidiaries on a consolidated basis for such
period in connection with Indebtedness, determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income (or loss),
after provision for taxes, of the Borrower and its Subsidiaries on a
consolidated basis for such period, determined in accordance with GAAP.
"Consolidated Net Worth" means, as of any date of determination, the
Borrower's consolidated stockholders equity determined in accordance with GAAP.
"Credit Documents" means this Agreement, the Notes, the Subsidiary
Guaranties, the Stock Pledge Agreements, the Applications, the Borrowing
Requests and any other documents or instruments executed by the Borrower or any
of the Guarantors in connection with this Agreement.
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Dollar" and "U.S. Dollar" and the sign "$" means lawful money of the
United States of America.
"EBITDA" means, for any period, on a trailing four fiscal quarter basis
(using the historical financial results of the Founding Companies, to the extent
necessary, for any period prior to the
5
acquisition of the Founding Companies by the Borrower on a pro forma basis,
consistent with SEC regulations), the sum of (i) Consolidated Net Income plus
each of the following to the extent actually deducted in determining
Consolidated Net Income (a) Consolidated Interest Expense, and (b) provisions
for taxes based on income or revenues, plus (ii) the amount of all depreciation,
amortization expense and other non-cash charges deducted in determining
Consolidated Net Income, all calculated on a consolidated basis for the Borrower
and its Subsidiaries and as determined in accordance with GAAP. Upon the
consummation of any Acquisition, EBITDA shall be adjusted to include the
historical financial results of the acquired business (on a trailing four fiscal
quarter pro forma basis consistent with SEC regulations).
"Effective Date" means the date this Agreement becomes effective as defined
in Section 10.19.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of non-
compliance or violations, formal investigations or proceedings relating to any
Environmental Law ("Claims") or any permit issued under any Environmental Law,
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (ii)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
a release or threatened release of Hazardous Materials.
"Environmental Law" means any federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law now or hereafter in
effect, including any judicial or administrative order, consent, decree or
judgment relating to (i) the environment, (ii) health or safety in relation to
the environment or (iii) Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Eurodollar Reserve Percentage" means, with respect to each Interest Period
for a LIBOR Loan, a percentage (expressed as a decimal) equal to the daily
average during such Interest Period of the percentages in effect on each day of
such Interest Period, if any, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor thereto), for determining the maximum
reserve requirements (including, without limitation, any supplemental, marginal
and emergency reserves) applicable to "Eurocurrency Liabilities" pursuant to
Regulation D of the Board of Governors of the Federal Reserve System or any
other then applicable regulation of the Board of Governors which prescribes
reserve requirements applicable to "Eurocurrency Liabilities" as presently
defined in Regulation D.
"Event of Default" means any of the events or circumstances specified in
Section 7.1.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16th of 1%) equal to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the next Business Day,
provided that (A) if such day is not a Business Day, the rate on such
transactions on the immediately preceding Business Day as so published on the
next Business Day shall apply, and (B) if no such rate is
6
published on such next Business Day, the rate for such day shall be the average
of the offered rates quoted to the Agent by two (2) federal funds brokers of
recognized standing on such day for such transactions as selected by the Agent.
"Fee Letter" means that certain letter agreement dated July 30, 1998, by
and between the Agent, the Arranger and the Borrower.
"Fixed Charge Coverage Ratio" means, for any period, on a trailing four
fiscal quarter basis (using the historical financial results of the Founding
Companies, to the extent necessary, for any period prior to the acquisition of
the Founding Companies by the Borrower on a pro forma basis, consistent with SEC
regulations), the ratio of (i) the sum of, without duplication, (a) EBITDA,
minus (b) cash taxes, minus (c) all cash dividends, distributions or payments
made in respect of the capital stock of the Borrower to the extent permitted
hereunder; to (ii) the sum of, without duplication, (a) the portion of Funded
Debt due and payable within one (1) year of the date of determination, plus (b)
Consolidated Interest Expense for the four fiscal quarters then ended, all
calculated on a consolidated basis for the Borrower and its Subsidiaries and as
determined in accordance with GAAP. Upon the consummation of any Acquisition,
the Fixed Charge Coverage Ratio shall be determined including the historical
financial results of the acquired business (on a trailing four fiscal quarter
pro forma basis, consistent with SEC regulations).
"Founding Companies" means PAR Electrical Contractors, Inc., a Missouri
corporation, Union Power Construction Company, a Colorado corporation, TRANS
TECH Electric, Inc., an Indiana corporation, and Potelco, Inc., a Washington
corporation.
"Funded Debt" means, as of any date of determination, the sum, without
duplication, of the following for the Borrower and its Subsidiaries: (i)
Indebtedness for borrowed money, all obligations evidenced by bonds, debentures,
notes or similar instruments, and purchase money obligations which in accordance
with GAAP would be shown on the consolidated balance sheet of the Borrower as a
liability, (ii) all reimbursement obligations relative to the face amount of all
drawn letters of credit issued for the account of the Borrower or any of its
Subsidiaries, and (iii) all Capitalized Lease Obligations.
"Funded Debt to EBITDA Ratio" means, for any period, the ratio of (i)
Funded Debt, to (ii) EBITDA.
"GAAP" means generally accepted accounting principles from time to time in
effect as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the statements and pronouncements of the Financial Accounting Standards Board or
in such other statements, opinions and pronouncements by such other entity as
may be approved by a significant segment of the U.S. accounting profession.
"Guarantor" means each Subsidiary of the Borrower listed on Schedule 5.1
and any other Subsidiary of the Borrower required to become a Guarantor pursuant
to Section 6.9.
"Guaranty" by any Person means all contractual obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection or similar transactions
7
in the ordinary course of business) of such Person guarantying any Indebtedness,
dividend or other obligation (including, without limitation, obligations in
connection with sales of any property) of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation, or
to purchase any property or assets constituting security therefor, primarily for
the purpose of assuring the owner of such Indebtedness or obligations of the
ability of the primary obligor to make payment of the Indebtedness or
obligation; or (ii) to advance or supply funds (x) for the purchase or payment
of such Indebtedness or obligation, or (y) to maintain working capital or other
balance sheet condition, or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation, in each case primarily
for the purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of the Indebtedness or
obligation; or (iii) to lease property or to purchase securities or other
property or services of the primary obligor primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or obligation; or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the primary
obligor against loss in respect thereof. For the purpose of all computations
made under this Agreement, the amount of a Guaranty in respect of any obligation
shall be deemed to be equal to the amount that would apply if such obligation
were the direct obligation of such Person rather than the primary obligor or, if
less, the maximum aggregate potential liability of such Person under the terms
of the Guaranty.
"Hazardous Material" shall have the meaning assigned to the term Hazardous
Substance in the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Acts of
1986, and shall include any substance defined as "hazardous" or "toxic" or words
used in place thereof under any Environmental Law applicable to the Borrower or
any of its Subsidiaries.
"Highest Lawful Rate" means the maximum nonusurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the Loans or the Reimbursement Obligations, or under laws
applicable to the Agent or any of the Lenders, which are presently in effect or,
to the extent allowed by applicable law, under such laws which may hereafter be
in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow. Determination of the rate of interest for the
purpose of determining whether the Loans or the Reimbursement Obligations are
usurious under all applicable laws shall be made by amortizing, prorating,
allocating, and spreading, in equal parts during the period of the full stated
term of the Loans, all interest at any time contracted for, taken, reserved,
charged or received from the Borrower in connection with the Loans or the
Reimbursement Obligations, as applicable.
"Indebtedness" means, for any Person, the following obligations of such
Person, without duplication: (i) obligations of such Person for borrowed money;
(ii) obligations of such Person representing the deferred purchase price of
property or services other than accounts payable arising in the ordinary course
of business and other than amounts which are being contested in good faith and
for which reserves in conformity with GAAP have been provided; (iii) obligations
of such Person evidenced by bonds, notes, bankers acceptances, debentures or
other similar instruments of such Person or reimbursement obligations or other
obligations with respect to letters of credit issued for such Person's account
or letters of credit issued pursuant to such Person's application therefor;
8
(iv) obligations of other Persons, whether or not assumed, secured by Liens upon
property or payable out of the proceeds or production from property now or
hereafter owned or acquired by such Person, but only to the extent of such
property's fair market value; (v) Capitalized Lease Obligations of such Person;
(vi) obligations under Interest Rate Protection Agreements and under hedge,
swap, exchange, forward, future, collar or cap arrangements, fixed price
agreements and all other agreements or arrangements designed to protect against
fluctuations in commodity prices and currency exchange rates; and (vii)
obligations of such Person pursuant to a Guaranty of any of the foregoing of
another Person. For purposes of this Agreement, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture to which such
Person is a party, to the extent the holder of such Indebtedness has recourse to
such Person.
"Indemnified Taxes" shall have the meaning ascribed to such term in Section
3.3.
"Initial Borrowing Date" means the date on which all conditions precedent
set forth herein to the initial Borrowings are satisfied or waived in writing
and the initial Borrowing hereunder occurs.
"Interest Payment Date" means (i) for a Base Rate Loan, the last Business
Day of each calendar quarter such Loan is outstanding commencing September 30,
1998, and (ii) for a LIBOR Loan, the last Business Day of each Interest Period
for such Loan and, during any Interest Period of six (6) months, the next
Business Day occurring three (3) months after the commencement of such Interest
Period.
"Interest Period" means the period commencing on the date that a Borrowing
of LIBOR Loans is advanced, continued or created by conversion and, subject to
Section 2.5, ending on the date one (1), two (2), three (3) or six (6) months
thereafter as selected by the Borrower pursuant to the terms of this Agreement.
"Interest Rate Protection Agreement" means any hedge, swap, exchange,
forward, future collar or cap arrangements, fixed price agreements or other
agreements or arrangements designed to protect against fluctuations in interest
rates.
"Investments" shall have the meaning ascribed to such term in Section 6.15.
"L/C Commitments" means, relative to any Lender, such Lender's obligation
to participate in Letters of Credit pursuant to Section 2.2 in the percentage
set forth opposite its signature hereto or pursuant to Section 10.10, as such
commitments may be reduced from time to time pursuant to the terms of this
Agreement; provided that the obligation of the Agent to make Revolving Loans and
participate in Letters of Credit shall be limited to $100,000,000 (subject to
any reduction thereof pursuant to Section 10.10) minus the outstanding principal
amount of the Agent Loans from time to time outstanding.
"L/C Commitment Amount" means $10,000,000, as such amount may be reduced
from time to time pursuant to the terms of this Agreement.
9
"L/C Documents" means this Agreement, the Letters of Credit and any
Borrowing Requests and Applications with respect thereto and any draft or other
document presented in connection with a drawing thereunder.
"L/C Obligations" means the undrawn face amounts of all outstanding Letters
of Credit and all unpaid Reimbursement Obligations with respect to Letters of
Credit.
"Lenders" is defined in the preamble.
"Lending Office" means the branch, office or affiliate of a Lender
specified on the appropriate signature page hereof or designated pursuant to
Sections 8.4 or 10.10.
"Letter of Credit" means any of the letters of credit issued by the Agent
on behalf of the Lenders for the account of the Borrower pursuant to Section
2.2.
"LIBOR Loan" means a Revolving Loan bearing interest prior to maturity at
the Adjusted LIBOR Rate plus the Applicable Margin.
"LIBOR Rate" means a rate of interest per annum (rounded upwards, if
necessary, to the nearest whole multiple of 1/16 of 1%), equal to the offered
rate for U.S. Dollar deposits of not less than $1,000,000 for a period of time
equal to the applicable Interest Period for such Loan as of 11:00 a.m. City of
London, England time two (2) London Business Days prior to the first date of
each such Interest Period as shown on the display designated as "British Bankers
Assoc. Interest Settlement Rates" on the Telerate System ("Telerate"), Page 3750
or Page 3740 or such other page or pages as may replace such pages on Telerate
for the purpose of displaying such rate; provided, however, that if such rate is
not available on Telerate then such offered rate shall be otherwise
independently determined by the Agent from an alternate, substantially similar
independent source available to the Agent or shall be calculated by the Agent by
a substantially similar methodology as that theretofore used to determine such
offered rate in Telerate.
"Lien" means any interest in any property or asset in favor of a Person
other than the owner of the property or asset and securing an obligation owed to
such Person, whether such interest is based on the common law, statute or
contract, including, but not limited to, the security interest lien arising from
a mortgage, encumbrance, pledge, conditional sale, security agreement or trust
receipt, or a lease, consignment or bailment for security purposes.
"Loan" means a Base Rate Loan or a LIBOR Loan, each of which is a "type" of
Loan hereunder, outstanding as a Revolving Loan or an Agent Loan, as applicable.
"London Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions are generally authorized or obligated by law or
executive order to close in the City of London, England.
"Majority Lenders" means, at any time, the Lenders then holding in the
aggregate at least sixty-six and two-thirds percent (66 2/3%) of the aggregate
of the Commitments plus the outstanding principal amount of the Agent Loans, or
if the Commitments have terminated pursuant to the terms
10
hereof, the aggregate Obligations. The percentage set forth opposite each
Lender's name in the line designated "Percentage" on the signature page hereto
reflects the initial voting percentage of each Lender hereunder on the Effective
Date.
"Material Adverse Effect" means an effect that results in a material
adverse change since March 31, 1998 in (i) the business, properties, assets,
financial condition or, prior to the Initial Borrowing Date, prospects of the
Borrower and its Subsidiaries taken as a whole, or (ii) in the ability of the
Borrower or Borrower and the Guarantors, taken as a whole, to perform its
Obligations under the Credit Documents to which they are a party.
"Maturity Date" means August 2, 2003.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor thereto.
"Notes" shall mean the revolving promissory notes of the Borrower as
defined in Section 2.11.
"Obligations" means all joint and several obligations of the Borrower and
the Guarantors to pay fees, costs and expenses hereunder, to pay principal or
interest on Loans and Reimbursement Obligations and to pay any other obligations
to the Agent or the Lenders arising under any Credit Document.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Percentage" means, for each Lender, the percentage of the Commitments
represented by such Lender's Commitment; provided that, if the Commitments are
terminated, each Lender's Percentage shall be calculated based on its Commitment
in effect immediately before such termination, subject to any assignments by
such Lender of Obligations pursuant to Section 10.10.
"Permitted Business" means any business described in Section 6.8.
"Permitted Liens" means the Liens described in Section 6.13.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or any agency or political subdivision
thereof.
"Plan" means an employee pension benefit plan covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code that
is either (i) maintained by the Borrower or any of its Subsidiaries, or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
the Borrower or any of its Subsidiaries is then making or accruing an obligation
to make contributions or has within the preceding five (5) plan years made or
had an obligation to make contributions.
11
"Reimbursement Obligation" means the obligations of the Borrower to
reimburse the Agent, for the benefit of the Lenders, for each drawing under a
Letter of Credit as described in Section 2.2(c).
"Revolving Loans" means the revolving loans by the Lenders described in
Section 2.1(a).
"S&P" means Standard & Poor's Rating Group or any successor thereto.
"SEC" means the Securities and Exchange Commission.
"Senior Debt" means, as of the date of any determination, the outstanding
Indebtedness under the Credit Documents.
"Senior Debt to EBITDA Ratio" means, for any period, the ratio of (i)
Senior Debt, to (ii) EBITDA.
"Stock Pledge Agreements" means each Stock Pledge Agreement of the Borrower
and any of its Subsidiaries in substantially the form of Exhibit 4.1B, as
amended, restated or supplemented from time to time.
"Subsidiary" means, for any Person, any corporation or other entity of
which more than fifty percent (50%) of the outstanding stock or comparable
equity interests having ordinary voting power for the election of the board of
directors of such corporation, any managers of such limited liability company or
similar governing body (irrespective of whether or not, at the time, stock or
other equity interests of any other class or classes of such corporation or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by such Person, as
applicable, or by one or more of its Subsidiaries.
"Subordinated Debt Investment" means any issue of subordinated debt of the
Borrower subordinated in payment to the Obligations, having a maturity after the
Maturity Date, with no scheduled principal payments until after the Maturity
Date, containing covenants no more restrictive than the covenants contained in
this Agreement and containing subordination, standstill and other provisions
reasonably acceptable to the Agent.
"Subsidiary Guaranty" means each Guaranty of each domestic direct or
indirect Subsidiary of the Borrower in substantially the form of Exhibit 4.1A.
"Tangible Assets" means all property which would be considered tangible
under GAAP, all calculated on a consolidated basis for the Borrower and its
Subsidiaries.
"Tangible Assets to Senior Debt" means, for any period, the ratio of (i)
Tangible Assets, to (ii) Senior Debt.
"Taxes" shall have the meaning ascribed to such term in Section 5.12.
12
"Unfunded Vested Liabilities" means, for any Plan at any time, the amount,
if any, by which the present value of all vested nonforfeitable accrued benefits
under such Plan exceeds the fair market value of all Plan assets allocable to
such benefits, determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of the Borrower or any of its Subsidiaries to the PBGC or such Plan.
Section 1.2 Interpretation. The foregoing definitions shall be equally
applicable to the singular and plural forms of the terms defined. All
references to times of day in this Agreement shall be references to Houston,
Texas time unless otherwise specifically provided.
SECTION 2. THE CREDIT FACILITY.
Section 2.1 Loans.
(a) Revolving Loans. Subject to the terms and conditions hereof, each
Lender severally and not jointly agrees to make one or more loans (each a
"Revolving Loan") to the Borrower from time to time before the Commitment
Termination Date on a revolving basis in an aggregate amount not to exceed at
any time outstanding an amount equal to its Percentage of the Commitment Amount
(for each Lender, its "Commitment"), subject to any reductions thereof pursuant
to the terms of this Agreement. No Lender shall be permitted or required to
make any Revolving Loan if, after giving effect thereto, (i) the aggregate
principal amount of the Revolving Loans of all Lenders and L/C Obligations
outstanding of the Borrower would thereby exceed the Commitment Amount then in
effect; (ii) the aggregate principal amount of all Revolving Loans of such
Lender and its participating interest in all L/C Obligations would thereby
exceed the Percentage of such Lender of the Commitment Amount then in effect; or
(iii) with respect to the Agent, the aggregate principal amount of all Revolving
Loans, its participating interest in all L/C Obligations and the aggregate
principal amount of all its Agent Loans would thereby exceed its Commitment.
Each Borrowing of Revolving Loans shall be made ratably from the Lenders in
proportion to their respective Percentages (subject to the limitation of the
Commitment of the Agent). Revolving Loans may be repaid, in whole or in part,
and all or any portion of the principal amount thereof reborrowed, before the
Commitment Termination Date, subject to the terms and conditions hereof.
(b) Agent Loans. Subject to the terms and conditions hereof, the Agent
may, in its sole discretion, make one or more loans (each an "Agent Loan") to
the Borrower from time to time before the Commitment Termination Date in an
aggregate amount not to exceed at any time outstanding the amount of the Agent
Swing Line. Agent Loans may be repaid, in whole or in part, at any time. Upon an
Event of Default and at the request of the Agent, (i) the Lenders agree to make
Revolving Loans to the Borrower in an amount equal to the outstanding amount of
the Agent Loans, and the Borrower hereby instructs the Agent in such
circumstance to apply the proceeds of such Revolving Loans to such Agent Loans
such that the Agent Loans are repaid in full; or (ii) in the event any such
Revolving Loans are not made, each Lender severally and not jointly agrees to
purchase from the Agent, and the Agent hereby agrees to sell to each Lender, an
undivided percentage participation interest, up to the extent of its Percentage,
in each Agent Loan, in each case so long as no Default or Event of Default of
which the Agent had actual knowledge was in existence at the time the Agent Loan
was made and such that the principal amount of each Lender's Revolving
13
Loans and/or participations in Agent Loans shall be an amount equal to its
Percentage times the principal amount of all Loans.
Section 2.2 Letters of Credit.
(a) Issuance of Letters of Credit. Subject to the terms and conditions
hereof, the Agent agrees to issue, from time to time prior to the Commitment
Termination Date, at the request of the Borrower and on behalf of the Lenders
and in reliance on their obligations under this Section 2.2, one or more letters
of credit (each a "Letter of Credit") for the Borrower's account; provided that
the Agent shall have no obligation to issue a Letter of Credit if, after the
issuance thereof, (i) the outstanding Loans and L/C Obligations would thereby
exceed the Commitment Amount then in effect, (ii) the outstanding L/C
Obligations would thereby exceed the L/C Commitment Amount then in effect, or
(iii) the issuance of such Letter of Credit would violate any legal or
regulatory restriction then applicable to the Agent or any Lender as notified by
such Lender to the Agent before the date of issuance of such Letter of Credit.
(b) Issuance Procedure. To request that the Agent issue a Letter of
Credit, the Borrower shall deliver to the Agent (with a duplicate copy to an
operations employee of the Agent as designated by the Agent from time to time) a
duly executed Borrowing Request in the form of Exhibit 2.2A (each a "Borrowing
Request"), together with a duly executed application for the relevant Letter of
Credit substantially in the form of Exhibit 2.2B (each an "Application"), or
such other computerized issuance or application procedure, instituted from time
to time by the Agent and agreed to by the Borrower, completed to the reasonable
satisfaction of the Agent, and such other documentation and information as the
Agent may reasonably request. In the event of any irreconcilable difference or
inconsistency between this Agreement and an Application, the provisions of this
Agreement shall govern. Upon receipt of a properly completed and executed
Borrowing Request and Application and any other reasonably requested documents
or information at least two (2) Business Days prior to any requested issuance
date, the Agent will process such Borrowing Request and Application in
accordance with its customary procedures and issue the requested Letter of
Credit on the requested issuance date. The Borrower may cancel any requested
issuance of a Letter of Credit prior to the issuance thereof without the
incurrence of any fee, charge or expense. The Agent will notify each Lender of
the amount and expiration date of each Letter of Credit it issues promptly upon
issuance thereof. Each Letter of Credit (except for up to $5,000,000 in
aggregate face amounts of Letters of Credit) shall have an expiration date no
later than one (1) year from the date of issuance thereof, provided that in no
event shall a Letter of Credit have an expiration date later than four (4)
Business Days before the Maturity Date. If the Agent issues any Letters of
Credit with expiration dates that automatically extend unless the Agent gives
notice that the expiration date will not so extend, the Agent will give such
notice of non-renewal before the time necessary to prevent such automatic
extension if before such required notice date (i) the expiration date of such
Letter of Credit if so extended would be later than four (4) Business Days
before the Maturity Date, (ii) the Commitment Termination Date shall have
occurred, (iii) an Event of Default has occurred and is continuing, or (iv) the
Agent is so directed by the Borrower. The Agent agrees to issue amendments to
any Letter of Credit increasing its amount, or extending its expiration date, at
the request of the Borrower subject to the conditions precedent for all Loans of
Section 4.2 and the other terms and conditions of this Section 2.2.
14
(c) The Borrower's Reimbursement Obligations.
(i) The Borrower hereby irrevocably and unconditionally agrees to
reimburse the Agent, for the benefit of the Lenders, for each payment or
disbursement made by the Agent to settle its obligations under any draft drawn
under a Letter of Credit (each, a "Reimbursement Obligation") within two (2)
Business Days from when such draft is paid with either funds not borrowed
hereunder or with a Borrowing subject to Section 2.4 and the other terms and
conditions contained in this Agreement. The Reimbursement Obligation shall bear
interest (which the Borrower hereby promises to pay) from and after the date
such draft is paid until (but excluding the date) the Reimbursement Obligation
is paid at the lesser of the Highest Lawful Rate or the Base Rate plus the
Applicable Margin so long as the Reimbursement Obligation shall not be past due,
and thereafter at the default rate per annum as set forth in Section 2.7(c),
whether or not the Maturity Date shall have occurred. If any such payment or
disbursement is reimbursed to the Agent after 2:00 p.m. on the date such payment
or disbursement is made by the Agent, interest shall be paid on the reimbursable
amount for one (1) day. The Agent shall give the Borrower notice of any drawing
on a Letter of Credit within one (1) Business Day after such drawing is paid.
(ii) The Borrower agrees for the benefit of the Agent and each
Lender that, notwithstanding any provision of any Application, the obligations
of the Borrower under this Section 2.2(c) and each applicable Application shall
be absolute, unconditional and irrevocable (subject to Section 2.2(b)) and shall
be performed strictly in accordance with the terms of this Agreement and each
applicable Application under all circumstances whatsoever INCLUDING, BUT NOT
LIMITED TO, ANY DEFENSE BASED UPON THE AGENT'S OR ANY LENDER'S OWN SIMPLE OR
CONTRIBUTORY NEGLIGENCE (other than the defense of payment in accordance with
this Agreement or a defense based on the gross negligence or willful misconduct
of the Agent or any Lender), including, without limitation, the following
circumstances (subject in all cases to the defense of payment in accordance with
this Agreement or a defense based on the gross negligence or willful misconduct
of the Agent or any Lender):
(1) any lack of validity or enforceability of any of
the L/C Documents;
(2) any amendment or waiver of or any consent to
depart from all or any of the provisions of any of the L/C
Documents;
(3) the existence of any claim, setoff, defense or
other right the Borrower or any Subsidiary may have at any
time against a beneficiary of a Letter of Credit (or any
Person for whom a beneficiary may be acting), the Agent, any
Lender or any other Person, whether in connection with this
Agreement, another L/C Document or any unrelated
transaction;
(4) any statement or any other document presented
under a Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect, provided
that the Agent's determination that documents presented
under the
15
Letter of Credit comply with the terms thereof did not
constitute gross negligence or willful misconduct of the
Agent;
(5) payment by the Agent under a Letter of Credit
against presentation to the Agent of a draft or certificate
that does not comply with the terms of the Letter of Credit,
provided that the Agent's determination that documents
presented under the Letter of Credit comply with the terms
thereof did not constitute gross negligence or willful
misconduct of the Agent; or
(6) any other act or omission to act or delay of any
kind by the Agent, any Lender or any other Person or any
other event or circumstance whatsoever that might, but for
the provisions of this Section 2.2(c), constitute a legal or
equitable discharge of the Borrower's obligations hereunder
or under any L/C Document, provided that such act or
omission of the Agent did not constitute gross negligence or
willful misconduct of the Agent or any Lender.
(d) The Participating Interests. Each Lender severally and not jointly
agrees to purchase from the Agent, and the Agent hereby agrees to sell to each
Lender, an undivided percentage participating interest, to the extent of its
Percentage, in each Letter of Credit issued by, and Reimbursement Obligation
owed to, the Agent in connection with a Letter of Credit. Upon any failure by
the Borrower to pay any Reimbursement Obligation in connection with a Letter of
Credit at the time required in Sections 2.2(c) and 2.4(c), or if the Agent is
required at any time to return to the Borrower or to a trustee, receiver,
liquidator, custodian or other Person any portion of any payment by the Borrower
of any Reimbursement Obligation in connection with a Letter of Credit, the Agent
shall promptly give notice of same to each Lender, and the Agent shall have the
right to require each Lender to fund its participation in such Reimbursement
Obligation. Each Lender (except the Agent to the extent it is also a Lender)
shall pay to the Agent an amount equal to each Lender's Percentage of such
unpaid or recaptured Reimbursement Obligation not later than the Business Day it
receives notice from the Agent to such effect, if such notice is received before
2:00 p.m., or not later than the following Business Day if such notice is
received after such time. If a Lender fails to pay timely such amount to the
Agent, it shall also pay to the Agent interest on such amount accrued from the
date payment of such amount was made by the Agent to the date of such payment by
the Lender at a rate per annum equal to the Federal Funds Rate in effect for
each such day, and only after such payment shall such Lender be entitled to
receive its Percentage of each payment received on the relevant Reimbursement
Obligation and of interest paid thereon. If any such Lender fails to pay such
amount to the Agent, any payments made by the Borrower with respect to the
relevant Reimbursement Obligation shall first be applied by the Agent to the
unfunded participation in such Reimbursement Obligation before any other Lenders
receive any payments or proceeds. The Agent will thereafter pay each Lender its
Percentage of each payment received by it relating to that for which such Lender
has funded its Percentage, from the date of funding. THE SEVERAL OBLIGATIONS OF
THE LENDERS TO THE AGENT UNDER THIS SECTION 2.2(D) SHALL BE ABSOLUTE,
IRREVOCABLE AND UNCONDITIONAL UNDER ANY AND ALL CIRCUMSTANCES WHATSOEVER AND
SHALL NOT BE SUBJECT TO ANY SETOFF, COUNTERCLAIM OR DEFENSE TO PAYMENT ANY
LENDER MAY HAVE OR HAVE HAD AGAINST THE BORROWER, THE AGENT, ANY OTHER LENDER OR
ANY OTHER
16
PERSON WHATSOEVER INCLUDING, BUT NOT LIMITED TO, ANY DEFENSE BASED ON THE
FAILURE OF THE DEMAND FOR PAYMENT UNDER THE LETTER OF CREDIT TO CONFORM TO THE
TERMS OF SUCH LETTER OF CREDIT OR THE LEGALITY, VALIDITY, REGULARITY OR
ENFORCEABILITY OF SUCH LETTER OF CREDIT AND INCLUDING, BUT NOT LIMITED TO, THOSE
RESULTING FROM THE AGENT'S OWN SIMPLE OR CONTRIBUTORY NEGLIGENCE. Without
limiting the generality of the foregoing, such obligations shall not be affected
by any Default or Event of Default or by any subsequent reduction or termination
of any Commitment of a Lender, and each payment by a Lender under Section 2.2
shall be made without any offset, abatement, withholding or reduction
whatsoever.
Section 2.3 Types of Loans and Minimum Borrowing Amounts. Borrowings of
Revolving Loans may be outstanding as either Base Rate Loans or LIBOR Loans, as
selected by the Borrower pursuant to Section 2.4. Borrowings of Agent Loans may
be outstanding only as Base Rate Loans. All Borrowings of LIBOR Loans advanced
on the Initial Borrowing Date shall be advanced as Base Rate Loans unless the
requisite notice for a LIBOR Loan has been given pursuant to Section 2.4(a) and
indemnification has been provided to the Lenders in connection therewith. Each
Borrowing of Base Rate Loans shall be in an amount of not less than $250,000 and
each Borrowing of LIBOR Loans shall be in an amount of not less than $500,000.
Section 2.4 Manner of Borrowing.
(a) Notice to the Agent. Subject to the limitations in Section 2.3,
the Borrower shall give notice to the Agent by no later than 11:00 a.m. at least
two (2) Business Days before the date on which the Borrower requests the Lenders
or the Agent, as applicable, to advance a Borrowing of LIBOR Loans and on the
date the Borrower requests the Lenders or the Agent, as applicable, to advance a
Borrowing of Base Rate Loans pursuant to a duly executed Borrowing Request, and
the Agent shall promptly give the Lenders notice thereof.
(b) Selection of Interest Periods. The Borrower may select multiple
Interest Periods for the Revolving Loans constituting any particular Borrowing,
provided that at no time shall the number of different Interest Periods for
outstanding LIBOR Loans exceed eight (8). The Revolving Loans included in each
Borrowing shall bear interest initially at the type of rate specified in the
Borrowing Request with respect thereto. Thereafter, the Borrower may from time
to time elect to change or continue the type of interest rate borne by each
Borrowing or, subject to Section 2.3's minimum amount requirement for each
outstanding Borrowing, a portion thereof, as follows: (i) if such Borrowing is
of LIBOR Loans, the Borrower may continue part or all of such Borrowing as LIBOR
Loans for an Interest Period specified by the Borrower or convert part or all of
such Borrowing into Base Rate Loans on the last day of the Interest Period
applicable thereto, or the Borrower may earlier convert part or all of such
Borrowing into Base Rate Loans so long as it pays the breakage fees and funding
losses provided in Section 2.12 and all interest accrued on such Borrowing, and
(ii) if such Borrowing is of Base Rate Loans, the Borrower may convert all or
part of such Borrowing into LIBOR Loans for an Interest Period specified by the
Borrower on any Business Day. Notices of the continuation of a Borrowing of
LIBOR Loans for an additional Interest Period or of the conversion of part or
all of a Borrowing of LIBOR Loans into Base Rate Loans or of Base Rate Loans
into LIBOR Loans must be given by no later than 11:00 a.m. at least two (2)
Business Days before the date of the requested continuation or conversion. The
Borrower shall give
17
such notices concerning the advance, continuation, or conversion of a Borrowing
by telephone or facsimile (which notice shall be irrevocable once given and, if
by telephone, shall be promptly confirmed in writing) pursuant to a Borrowing
Request which shall specify the date of the requested advance, continuation or
conversion (which shall be a Business Day), the amount of the requested
Borrowing, the type of Loans to comprise such new, continued or converted
Borrowing and, if such Borrowing is to be comprised of LIBOR Loans, the Interest
Period applicable thereto. The Borrower agrees that the Agent and each Lender
may rely on any such telephonic or facsimile notice given by any person it in
good faith believes is an authorized representative of the Borrower without the
necessity of independent investigation and that, if any such notice by telephone
conflicts with any written confirmation, such telephonic notice shall govern if
the Agent or any Lender has acted in reliance thereon.
(c) Borrower's Failure to Notify. If the Borrower fails to give notice
pursuant to Section 2.4(a) or (b) of (i) the continuation or conversion of any
outstanding principal amount of a Borrowing of LIBOR Loans or of (ii) a
Borrowing of Loans to pay outstanding Reimbursement Obligations, as applicable,
and has not notified the Agent by 11:00 a.m. at least two (2) Business Days
before the last day of the Interest Period for such Borrowing of LIBOR Loans or
by 11:00 a.m. on the day such Reimbursement Obligation becomes due that it
intends to repay such Borrowing or such Reimbursement Obligation with funds not
borrowed hereunder, the Borrower shall be deemed to have requested, (x) the
continuation of such Borrowing as a LIBOR Loan with an Interest Period of one
(1) month, or (y) the advance of a new Borrowing of Base Rate Loans on such day
in the amount of the Reimbursement Obligation then due, which Borrowing shall be
deemed to have been funded on such day to pay the Reimbursement Obligation then
due, in each case so long as no Default or Event of Default shall have occurred
and be continuing or would occur as a result of such Borrowing but otherwise
disregarding the conditions to a Borrowing set forth in Section 4.2. Upon the
occurrence and during the continuance of any Event of Default, (i) each LIBOR
Loan will automatically, on the last day of the then existing Interest Period
therefor, convert into a Base Rate Loan and (ii) the obligation of the Lenders
to make, continue or convert Loans into LIBOR Loans shall be suspended.
(d) Funding and Disbursement of Loans. Not later than 1:00 p.m. on the
date of any requested advance of a new Borrowing of Revolving Loans, each
Lender, subject to all other provisions hereof, shall make available its
Revolving Loan comprising its ratable share of such Borrowing in funds
immediately available in Houston, Texas for the benefit of the Agent and
according to the disbursement instructions of the Agent. The Agent shall make
the proceeds of each such Borrowing, and each Agent Loan which the Agent makes,
in its sole discretion, available in immediately available funds to the Borrower
on the date of any requested advance of a new Borrowing by 2:00 p.m. No Lender
shall be responsible to the Borrower for any failure by another Lender to fund
its portion of a Borrowing, and no such failure by a Lender shall relieve any
other Lender from its obligation, if any, to fund its portion of a Borrowing.
(e) Agent Reliance on Lender Funding. Unless the Agent shall have been
notified by a Lender before the date on which such Lender is scheduled to make
payment to the Agent of the proceeds of a Revolving Loan (which notice shall be
effective upon receipt) that such Lender does not intend to make such payment,
the Agent may assume that such Lender has made such payment when due and in
reliance upon such assumption may (but shall not be required to) make available
18
to the Borrower the proceeds of the Revolving Loan to be made by such Lender
and, if any Lender has not in fact made such payment to the Agent, such Lender
shall, on demand, pay to the Agent the amount made available to the Borrower
attributable to such Lender together with interest thereon for each day during
the period commencing on the date such amount was made available to the Borrower
and ending on (but excluding) the date such Lender pays such amount to the Agent
at a rate per annum equal to the interest rate attributable to the relevant
Revolving Loan. If such amount is not received from such Lender by the Agent
immediately upon demand, the Borrower will, on demand, repay to the Agent the
proceeds of the Loan attributable to such Lender with interest thereon at a rate
per annum equal to the interest rate applicable to the relevant Revolving Loan.
Nothing in this Section 2.4(e) shall be deemed to relieve any Lender from its
obligations to fund its Commitments hereunder or to prejudice any rights which
the Borrower may have against any Lender as a result of any default by such
Lender hereunder.
Section 2.5 Interest Periods. As provided in Section 2.4(a) and (b), at
the time of each request for the advance or continuation of, or conversion into,
a Borrowing of LIBOR Loans, the Borrower shall select an Interest Period
applicable to such LIBOR Loans from among the available options subject to the
limitations in Section 2.4(a); provided, however, that:
(a) the Borrower may not select an Interest Period for a Borrowing of
LIBOR Loans that extends beyond the Maturity Date;
(b) whenever the last day of any Interest Period would otherwise be a
day that is not a Business Day, the last day of such Interest Period shall
either be (i) extended to the next succeeding Business Day, or (ii) reduced to
the immediately preceding Business Day if the next succeeding Business Day is in
the next calendar month; and
(c) for purposes of determining an Interest Period, a month means a
period starting on one day in a calendar month and ending on the numerically
corresponding day in the next calendar month; provided, however, that if there
is no such numerically corresponding day in the month in which an Interest
Period is to end or if such Interest Period begins on the last Business Day of a
calendar month, then such Interest Period shall end on the last Business Day of
the calendar month in which such Interest Period is to end.
Section 2.6 Interest Payments.
(a) Base Rate Loans. Each Base Rate Loan shall bear interest
(computed on the basis of a 365/366-day year and actual days elapsed, excluding
the date of repayment) on the unpaid principal amount thereof from the date such
Loan is made until maturity (whether by acceleration or otherwise) or conversion
to a LIBOR Loan in accordance with Section 2.4(b) hereof, at a rate per annum
equal to the lesser of (i) the Highest Lawful Rate, or (ii) with respect to
Revolving Loans, the sum of the Base Rate from time to time in effect plus the
Applicable Margin, or with respect to Agent Loans, the sum of the Base Rate from
time to time in effect minus 0.625%, payable in arrears on each Interest Payment
Date for such Loan and at maturity (whether by acceleration or otherwise) or
conversion to a LIBOR Loan in accordance with Section 2.4(b).
19
(b) LIBOR Loans. Each LIBOR Loan shall bear interest (computed on the
basis of a 360-day year and actual days elapsed, excluding the date of
repayment) on the unpaid principal amount thereof from the date such Loan is
made until maturity (whether by acceleration or otherwise) or conversion to a
Base Rate Loan in accordance with Section 2.4(b) hereof, at a rate per annum
equal to the lesser of (i) the Highest Lawful Rate, or (ii) the sum of the
Adjusted LIBOR Rate plus the Applicable Margin, payable in arrears on each
Interest Payment Date for such Loan and at maturity (whether by acceleration or
otherwise) or conversion to a Base Rate Loan in accordance with Section 2.4(b).
(c) Rate Determinations. The Agent shall determine each interest rate
applicable to the Loans and Reimbursement Obligations hereunder (including the
Applicable Margin, determined as set forth in the definition thereof) and such
determination shall be conclusive and binding except in the case of the Agent's
manifest error or willful misconduct. The Agent shall give prompt telephonic,
telex or facsimile notice to the Borrower and each Lender (in the case of
Revolving Loans) of the interest rate applicable to each Loan or Reimbursement
Obligation (but, if such notice is given by telephone, the Agent shall confirm
such rate in writing) promptly after the Agent has made such determination.
Section 2.7 Default Rates. If any payment of principal on any Loan is not
made when due after the expiration of the grace period therefor provided in
Section 7.1 (whether by acceleration or otherwise), such Loan shall bear
interest (computed on the basis of a year of 360, 365 or 366 days, as
applicable, and actual days elapsed) from the date such payment was due until
such principal then due is paid in full, payable on demand, at a rate per annum
equal to:
(a) for any Base Rate Loan which is a Revolving Loan the lesser of (i)
the Highest Lawful Rate, or (ii) the sum of two percent (2%) per annum plus the
Base Rate from time to time in effect (but not less than the Base Rate in effect
at maturity) plus the Applicable Margin;
(b) for any LIBOR Loan the lesser of (i) the Highest Lawful Rate, or
(ii) the sum of two percent (2%) per annum plus the rate of interest in effect
thereon at the time of such default until the end of the Interest Period for
such Loan and, thereafter, at a rate per annum equal to the sum of two percent
(2%) per annum plus the Base Rate from time to time in effect (but not less than
the Base Rate in effect at maturity) plus the Applicable Margin;
(c) for any unpaid Reimbursement Obligations, the lesser of (i) the
Highest Lawful Rate, or (ii) the sum of two percent (2%) per annum plus the Base
Rate from time to time in effect (but not less than the Base Rate in effect at
maturity) plus the Applicable Margin; and
(d) for any Base Rate Loan which is an Agent Loan, the lesser of (i)
the Highest Lawful Rate, or (ii) the sum of two percent (2%) per annum plus the
Base Rate from time to time in effect (but not less than the Base Rate in effect
at maturity) minus 0.625%.
It is the intention of the Agent and each Lender to conform strictly to usury
laws applicable to it. Accordingly, if the transactions contemplated hereby or
the Loans or the Reimbursement Obligations would be usurious as to the Agent or
the Lenders under laws applicable to it (including the laws of the United States
of America and the State of Texas or any other jurisdiction whose laws may be
20
mandatorily applicable to the Agent or such Lender notwithstanding the other
provisions of this Agreement, the Notes or any other Credit Document), then, in
that event, notwithstanding anything to the contrary in this Agreement, the
Notes or any other Credit Document, it is agreed as follows: (i) the aggregate
of all consideration which constitutes interest under laws applicable to the
Lenders that is contracted for, taken, reserved, charged or received by the
Lenders under this Agreement, the Notes or any other Credit Document or
otherwise shall under no circumstances exceed the Highest Lawful Rate, and any
excess shall be credited by the applicable Lender on the principal amount of the
applicable Note or to the Reimbursement Obligations (or, if the principal amount
of such Note and all Reimbursement Obligations owed to such Lender shall have
been paid in full, refunded by such Lender to the Borrower); (ii) in the event
that the maturity of the Notes is accelerated by reason of an election of the
holder or holders thereof resulting from any Event of Default hereunder or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under laws applicable to the Lenders may
never include more than the Highest Lawful Rate, and excess interest, if any,
provided for in this Agreement, the Notes, any other Credit Document or
otherwise shall be automatically canceled by the applicable Lenders as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by the applicable Lenders on the principal amount of the applicable
Notes or Reimbursement Obligations (or if the principal amounts thereof shall
have been paid in full, refunded by the applicable Lender to the Borrower); and
(iii) if at any time the interest provided hereunder, together with any other
fees payable pursuant to this Agreement, the Notes or any other Credit Document
and deemed interest under applicable law, exceeds the amount that would have
accrued at the Highest Lawful Rate, the amount of interest and any such fees to
accrue to the Lenders hereunder and thereunder shall be limited to the amount
which would have accrued at the Highest Lawful Rate, but any subsequent
reductions shall not reduce the interest to accrue to the Lenders hereunder and
thereunder below the Highest Lawful Rate until the total amount of interest
accrued pursuant hereto and thereto and such fees deemed to be interest equals
the amount of interest which would have accrued to the Lenders if a varying rate
per annum equal to the interest hereunder had at all times been in effect plus
the amount of fees which would have been received but for the effect of this
Section 2.7. The Agent and the Lenders hereby elect to determine the applicable
rate ceiling under Section 303.201 of the Texas Finance Code ▇▇▇. (▇▇▇▇▇▇ 1998)
by the weekly rate ceiling from time to time in effect, subject to the Agent's
and the Lenders' right subsequently to change such method in accordance with
applicable law. In the event the Loans and all Reimbursement Obligations are
paid in full by the Borrower prior to the Maturity Date and the interest
received for the actual period of the existence of the Loans or the
Reimbursement Obligations exceeds the Highest Lawful Rate, the applicable
Lenders shall refund to the Borrower the amount of the excess or shall credit
the amount of the excess against amounts owing under the Loans and none of the
Lenders shall be subject to any of the penalties provided by law for contracting
for, taking, reserving, charging or receiving interest in excess of the Highest
Lawful Rate. The provisions of Chapter 346 of Tex. Finance Code ▇▇▇. (▇▇▇▇▇▇
1998), regulating certain revolving credit accounts shall not apply to this
Agreement or any of the Notes.
Section 2.8 Maturity of Loans. Each Revolving Loan, together with accrued
and unpaid interest thereon and all other fees then due and owing under any
Credit Document, shall mature and become due and payable on the Maturity Date.
Each Agent Loan, together with accrued and unpaid interest thereon, shall mature
and become due and payable five (5) days after the date of such Agent Loan,
provided that all such Agent Loans shall mature and become due and payable no
later than the Maturity Date.
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Section 2.9 Optional Prepayments. The Borrower shall have the privilege of
prepaying the Loans without premium or penalty in whole or in part at any time.
If the Borrower is prepaying LIBOR Loans, it shall give to the Agent notice of
such prepayment no later than 11:00 a.m. at least two (2) Business Days before
the proposed prepayment date. All prepayments of LIBOR Loans shall be
accompanied by accrued interest thereon, together with any applicable breakage
fees and funding losses pursuant to Section 2.12. The Borrower may direct the
application of any optional prepayment hereunder to the Base Rate Loans or LIBOR
Loans outstanding.
Section 2.10 Mandatory Prepayments of Loans. If the aggregate principal
amount of outstanding Loans and L/C Obligations shall at any time for any reason
exceed the Commitment Amount then in effect, the Borrower shall, immediately and
without notice or demand, pay the amount of such excess to the Agent for the
ratable benefit of the Lenders as a prepayment of the Loans and, if all Loans
have been paid, a pre-funding of Letters of Credit pursuant to the provisions of
Section 7.4. Any mandatory prepayment of Loans pursuant hereto shall not be
limited by the notice provision for prepayments set forth in Section 2.9, but
immediately upon determining the need to make any such prepayment, the Borrower
shall notify the Agent of such required prepayment. Each such prepayment shall
be accompanied by a payment of all accrued and unpaid interest on the Loans
prepaid and any applicable breakage fees and funding losses pursuant to Section
2.12.
Section 2.11 The Notes. The Revolving Loans outstanding to the Borrower
from the Lenders (and, with respect to the Agent, any Agent Loans outstanding to
the Borrower) shall be evidenced by promissory notes of the Borrower payable to
each of the Lenders and the Agent in the form of Exhibit 2.11 (such promissory
notes, together with any replacements thereof, the "Notes"). Each holder of a
Note shall record on its books and records or on a schedule to the Note the
amount of each Loan outstanding from it to the Borrower, all payments of
principal and interest and the principal balance from time to time outstanding
thereon, the type of such Loan and, if a LIBOR Loan, the Interest Period and
interest rate applicable thereto. Such record, whether shown on the books and
records of a holder of a Note or on a schedule to its Note, shall be prima facie
evidence as to all such matters; provided, however, that the failure of any
holder to record any of the foregoing or any error in any such record shall not
limit or otherwise affect the obligation of the Borrower to repay all Loans
outstanding to it hereunder, together with accrued interest thereon. At the
request of any holder of a Note and upon such holder tendering to the Borrower
the Note to be replaced, the Borrower shall furnish a new Note to such holder to
replace any outstanding Note and at such time the first notation appearing on
the schedule on the reverse side of, or attached to, such new Note shall set
forth the aggregate unpaid principal amount of all Loans, if any, then
outstanding thereon.
Section 2.12 Breakage Fees. If any Lender incurs any loss, cost or expense
(excluding any loss of anticipated profit, but including, without limitation,
any loss, cost, expense or premium reasonably incurred by reason of the
liquidation or re-employment of deposits or other funds acquired by such Lender
to fund or maintain any LIBOR Loan or the relending or reinvesting of such
deposits or amounts paid or prepaid to the Lenders) as a result of any of the
following events other than any such occurrence as a result of a change of
circumstance described in Sections 8.1 or 8.2:
(i) any payment, prepayment or conversion of a LIBOR Loan on a date
other than the last day of its Interest Period (whether by acceleration,
prepayment or otherwise);
22
(ii) any failure to make a principal payment of a LIBOR Loan on the
due date therefor; or
(iii) any failure by the Borrower to borrow, continue, prepay or
convert to a LIBOR Loan on the date specified in a notice given pursuant to
Section 2.4(a) or (b) (other than by reason of a default of a Lender),
then the Borrower shall pay to such Lender such amount as will reimburse such
Lender for such loss, cost or expense. If any Lender makes such a claim for
compensation, it shall provide to the Borrower a certificate executed by an
officer of such Lender setting forth the amount of such loss, cost or expense in
reasonable detail (including an explanation of the basis for and the computation
of such loss, cost or expense)no later than 120 days after the event giving rise
to the claim for compensation, and the amounts shown on such certificate shall
be conclusive and binding absent manifest error. Within ten (10) days of
receipt of such certificate, the Borrower shall pay to such Lender such amount
as will compensate such Lender for such loss, cost or expense as provided
herein, unless such Lender has failed to timely give notice to the Borrower of
such claim for compensation as provided herein, in which event the Borrower
shall no longer be obligated to pay such claim.
Section 2.13 Commitment Terminations. The Borrower shall have the right at
any time and from time to time, upon five (5) Business Days' prior and
irrevocable written notice to the Agent, to terminate or reduce the Commitments
without premium or penalty, in whole or in part, any partial termination to be
(i) in an amount not less than $1,000,000 as determined by the Borrower, and
(ii) allocated ratably among the Lenders in proportion to their respective
Commitments, as applicable; provided that the Commitment Amount may not be
reduced to an amount less than the sum of the aggregate principal amount of
outstanding Loans plus the aggregate outstanding L/C Obligations, after giving
effect to payments on such proposed termination or reduction date, unless the
Borrower provides to the Lenders or the Agent, as applicable, cash collateral in
an amount sufficient to cover such shortage or back to back letters of credit
from a financial institution satisfactory to all of the Lenders in an amount
equal to the undrawn face amount of any applicable outstanding Letters of Credit
with an expiry date of at least five (5) days after the expiry date of any
applicable Letter of Credit and which provide that the Lenders may make a
drawing thereunder in the event that it pays a drawing under such Letter of
Credit. Any termination of the Commitments pursuant to this Section 2.13 is
permanent and may not be reinstated. The Agent shall give prompt notice to each
Lender of any such termination of the Commitments.
SECTION 3. FEES AND PAYMENTS.
Section 3.1 Fees.
(a) Commitment Fee. For the period from the Effective Date to and
including the Commitment Termination Date the Borrower shall pay to the Agent
for the ratable account of the Lenders, a commitment fee (computed on a basis of
a 365/366-day year and actual days elapsed) on an amount equal to the average
daily difference between (i) the sum of the Commitment Amount plus the
outstanding principal amount of the Agent Loans and (ii) the outstanding
Revolving Loans and L/C Obligations, such commitment fee to be calculated, for
any day, at such times as the relevant
23
Funded Debt to EBITDA Ratio is in one of the following ranges, based upon the
percentage per annum set forth opposite such Funded Debt to EBITDA Ratio set
forth below times such amount:
Funded Debt to EBITDA Ratio Commitment Fee
------------------------------- ------------------
Less than or equal to 1.5 to 1.0 0.175%
Greater than 1.5 to 1.0 but less
than or equal to 1.75 to 1.0 0.200%
Greater than 1.75 to 1.0 but less
than or equal to 2.25 to 1.0 0.250%
Greater than 2.25 to 1.0 but less
than or equal to 2.75 to 1.0 0.250%
Greater than 2.75 to 1.0 0.300%
For the period from the Effective Date through the earlier of the date the
Borrower is to provide the Agent with the financial statements for the fiscal
quarter ended June 30, 1998, as required by Section 6.6(a)(i) or the date such
financial statements are provided to the Agent, the commitment fee percentage
shall be 0.175%, thereafter, the commitment fee percentage shall be set by the
Agent at the same time and in the same manner as the Applicable Margin is set.
Such commitment fees shall be payable in arrears commencing on September 30,
1998, and on the last Business Day of each calendar quarter thereafter and on
the Maturity Date unless the Commitments are terminated in whole on an earlier
date, in which event the commitment fee for the period to but not including the
date of such termination shall be paid in whole on the date of such termination.
Upon the closing of a Subordination Debt Investment(s) with proceeds aggregating
at least $30,000,000, the percentages in the Commitment Fee column above shall
each be reduced by 0.025%.
(b) Letter of Credit Fees. Commencing upon the date of issuance or
extension of any Letter of Credit, the Borrower shall pay to the Agent quarterly
in arrears (pro rated, if necessary for any portion of such quarter) for the
ratable account of the Lenders a non-refundable fee for any Letter of Credit
equal to the greater of (x) $125 per quarter, or (y) the face amount of such
Letter of Credit times the Applicable Margin for LIBOR Loans, calculated on the
basis of a 365/366-day year and actual days in the period and based on the then
scheduled expiry date of the Letter of Credit. Thereafter, such fees shall be
payable by the Borrower in arrears on the last Business Day of each calendar
quarter of each year commencing with the next succeeding calendar quarter, with
the last such payment on the date any such Letter of Credit expires. In
addition, the Borrower shall pay to the Agent solely for the Agent's account, in
connection with each Letter of Credit, reasonable administrative and amendment
fees and expenses for letters of credit established by the Agent from time to
time in accordance with its customary practices and as agreed between the Agent
and the Borrower and a 1/8% fronting fee of 1% of the face amount of each Letter
of Credit.
(c) Agent Fees. The Borrower shall pay to each of the Agent and the
Arranger the fees agreed to between the Agent, the Arranger and the Borrower
pursuant to the Fee Letter, and any other fees from time to time agreed to by
the Borrower and the Agent.
24
Section 3.2 Place and Application of Payments. All payments of principal
of and interest on the Loans and the Reimbursement Obligations and all other
amounts payable by the Borrower under the Credit Documents shall be made by the
Borrower to the Agent by no later than 2:00 p.m. on the due date thereof at the
office of the Agent in Houston, Texas (or such other location as the Agent may
designate to the Borrower). Any payments received by the Agent from the Borrower
after 2:00 p.m. shall be deemed to have been received on the next Business Day.
Section 3.3 Withholding Taxes.
(a) Payments Free of Withholding. Except as otherwise required by law
and subject to Section 3.3(b), each payment by the Borrower to the Agent or any
Lender under this Agreement or any other Credit Document shall be made without
withholding for or on account of any present or future taxes (other than overall
net income taxes on the recipient) imposed by or within the jurisdiction in
which the Borrower is domiciled, any jurisdiction from which the Borrower makes
any payment, or (in each case) any political subdivision or taxing authority
thereof or therein, excluding, in the case of each Lender and the Agent, taxes,
assessments or other governmental charges
(i) imposed on, based upon, or measured by its income, and
branch profits, franchise and similar taxes imposed on it, by any jurisdiction
in which the Agent or such Lender, as the case may be, is incorporated or
maintains its principal place of business or Lending Office or which subjects
the Agent or such Lender to tax by reason of a connection between the taxing
jurisdiction and the Agent or such Lender (other than a connection resulting
from the transactions contemplated by this Agreement);
(ii) imposed as a result of a connection between the taxing
jurisdiction and the Agent or such Lender, as the case may be, other than a
connection resulting from the transactions contemplated by this Agreement;
(iii) imposed as a result of the transfer by such Lender of its
interest in this Agreement or any other Credit Document or a designation by such
Lender (other than pursuant to Section 3.3(d) hereof) of a new Lending Office
(other than taxes imposed as a result of any change in treaty, law or regulation
after such transfer of the Lender's interest in this Agreement or any Credit
Document or designation of a new Lending Office);
(iv) imposed by the United States of America upon a Lender
organized under the laws of a jurisdiction outside of the United States, except
to the extent that such tax is imposed or increased as a result of any change in
applicable law, regulation or treaty (other than any addition of or change in
any "anti-treaty shopping," "limitation of benefits," or similar provision
applicable to a treaty) after the Effective Date hereof, in the case of each
Lender originally a party hereto or, in the case of any Purchasing Lender (as
defined in Section 10.10), after the date on which it becomes a Lender;
(v) which would not have been imposed but for (a) the failure of
the Agent or any Lender, as the case may be, to provide (x) an Internal Revenue
Service Form 1001 or 4224,
25
as the case may be, or any substitute or successor form prescribed by the
Internal Revenue Service pursuant to Section 3.3(b) below, or (y) any other
certification, documentation or proof which is reasonably requested by the
Borrower, or (b) a determination by a taxing authority or a court of competent
jurisdiction that a certification, documentation or other proof provided by such
Lender or the Agent to establish an exemption from such tax, assessment or other
governmental charge is false
(all such non-excluded taxes, assessments or other governmental charges and
liabilities being hereinafter referred to as "Indemnified Taxes"). If any such
withholding is so required, the Borrower shall make the withholding, pay the
amount withheld to the appropriate governmental authority before penalties
attach thereto or interest accrues thereon and forthwith pay such additional
amount as may be necessary to ensure that the net amount actually received by
the Agent and each Lender is free and clear of such Indemnified Taxes (including
Indemnified Taxes on such additional amount) and is equal to the amount that the
Agent or such Lender (as the case may be) would have received had such
withholding not been made. If the Agent or any Lender pays any amount in
respect of any Indemnified Taxes, penalties or interest, the Borrower shall
reimburse the Agent or that Lender for the payment on demand in the currency in
which such payment was made. If the Borrower pays any Indemnified Taxes,
penalties or interest, it shall deliver official tax receipts evidencing the
payment or certified copies thereof, or other satisfactory evidence of payment
if such tax receipts have not yet been received by the Borrower (with such tax
receipts to be promptly delivered when actually received), to the Agent or the
Lender on whose account such withholding was made (with a copy to the Agent if
not the recipient of the original) within fifteen (15) days of such payment.
(b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Agent on or before the Effective Date, two duly
completed and signed copies of either Form 1001 (entitling such Lender to a
complete exemption from withholding under the Code on all amounts to be received
by such Lender, including fees, pursuant to the Credit Documents) or Form 4224
(relating to all amounts to be received by such Lender, including fees, pursuant
to the Credit Documents) of the Internal Revenue Service. Thereafter and from
time to time, each Lender shall submit to the Borrower and the Agent such
additional duly completed and signed copies of one or the other of such forms
(or such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may be (i) notified by the Borrower,
directly or through the Agent, to such Lender, and (ii) required under then-
current United States law or regulations to avoid United States withholding
taxes on payments in respect of all amounts to be received by such Lender,
including fees, pursuant to the Credit Documents. Upon the request of the
Borrower, each Lender that is a United States person shall submit to the
Borrower a certificate to the effect that it is such a United States person.
Each such Lender shall make written demand on the Borrower for indemnification
or compensation hereunder not later than 120 days after the earlier of (i) the
date on which such Lender or Agent makes payment of Indemnified Taxes, or (ii)
the date on which the relevant taxing authority or other governmental authority
makes written demand upon such Lender or the Agent for payment of Indemnified
Taxes; provided that any failure of a Lender or the Agent to give the Borrower
timely notice as provided herein shall not relieve the Borrower of any
obligation which it has to pay such claim for compensation for such
indemnification.
26
(c) Inability of Lender to Submit Forms. If any Lender determines, as
a result of any change in applicable law, regulation or treaty, or in any
official application or interpretation thereof, that it is unable to submit to
the Borrower or the Agent any form or certificate that such Lender is obligated
to submit pursuant to Section 3.3(b) or that such Lender is required to withdraw
or cancel any such form or certificate previously submitted or any such form or
certificate otherwise becomes ineffective or inaccurate, such Lender shall
promptly notify the Borrower and the Agent of such fact and the Lender shall to
that extent not be obligated to provide any such form or certificate and will be
entitled to withdraw or cancel any affected form or certificate, as applicable.
(d) Refund of Taxes. If any Lender or the Agent receives a refund of
any Indemnified Tax or any tax referred to in Section 10.3 with respect to which
the Borrower has paid any amount pursuant to this Section 3.3 or Section 10.3,
such Lender or the Agent shall pay the amount of such refund (including any
interest received with respect thereto) to the Borrower.
SECTION 4. CONDITIONS PRECEDENT.
Section 4.1 Conditions Precedent to Initial Borrowing. The obligation of
each Lender to advance the initial Loans hereunder and of the Agent to issue any
Letter of Credit on the Initial Borrowing Date is subject to the following
conditions precedent, all in form and substance satisfactory to the Lenders (and
which shall be evidenced by the making of such Loan(s) and, if applicable, the
issuance of such Letter(s) of Credit) and in sufficient number of signed
counterparts, where applicable, to provide one for each Lender (except for the
Notes, of which only one original shall be signed for each Lender):
(a) The Agent shall have received:
(i) Notes. The duly executed Notes of the Borrower;
(ii) Subsidiary Guaranties. The duly executed Subsidiary
Guaranties of each of the Guarantors in substantially the form of Exhibit 4.1A;
(iii) Stock Pledge Agreements. The duly executed Stock
Pledge Agreements of each of the Borrower, NorAm Telecommunications, Inc. and
Spalj Construction Co. in substantially the form of Exhibit 4.1B, together with
the original stock certificates referenced therein and undated stock powers
executed in blank with respect to each such stock certificate;
(iv) UCC-Financing Statements. The duly executed UCC-1
Financing Statements of each of the Borrower, NorAm Telecommunications, Inc. and
Spalj Construction Co. with respect to the stock referenced in the Stock Pledge
Agreements;
(v) Certificate of Officers of Borrower and Guarantors. A
certificate of the Secretary or Assistant Secretary and the President or Vice
President of each of the Borrower and the Guarantors containing specimen
signatures of the persons authorized to execute Credit Documents on such
Person's behalf or any other documents provided for herein, together with (x)
copies of resolutions of the Board of Directors of such Person authorizing the
execution and delivery of the Credit Documents and of all other legal documents
or proceedings taken by such Person in
27
connection with the execution and delivery of the Credit Documents, and (y)
copies of such Person's Certificate or Articles of Incorporation, certified by
the Secretary of State of such Person's jurisdiction of organization, and
Bylaws;
(vi) Certificates of Existence and Good Standing. Certificates of
existence and good standing from the appropriate governing agency of the
Borrower's and each Guarantor's jurisdiction of organization and of all
jurisdictions where such Person is authorized to do business;
(vii) Fees. Payment of all fees and all expenses incurred through the
Effective Date then due and owing to the Agent and the Arranger pursuant to this
Agreement and the Fee Letter;
(viii) Consents. Certified copies of all documents evidencing any
necessary consents and governmental approvals taken or obtained by the Borrower
and the Guarantors with respect to the Credit Documents;
(ix) Financial Condition Certificate. A certificate of the principal
financial officer of the Borrower in substantially the form of Exhibit 4.1C;
(x) Searches. The results of recent lien searches showing no Liens on
any of the property or assets of the Borrower or any of its Subsidiaries other
than Permitted Liens or evidence that any such Liens other than Permitted Liens
have been terminated or will be terminated concurrently with the Initial
Borrowing Date;
(xi) Opinion of Counsel. The opinion of ▇▇▇▇ ▇▇▇▇▇▇▇, General Counsel
to the Borrower and the Guarantors covering such matters as the Lenders may
reasonably require; and
(xii) Other Documents. Such other documents as the Lenders may
reasonably request.
(b) All legal matters incident to the execution and delivery of the Credit
Documents shall be reasonably satisfactory to the Lenders.
Section 4.2 Conditions Precedent to all Borrowings. In the case of each
advance of a Borrowing hereunder (including the issuance of, increase in the
amount of, or extension of the expiry date of, a Letter of Credit and the
initial Borrowing hereunder but excluding the Revolving Loans to be made as
required by Section 2.1(b)):
(a) Notices. In the case of a Borrowing, the Agent shall have received
the Borrowing Request required by Section 2.4, and in the case of the issuance,
extension or increase of a Letter of Credit, the Agent shall have received a
duly completed Borrowing Request and Application for such Letter of Credit
meeting the requirements of Section 2.2;
(b) Representations and Warranties True and Correct. Each of the
representations and warranties of the Borrower and its Subsidiaries set forth
herein and in the Credit Documents
28
shall be true and correct in all material respects as of the time of such new
Borrowing, except as a result of the transactions expressly permitted hereunder
or thereunder and except to the extent that any such representation or warranty
relates solely to an earlier date, in which case it shall have been true and
correct in all material respects as of such earlier date;
(c) No Default. No Default or Event of Default shall have occurred and be
continuing or would occur as a result of such Borrowing;
(d) New Litigation and Changes in Pending Litigation. Since the Effective
Date, no new litigation (including, without limitation, derivative or injunctive
actions), arbitration proceedings or governmental proceedings shall be pending
or known to be threatened against the Borrower or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect; and no material
development (whether or not disclosed) shall have occurred in any litigation
(including, without limitation, derivative or injunctive actions), arbitration
proceedings or governmental proceedings previously disclosed, which could
reasonably be expected to have a Material Adverse Effect;
(e) Regulation U; Other Laws. The Borrowings to be made by the Borrower
shall not result in either the Borrower or the Agent or any Lender being in non-
compliance with or in violation of Regulation U of the Board of Governors of the
Federal Reserve System and shall not be prohibited by any other legal
requirement (including Regulations T and X of the Board of Governors of the
Federal Reserve System) imposed by the banking laws of the United States of
America, and shall not otherwise subject the Agent or any Lender to a penalty or
other onerous conditions under or pursuant to any legal requirement; and
(f) Material Adverse Change. There has occurred no event or effect that
has had or could reasonably be expected to have a Material Adverse Effect.
Each request for the advance of a Borrowing and each request for the issuance
of, increase in the amount of, or extension of the expiry date of, a Letter of
Credit shall be deemed to be a representation and warranty by the Borrower on
the date of such Borrowing, or issuance of, increase in the amount of, or
extension of the expiry date of, such Letter of Credit that all conditions
precedent to such Borrowing have been satisfied or fulfilled unless the Borrower
gives to the Agent written notice to the contrary, in which case no Lender shall
be required to fund such advances and the Agent shall not be required to issue,
increase the amount of or extend the expiry date of such Letter of Credit unless
the Majority Lenders shall have previously waived in writing such non-
compliance. In the event an Event of Default shall have occurred or be
continuing or would occur as a result of such Borrowing, the Borrower may not
convert any Base Rate Loan into a LIBOR Loan or continue any LIBOR Loan and may
only convert or continue any LIBOR Loan into or as a Base Rate Loan in
accordance with Section 2.4(b) hereof and subject to the applicability of the
provisions of Section 2.7 regarding default rates of interest, and in such
case, any LIBOR Loan which has not been accelerated pursuant to the terms hereof
shall automatically convert into a Base Rate Loan at the end of the applicable
Interest Period unless prior to such time, any such Event of Default shall have
been cured or waived pursuant to the terms hereof. In the event a Default shall
have occurred and be continuing or would occur as a result of such Borrowing,
the Borrower may only convert any
29
Base Rate Loan or continue any LIBOR Loan into a LIBOR Loan with a one (1) month
Interest Period.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent and each Lender as
follows:
Section 5.1 Organization.
(a) The Borrower and each of its Subsidiaries (i) is a duly
incorporated and existing corporation (or other Person) in good standing under
the laws of the jurisdiction of its organization, (ii) has all necessary
corporate power (or comparable power, in the case of a Subsidiary that is not a
corporation) to own the property and assets it uses in its business and
otherwise to carry on its business as presently conducted, and (iii) is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business transacted by it or the nature of the property owned or
leased by it makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified could not reasonably be expected to have
a Material Adverse Effect.
(b) As of the date hereof, the Borrower has no Subsidiaries other than
the Subsidiaries listed on Schedule 5.1, and the Borrower owns one hundred
percent (100%) of each class of capital stock or ownership interests of each of
such Subsidiary.
Section 5.2 Power and Authority; Validity. Each of the Borrower and the
Guarantors has the corporate (or comparable power, in the case of a Subsidiary
that is not a corporation) power and authority to execute, deliver and carry out
the terms and provisions of the Credit Documents to which it is a party and has
taken all necessary corporate (or comparable action, in the case of a Subsidiary
that is not a corporation) action to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. Each of the
Borrower and the Guarantors has duly executed and delivered each such Credit
Document and each such Credit Document constitutes the legal, valid and binding
obligation of such Person enforceable in accordance with its terms, subject as
to enforcement only to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity, regardless of whether in a proceeding in equity
or at law.
Section 5.3 No Violation. Neither the execution, delivery nor performance
by the Borrower or any of the Guarantors of the Credit Documents to which it is
a party nor compliance by any of such Persons with the terms and provisions
thereof, nor the consummation by it of the transactions contemplated herein or
therein, will (i) contravene any applicable provision of any law, statute, rule
or regulation, or any applicable order, writ, injunction or decree of any court
or governmental instrumentality, except where such contravention could not
reasonably be expected to have a Material Adverse Effect, (ii) conflict with or
result in any breach of any term, covenant, condition or other provision of, or
constitute a default under (except where such conflict, breach or default could
not reasonably be expected to have a Material Adverse Effect), or result in the
creation or imposition of (or the obligation to create or impose) any Lien other
than any Permitted Lien upon any of the property or assets of the Borrower or
its Subsidiaries under the terms of any contractual obligation to which the
Borrower or any of its Subsidiaries is a party or by which it or any of its
30
properties or assets are bound or to which it may be subject, or (iii) violate
or conflict with any provision of the Certificate or Articles of Incorporation
or Bylaws or other governance documents, as applicable, of such Person.
Section 5.4 Litigation. There are no lawsuits (including, without
limitation, derivative or injunctive actions), arbitration proceedings or
governmental proceedings pending or, to the best knowledge of the Borrower,
threatened, involving the Borrower or any of its Subsidiaries except for such
lawsuits or other proceedings which could not reasonably be expected to have a
Material Adverse Effect and any lawsuits and proceedings disclosed in Schedule
5.4.
Section 5.5 Use of Proceeds; Margin Regulations. The proceeds of the Loans
may only be used to repay existing Indebtedness, to provide working capital and
for general corporate purposes (including the issuance of Letters of Credit) and
for Acquisitions. Neither the Borrower nor any of its Subsidiaries are engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stock. No proceeds of any Loan will be used to purchase or carry any
"margin stock" (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), to extend credit for the purpose of purchasing or
carrying any "margin stock," or for a purpose which violates Regulations T, U or
X of the Board of Governors of the Federal Reserve System.
Section 5.6 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 5.7 Public Utility Holding Company Act. Neither the Borrower nor
any of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
Section 5.8 True and Complete Disclosure. All factual information (not
including estimated, pro forma financial information and other projections)
heretofore or contemporaneously furnished by the Borrower or any of its
Subsidiaries in writing to the Agent or the Lenders in connection with any
Credit Document or any transaction contemplated therein is, disregarding any
updated, corrected, supplemented, superceded or otherwise modified information
except as so updated, corrected, supplemented, superceded or otherwise modified
and all other such factual information hereafter furnished by any such Persons
in writing to the Lenders in connection herewith, any of the other Credit
Documents or the Loans will be, true and accurate in all material respects,
taken as a whole, on the date of such information and not incomplete by omitting
to state any material fact necessary to make the information therein not
misleading at such time in light of the circumstances under which such
information, taken as a whole, was provided. All estimates, pro forma financial
information and projections furnished by the Borrower or any of its Subsidiaries
in writing to the Lenders in connection with any Credit Document or any
transaction contemplated therein, were prepared by the Borrower in good faith
based upon assumptions believed by the Borrower to be reasonable at the time
such information was prepared, it being recognized by the Agent and the Lenders
that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered by
such financial information may differ from the projected results set forth
therein by a material amount.
31
Section 5.9 Financial Statements. The financial statements heretofore
delivered to the Lenders for the fiscal quarter ending March 31, 1998, were
prepared in accordance with GAAP, and such financial statements, together with
the related notes and schedules, fairly presents the financial position of the
Borrower and its Subsidiaries as of the dates thereof and the results of
operations for the periods covered thereby, subject to normal year-end
adjustments and omission of certain footnotes as permitted by the SEC.
Section 5.10 No Material Adverse Change. From March 31, 1998, there has
occurred no event or effect that has had, or to the best knowledge of the
Borrower could reasonably be expected to have, a Material Adverse Effect.
Section 5.11 Labor Controversies. There are no labor strikes, lock-outs,
slow downs, work stoppages or similar events pending or, to the best knowledge
of the Borrower, threatened against the Borrower or any of its Subsidiaries that
could reasonably be expected to have a Material Adverse Effect.
Section 5.12 Taxes. Except as disclosed on Schedule 5.12, the Borrower and
its Subsidiaries have filed all federal tax returns and all other material tax
returns required to be filed, and have paid all governmental taxes, rates,
assessments, fees, charges and levies (collectively, "Taxes") except such Taxes,
if any, as are being contested in good faith and for which reserves have been
provided in accordance with GAAP and except where the failure to pay such Taxes
could not reasonably be expected to have a Material Adverse Effect. Except as
disclosed on Schedule 5.12, no tax liens have been filed and no claims are being
asserted for Taxes. Except as disclosed on Schedule 5.12, the charges, accruals
and reserves on the books of the Borrower and its Subsidiaries for Taxes and
other governmental charges have been determined in accordance with GAAP.
Section 5.13 ERISA. With respect to each Plan, the Borrower and its
Subsidiaries have fulfilled their obligations under the minimum funding
standards of, and are in compliance in all material respects with, ERISA and
with the Code to the extent applicable to it, and have not incurred any
liability under Title IV of ERISA to the PBGC or a Plan other than a liability
to the PBGC for premiums under Section 4007 of ERISA, except where such
liability could not reasonably be expected to have a Material Adverse Effect.
As of the Effective Date, neither the Borrower nor any of its Subsidiaries has
any contingent liability with respect to any post-retirement benefits under a
welfare plan as defined in ERISA other than liability for continuation coverage
described in Part 6 of Title I of ERISA, except where such liability could not
reasonably be expected to have a Material Adverse Effect.
Section 5.14 Consents. All consents and approvals of, and filings and
registrations with, and all other actions of, all governmental agencies,
authorities or instrumentalities required to consummate the Borrowings
hereunder, on the date of each such Borrowing, have been obtained or made and
are or will be in full force and effect.
Section 5.15 Capitalization. All outstanding shares of the Borrower and
its Subsidiaries have been duly and validly issued, are fully paid and
nonassessable. None of the Borrower's Subsidiaries has outstanding any
securities convertible into or exchangeable for its capital stock or outstanding
any rights to subscribe for or to purchase, or any options for the purchase of,
or any
32
agreement providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock.
Section 5.16 Ownership of Property. The Borrower and its Subsidiaries have
good title to or a valid leasehold interest in all of its property except to the
extent, in the aggregate, no Material Adverse Effect could reasonably be
expected to result from the failure to have such title or interest, subject to
no Liens except Permitted Liens. The Borrower and its Subsidiaries own or hold
valid licenses to use all the material patents, trademarks, permits, service
marks and trade names, free of any burdensome restrictions, that are necessary
to the operation of the business of the Borrower and its Subsidiaries as
presently conducted, except where the failure to own or hold such licenses could
not reasonably be expected to have a Material Adverse Effect.
Section 5.17 Compliance with Statutes. The Borrower and its Subsidiaries
are in compliance in all material respects with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies and have all necessary permits, licenses and other necessary
authorizations with respect to the conduct of their businesses and the ownership
and operation of their properties except where the failure to so comply or hold
such permits, licenses or other authorizations could not reasonably be expected
to have a Material Adverse Effect.
Section 5.18 Environmental Matters.
(a) Borrower and its Subsidiaries have complied with, and on the date
of each Borrowing will be in compliance with, all applicable Environmental Laws
and the requirements of any permits issued under such Environmental Laws except
where failure to so comply could not reasonably be expected to have a Material
Adverse Effect. To the best knowledge of the Borrower, there are no pending,
past or threatened Environmental Claims against the Borrower or any of its
Subsidiaries or any property owned or operated by the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect. To the best knowledge of the Borrower, there are no conditions or
occurrences on or emanating from any property owned or operated by the Borrower
or any of its Subsidiaries or on any property adjoining or in the vicinity of
any such property that could reasonably be expected (i) to form the basis of an
Environmental Claim against the Borrower or any of its Subsidiaries or any
property owned or operated by the Borrower or any of its Subsidiaries, or (ii)
to cause any property owned or operated by the Borrower or any of its
Subsidiaries to be subject to any material restrictions on the ownership,
occupancy, the current or intended use or transferability of such property by
the Borrower or any of its Subsidiaries under any applicable Environmental Law
except for any such condition or occurrence described in clauses (i) or (ii)
which could not reasonably be expected to have a Material Adverse Effect.
(b) To the best knowledge of the Borrower (i) Hazardous Materials have
not at any time been generated, used, treated or stored on, or transported to or
from, any property owned or operated by the Borrower or any of its Subsidiaries
in a manner that has violated or could reasonably be expected to violate any
33
Environmental Law, except for such violation which could not reasonably be
expected to have a Material Adverse Effect, and (ii) Hazardous Materials have
not at any time been released on or from any property owned or operated by the
Borrower or any of its Subsidiaries in a matter that has violated or could
reasonably be expected to violate any Environmental Law, except for such
violation which could not reasonably be expected to have a Material Adverse
Effect.
Section 5.19 Year 2000 Compliance. All devices, systems, machinery,
information technology, computer software and hardware, and other date sensitive
technology (jointly and severally its "systems") necessary for the Borrower and
its Subsidiaries to carry on their business as presently contemplated to be
conducted will be Year 2000 Compliant within a period of time calculated to
result in no material disruption of any of their business operations. For
purposes hereof, "Year 2000 Compliant" means that such systems are designed to
be used prior to, during and after the Gregorian calendar year 2000 A.D. and
will operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century. The
Borrower and its Subsidiaries will (i) undertake a inventory, review, and
assessment of all areas within their businesses and operations that could be
adversely affected by the failure of the Borrower and its Subsidiaries to be
Year 2000 Compliant on a timely basis; and (ii) develop a plan and timeline for
becoming Year 2000 Compliant on a timely basis. The Borrower, when it
reasonably determines such action necessary, will make written inquiry of each
of its and its Subsidiaries' key suppliers, vendors, and customers, and will
obtain in writing confirmations from all such Persons, as to whether such
Persons have initiated programs to become Year 2000 Compliant. For purposes
hereof, "key suppliers, vendors, and customers" refers to those suppliers,
vendors, and customers of the Borrower and its Subsidiaries whose business
failure could reasonably be expected to have a Material Adverse Effect. The
fair market value of all Collateral pledged to the Lenders as collateral to
secure the Loans is not and shall not be less than currently anticipated or
subject to substantial deterioration in value because of the failure of such
Collateral to be Year 2000 Compliant."
Section 5.20 Existing Indebtedness and Liens. The Borrower and its
Subsidiaries have no Indebtedness or Liens on any of their properties or assets
on the Effective Date other than as listed on Schedule 5.20.
34
SECTION 6. COVENANTS.
The Borrower covenants and agrees that, without the consent of the Majority
Lenders and so long as any Note, Letter of Credit or Reimbursement Obligation or
any other Obligation is outstanding or any Commitment is outstanding hereunder:
Section 6.1 Existence. The Borrower and its Subsidiaries will preserve and
maintain their existence except (i) for the dissolution of any Subsidiaries
whose assets are transferred to the Borrower or any of its Subsidiaries; (ii)
the Borrower shall not be required to preserve, renew or keep in full force and
effect the corporate or other existence of any Subsidiary, if the Board of
Directors of the Borrower shall determine in the exercise of its business
judgment that the preservation thereof is no longer desirable in the conduct of
business of the Borrower or any Subsidiary and that abandonment of any such
right shall not have a Material Adverse Effect on the Borrower and its
Subsidiaries, taken as a whole; and (iii) as otherwise expressly permitted
herein.
Section 6.2 Maintenance. The Borrower and its Subsidiaries will maintain,
preserve and keep their material plants, properties and equipment necessary to
the proper conduct of their businesses in reasonably good repair, working order
and condition (normal wear and tear excepted) and will from time to time make
all reasonably necessary repairs, renewals, replacements, additions and
betterments thereto consistent with usual and customary business practices so
that at all times such plants, properties and equipment are reasonably preserved
and maintained, in each case with such exceptions as could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect;
provided, however, that nothing in this Section 6.2 shall prevent the Borrower
or any of its Subsidiaries from discontinuing the operation or maintenance of
any such plants, properties or equipment if such discontinuance is, in the
judgment of the Borrower or any such Subsidiary, as applicable, desirable in the
conduct of its business and not materially disadvantageous to the Lenders.
Section 6.3 Taxes. The Borrower and its Subsidiaries will duly pay and
discharge all Taxes upon or against them or their properties before penalties
accrue thereon, unless and to the extent that the same is being contested in
good faith and by appropriate proceedings and reserves have been established in
conformity with GAAP.
Section 6.4 ERISA. The Borrower and its Subsidiaries will promptly pay and
discharge all obligations and liabilities arising under ERISA or otherwise with
respect to each Plan of a character which if unpaid or unperformed might result
in the imposition of a material Lien against any properties or assets of the
Borrower or any of its Subsidiaries and will promptly notify the Agent of (i)
the occurrence of any reportable event (as defined in ERISA) relating to a Plan
other than any such event with respect to which the PBGC has waived notice by
regulation; (ii) receipt of any notice from PBGC of its intention to seek
termination of any Plan or appointment of a trustee therefor; (iii) the
Borrower's or any of its Subsidiary's intention to terminate or withdraw from
any Plan if such termination or withdrawal would result in liability under Title
IV of ERISA; and (iv) the occurrence of any event that could reasonably be
expected to result in the incurrence of any material liability, fine or penalty,
or any material increase in the contingent liability of the Borrower or any of
its Subsidiaries, in connection with any post-retirement benefit under a welfare
plan benefit (as defined in ERISA).
35
Section 6.5 Insurance. The Borrower and its Subsidiaries will maintain or
cause to be maintained with responsible insurance companies, insurance against
any loss or damage to all material insurable property and assets owned by them,
such insurance to be of a character and in or in excess of such amounts as are
customarily maintained by companies similarly situated and operating like
property or assets (subject to self-insured retentions and deductibles), all of
which policies shall provide that no policy shall terminate without at least ten
(10) days' advance written notice to the Agent and be reasonably acceptable to
the Agent. The Borrower and each of its Subsidiaries will also insure employers'
and public and product liability risks with responsible insurance companies, all
as reasonably acceptable to the Agent.
Section 6.6 Financial Reports and Other Information.
(a) The Borrower and its Subsidiaries will maintain a system of
accounting in such manner as will enable preparation of financial statements in
accordance with GAAP and will furnish to the Agent and its authorized
representatives such information about the business and financial condition of
the Borrower and its Subsidiaries, including, without limitation, any corporate
documents and records, within such time period, as the Agent or any Lender may
reasonably request; and, without any request, will furnish to the Agent:
(i) within forty-five (45) days after the end of each fiscal
quarter of each fiscal year of the Borrower, the consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such fiscal quarter and the
related consolidated statements of income and retained earnings and of cash
flows for such fiscal quarter and for the portion of the fiscal year ended with
the last day of such fiscal quarter, all of which shall be in reasonable detail
and in the case of consolidated statements, in the form filed with the SEC and
within five (5) days thereafter, a certificate of an officer of the Borrower
acceptable to the Agent that such financial reports fairly present the financial
condition of the Borrower and its Subsidiaries as of the dates indicated and the
results of their operations and changes in their cash flows for the periods
indicated and that they have been prepared in accordance with GAAP, in each
case, subject to normal year-end audit adjustments and the omission of any
footnotes as permitted by the SEC; and
(ii) within one hundred twenty (120) days after the end of each
fiscal year of the Borrower, consolidated and consolidating balance sheets of
the Borrower and its Subsidiaries as at the end of such fiscal year and the
related consolidated and consolidating statements of income and consolidated
statements of retained earnings and of cash flows for such fiscal year and
setting forth consolidated comparative figures for the preceding fiscal year and
certified by an officer of the Borrower acceptable to the Agent, to the effect
that such statements fairly present the financial condition of the Borrower and
its Subsidiaries as of the dates indicated and the results of their operations
and changes in their cash flows, and in the case of the consolidated statements,
audited by an independent nationally-recognized accounting firm acceptable to
the Agent.
(b) Each financial statement furnished to the Agent pursuant to
subsections (i) and (ii) of Section 6.6(a) shall be accompanied by (i) a written
certificate signed by an officer of the Borrower acceptable to the Agent to the
effect that (x) no Default or Event of Default has occurred during the period
covered by such statements or, if any such Default or Event of Default has
occurred during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by the Borrower to
remedy the same, and (y) the representations and warranties
36
contained herein are true and correct in all material respects as though made on
the date of such certificate, except to the extent that any such representation
or warranty relates solely to an earlier date, in which case it was true and
correct as of such earlier date and except as otherwise described therein, as a
result of the transactions expressly permitted hereunder or as previously
disclosed to the Lenders, and (ii) a Compliance Certificate in the form of
Exhibit 6.6 showing the Borrower's compliance with the financial covenants set
forth herein.
(c) Promptly upon receipt thereof, the Borrower will provide the Agent
with a copy of each report or "management letter" submitted to the Borrower or
any of its Subsidiaries by its independent accountants or auditors in connection
with any annual, interim or special audit made by them of the books and records
of the Borrower or any of its Subsidiaries.
(d) Promptly after any officer of the Borrower obtains knowledge of
any of the following, the Borrower will provide the Agent with written notice in
reasonable detail of: (i) any pending or threatened Environmental Claim against
the Borrower or any of its Subsidiaries or any property owned or operated by the
Borrower or any of its Subsidiaries that if adversely determined could
reasonably be expected to have a Material Adverse Effect; (ii) any condition or
occurrence on any property owned or operated by the Borrower or any of its
Subsidiaries that results in noncompliance by the Borrower or any of its
Subsidiaries with any Environmental Law that could reasonably be expected to
have a Material Adverse Effect; and (iii) the taking of any material removal or
remedial action in response to the actual or alleged presence of any Hazardous
Material on any property owned or operated by the Borrower or any of its
Subsidiaries, which Hazardous Material or the removal or remediation thereof
could reasonably be expected to have a Material Adverse Effect.
(e) The Borrower will promptly and in any event, within ten (10) days
after an officer of the Borrower has knowledge thereof, give written notice to
the Agent of: (i) any pending or threatened litigation or proceeding against
the Borrower or any of its Subsidiaries asserting any uninsured claim or claims
against any of same in excess of $1,000,000 in the aggregate; (ii) the
occurrence of any Default or Event of Default; (iii) any circumstance that has
had a Material Adverse Effect; and (iv) any event which would result in a breach
of Sections 6.20, 6.21, 6.22, 6.23 or 6.24.
(f) The Agent will promptly provide to each Lender all information
provided to it by the Borrower pursuant to this Section 6.6.
(g) The Borrower will (i) furnish such additional information,
statements and other reports with respect to the Borrower's compliance (and its
approach to and progress towards achieving compliance) with Section 5.19 as the
Agent may request from time to time; (ii) in the event of any change in
circumstances that causes or will likely cause any of the Borrower's
representations and warranties set forth in Section 5.19, to no longer be true,
the Borrower shall promptly, and in any event within ten (10) days of receipt of
information regarding a change in circumstances, provide the Agent with written
notice that describes in reasonable detail the change in circumstances and any
additional information any Lender requests of the Borrower in connection
therewith; and (iii) give any representative of any Lender reasonable access to,
and permit such representative to examine, copy or make excerpts from, any and
all relevant books, records and documents in the possession of the Borrower and
its Subsidiaries and relating to their affairs, and to inspect any of the
properties and systems of the Borrower and its Subsidiaries, and to project test
37
its systems to determine if they are Year 2000 Compliant in an integrated
environment, all at the sole cost and expense of the Lenders.
Section 6.7 Lenders' Inspection Rights. Upon reasonable notice from the
Agent or any Lender, the Borrower will permit the Agent or any Lender (and such
Persons as the Agent or any Lender may reasonably designate), at the Borrower's
expense while an Event of Default has occurred and is continuing, during normal
business hours following reasonable notice to visit and inspect any of the
properties of the Borrower or any of its Subsidiaries, to examine all of their
books and records, to make copies and extracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective officers and
independent public accountants (and by this provision, the Borrower authorizes
such accountants to discuss with the Agent or any Lender, and such Persons as
the Agent or any Lender may designate, the affairs, finances and accounts of the
Borrower and its Subsidiaries provided that the Borrower has the opportunity to
be present at such discussions), all at such reasonable times and as often as
may be reasonably requested.
Section 6.8 Conduct of Business. The Borrower and its Subsidiaries will
not engage in any line of business other than the specialty electric and
telecommunications infrastructure contracting service business, electrical
contracting services, installation of transportation, control and lighting
equipment and services or businesses reasonably related thereto (each, a
"Permitted Business").
Section 6.9 New Subsidiaries. The Borrower shall cause (i) any direct or
indirect domestic Subsidiary which is formed or acquired after the Effective
Date to become a Guarantor with respect to, and jointly and severally liable
with all other Guarantors for, all of the Obligations under this Agreement and
the Notes pursuant to a Guaranty substantially in the form of Exhibit 4.1A, and
(ii) any Subsidiary which forms or acquires a Subsidiary after the Effective
Date to execute and deliver to the Agent a Stock Pledge Agreement substantially
in the form of Exhibit 4.1B, and to deliver the original stock certificates for
any such Subsidiary as set forth therein (or other evidence of its ownership
interest therein) and undated stock powers executed in blank with respect
thereto, in each case within thirty (30) days following such formation or
acquisition. The Borrower shall provide to the Agent a list of all its
Subsidiaries with the state or country of incorporation and the location of the
principal place of business of each such Subsidiary at the same time as it
provides its quarterly financial reports to the Agent pursuant to Section
6.6(a)(i).
Section 6.10 Dividends and Negative Pledges.
(a) The Borrower shall not pay any dividends or other distributions
on its capital stock.
(b) Except as otherwise permitted herein, neither the Borrower nor
any of its Subsidiaries shall, directly or indirectly, create or otherwise
permit to exist or become effective any restriction on the ability of any
Subsidiary of the Borrower to (i) pay dividends or make any other distributions
on its capital stock or any other interest or participation in its profits owned
by the Borrower or to pay any Indebtedness owed to the Borrower, or (ii) make
loans or advances to the Borrower or any of its Subsidiaries, except in either
case for restrictions existing under or by reason of applicable law, this
Agreement and the other Credit Documents.
38
(c) Neither the Borrower nor any of its Subsidiaries shall enter into
any agreement creating or assuming any Lien upon its properties, revenues or
assets, whether now owned or hereafter acquired other than as permitted
hereunder. Neither the Borrower nor any of its Subsidiaries shall enter into any
agreement other than this Agreement and the Credit Documents prohibiting the
creation or assumption of any Lien upon its properties, revenues or assets,
whether now owned or hereafter acquired or prohibiting or restricting the
ability of the Borrower or any of its Subsidiaries to amend or otherwise modify
this Agreement or any Credit Document.
Section 6.11 Restrictions on Fundamental Changes. Neither the Borrower nor
any of its Subsidiaries shall be a party to any merger into or consolidation
with, make an Acquisition or otherwise purchase or acquire all or substantially
all of the assets or stock of, any other Person, or sell all or substantially
all of its assets (other than sales of inventory or surplus or obsolete assets
in the ordinary course of business) or stock, except:
(a) the Borrower or any of its Subsidiaries may merge into or
consolidate with, make an Acquisition or otherwise purchase or acquire all or
substantially all of the assets or stock of any other Person if upon the
consummation of any such merger, consolidation, purchase or Acquisition, (i) the
Borrower or such Subsidiary is the surviving corporation to any such merger or
consolidation (or the other Person will thereby become a Subsidiary); (ii) the
nature of the business of such acquired Person is a Permitted Business; (iii)
the maximum cash purchase price paid and Indebtedness incurred to a seller by
the Borrower or any of its Subsidiaries in connection with (x) any single
Acquisition shall not exceed ten percent (10%) of the Borrower's Consolidated
Net Worth as of the end of the immediately preceding fiscal quarter, and (y) all
Acquisitions made during any rolling four (4) fiscal quarters (excluding any
Acquisition exceeding ten percent (10%) of the Borrower's Consolidated Net Worth
for which the Borrower has obtained the approval of the Majority Lenders
hereunder) shall not exceed twenty-five percent (25%) of the Borrower's
Consolidated Net Worth as of the end of the immediately preceding fiscal
quarter; (v) no Default or Event of Default shall have occurred and be
continuing or would otherwise be existing as a result of such merger,
consolidation, purchase or Acquisition; and (vi) such merger, consolidation,
purchase or Acquisition is non-hostile in nature;
(b) the Borrower may purchase or otherwise acquire all or
substantially all of the stock or assets of, or otherwise acquire by merger or
consolidation, any of its Subsidiaries, and any such Subsidiary may merge into,
or consolidate with, or purchase or otherwise acquire all or substantially all
of the assets or stock of or sell all or substantially all of its assets or
stock to, any other Subsidiary of the Borrower or the Borrower, in each case so
long as the Borrower shall be the surviving entity to any such merger or
consolidation if the transaction is with the Borrower; and
(c) the sale of non operating assets unnecessary for the continued
operation of the Borrower's business and in the normal course of the Borrower's
business.
Except as otherwise permitted in this Section 6.11, the Borrower shall not sell
or dispose of any capital stock of or its ownership interest in any of the
Guarantors or any other Subsidiaries which it may form.
Section 6.12 Environmental Laws. The Borrower and its Subsidiaries shall
comply with all Environmental Laws (including, without limitation, obtaining and
maintaining all necessary
39
permits, licenses and other necessary authorizations) applicable to or affecting
the properties or business operations of the Borrower or any of its Subsidiaries
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect.
Section 6.13 Liens. The Borrower and its Subsidiaries shall not create,
incur, assume or suffer to exist any Lien of any kind on any of their properties
or assets of any kind except the following (collectively, the "Permitted
Liens"):
(a) Liens arising in the ordinary course of business by operation of
law in connection with workers' compensation, unemployment insurance, old age
benefits, social security obligations, taxes, assessments, statutory obligations
or other similar charges, good faith deposits, pledges or other Liens in
connection with (or to obtain letters of credit in connection with) bids,
performance bonds, contracts or leases to which the Borrower or its Subsidiaries
are a party or other deposits required to be made in the ordinary course of
business; provided that in each case the obligation secured is not for
Indebtedness and is not overdue or, if overdue, is being contested in good faith
by appropriate proceedings and reserves in conformity with GAAP have been
provided therefor;
(b) mechanics', workmen, materialmen, landlords', carriers' or other
similar Liens arising in the ordinary course of business (or deposits to obtain
the release of such Liens) related to obligations not due or, if due, that are
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor;
(c) inchoate Liens under ERISA and Liens for Taxes not yet due or
which are being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP have been provided therefor;
(d) Liens arising out of judgments or awards against the Borrower or
any of its Subsidiaries, or in connection with surety or appeal bonds or the
like in connection with bonding such judgments or awards, the time for appeal
from which or petition for rehearing of which shall not have expired or for
which the Borrower or such Subsidiary shall be prosecuting on appeal or
proceeding for review and for which it shall have obtained a stay of execution
or the like pending such appeal or proceeding for review; provided that the
aggregate amount of uninsured or underinsured liabilities (including interest,
costs, fees and penalties, if any) of the Borrower and its Subsidiaries secured
by such Liens shall not exceed $1,000,000 at any one time outstanding and
provided further there is adequate assurance, in the sole reasonable discretion
of the Lenders, that the insurance proceeds attributable thereto shall be paid
promptly upon the expiry of such time period or resolution of such proceeding if
necessary to remove such Liens;
(e) rights of a common owner of any interest in property held by a
Person and such common owner as tenants in common or through other common
ownership;
(f) encumbrances (other than to secure the payment of Indebtedness),
easements, restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations in any property or rights-of-way of a Person for the purpose of
roads, pipelines, transmission lines, transportation lines, distribution lines,
removal of gas, oil, coal, metals, steam, minerals, timber or other natural
resources, and other like purposes, or for the joint or common use of real
property, rights-of-way,
40
facilities or equipment, or defects, irregularity and deficiencies in title of
any property or rights-of-way which do not materially diminish the value of or
the ability to use such property;
(g) financing statements filed by lessors of property (but only with
respect to the property so leased) and Liens under any conditional sale or title
retention agreements entered into in the ordinary course of business;
(h) rights of lessees of equipment owned by the Borrower or any of its
Subsidiaries;
(i) Liens securing Indebtedness permitted by Section 6.14(d) on any
assets acquired;
(j) Liens on assets acquired in an Acquisition securing Indebtedness
permitted by Section 6.14(h); provided that no such Liens shall encumber
accounts, accounts receivable, inventory (other than purchase money Liens),
cash, deposit accounts, Cash Equivalents, general intangibles, intellectual
property or any stock or other ownership interests in any Subsidiaries;
(k) existing Liens listed on Schedule 6.13 and any extension, renewal
or replacement thereof; and
(l) Liens on any assets acquired in an Acquisition, provided that all
such Liens, other than Permitted Liens listed in (a) through (k) of this
Section, shall be released on or before thirty (30) days from the date of such
Acquisition.
Section 6.14 Indebtedness. The Borrower and its Subsidiaries shall not
contract, assume or suffer to exist any Indebtedness (including, without
limitation, any Guaranties), except:
(a) Indebtedness under the Credit Documents;
(b) unsecured intercompany loans and advances from the Borrower to any
of its Subsidiaries and unsecured intercompany loans and advances from any of
such Subsidiaries to the Borrower or any other Subsidiaries of the Borrower;
(c) existing Indebtedness listed on Schedule 6.13, and any subsequent
extensions, renewals or refinancings thereof so long as such Indebtedness is not
increased in amount, the maturity date thereof is not made earlier in time, the
interest rate per annum applicable thereto is not increased, any amortization of
principal thereunder is not shortened and the payments thereunder are not
increased;
(d) Capitalized Lease Obligations and purchase money Indebtedness on
assets acquired in an aggregate amount not to exceed $2,500,000 at any one time
outstanding;
(e) unsecured Indebtedness to a seller incurred in connection with an
Acquisition, provided that such Indebtedness is subordinated in payment to the
Obligations hereunder as reasonably acceptable to the Agent, such Indebtedness
contains covenants no more restrictive than the covenants contained in this
Agreement and standstill provisions reasonably acceptable to the
41
Agent and no payments may be made thereon if a Default or Event of Default shall
have occurred and be continuing or would occur as a result of any such payment;
(f) Indebtedness under any Interest Rate Protection Agreements entered
into to protect the Borrower against fluctuations in interest rates and not for
speculative purposes;
(g) Indebtedness incurred in connection with Subordinated Debt
Investments not to exceed (excluding any Indebtedness permitted by Section
6.14(e)) in the aggregate $50,000,000, all as reasonably acceptable to the
Agent; and
(h) other Indebtedness not included within subsections (a) through (g)
above, including, without limitation, Indebtedness assumed in connection with an
Acquisition, provided that such Indebtedness shall not exceed $7,500,000 at any
one time outstanding.
Section 6.15 Loans, Advances and Investments. The Borrower and its
Subsidiaries shall not lend money or make advances to any Person, or purchase or
acquire any stock, indebtedness, obligations or securities of, or any other
interest in, or make any capital contribution to, any Person (any of the
foregoing, an "Investment") other than:
(a) Investments in Cash Equivalents;
(b) receivables owing to the Borrower or its Subsidiaries created or
acquired in the ordinary course of business and payable on customary trade terms
of the Borrower or such Subsidiary and in compliance with the requirements of
Section 6.17;
(c) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in the
ordinary course of business;
(d) deposits made in the ordinary course of business consistent with
past practices to secure the performance of leases;
(e) as permitted by Section 6.14(b);
(f) loans to employees of the Borrower or any of its Subsidiaries,
provided that all such loans shall not exceed $2,000,000 at any one time;
(g) the existing loan to the NorAm Telecommunications, Inc. employee
stock ownership plan; and
(h) as permitted by Section 6.11.
Section 6.16 Transfer of Assets. The Borrower and its Subsidiaries shall
not permit any sale, transfer, conveyance, assignment or other disposition of
any material asset of the Borrower or any of its Subsidiaries except:
42
(a) transfers of inventory, equipment and other assets in the
ordinary course of business;
(b) the retirement or replacement of assets (with assets of equal or
greater value) in the ordinary course of business;
(c) transfers of any assets among the Borrower and any of its
Subsidiaries; and
(d) the transfer of any assets acquired in an Acquisition which are
not necessary for the operation of the business of the Borrower and its
Subsidiaries, provided that the net cash proceeds thereof are reinvested by the
Borrower and its Subsidiaries in the operation of a Permitted Business.
Section 6.17 Transactions with Affiliates. Except as otherwise
specifically permitted herein, the Borrower and its Subsidiaries shall not enter
into or be a party to any material transaction or arrangement or series of
related transactions or arrangements which in the aggregate would be material
with any Affiliate of such Person, including without limitation, the purchase
from, sale to or exchange of property with or the rendering of any service by or
for, any Affiliate, except pursuant to the reasonable requirements of such
entity's business and upon fair and reasonable terms no less favorable to such
entity than would be able to be obtained in a comparable arm's-length
transaction with a Person other than an Affiliate.
Section 6.18 Compliance with Laws. The Borrower and its Subsidiaries shall
conduct their businesses and otherwise be in compliance in all material respects
with all applicable laws, regulations, ordinances and orders of all
governmental, judicial and arbitral authorities applicable to them and shall
obtain and maintain all necessary permits, licenses and other authorizations
necessary to conduct their businesses and own and operate their properties
except where the failure to comply or have such permits, licenses or other
authorizations could not reasonably be expected to have a Material Adverse
Effect.
Section 6.19 Capital Expenditures. Neither the Borrower nor any of its
Subsidiaries shall make or commit to make Capital Expenditures in excess of
fifteen percent (15%) of Consolidated Net Worth during any rolling four (4)
fiscal quarters.
Section 6.20 Minimum Consolidated Net Worth. The Borrower will maintain a
minimum Consolidated Net Worth of not less than an amount equal to the sum of
(i) $98,000,000, plus (ii) for each fiscal quarter ended prior to (but not on)
such date of determination, commencing with the fiscal quarter ended June 30,
1998, an amount equal to 50% of Consolidated Net Income for such fiscal quarter,
if positive, plus (iii) for the fiscal quarter during which such date of
determination falls, an amount equal to 100% of the amount of any equity
issuance by the Borrower, including in a secondary offering or where equity is
used to acquire another entity in an Acquisition, plus (iv) for the fiscal
quarter during which such determination falls, an amount equal to 100% of the
stockholders equity of any entity acquired in an Acquisition for which the
Borrower uses the pooling of interest method of accounting in accordance with
GAAP, minus (v) any distributions to shareholders of any Subchapter S
corporation acquired in an Acquisition as a result of operations of the
corporation acquired prior to the closing of the Acquisition or the terms of the
Acquisition.
43
Section 6.21 Fixed Charge Coverage Ratio. The Borrower will maintain a
Fixed Charge Coverage Ratio of at least 1.25 to 1.0.
Section 6.22 Funded Debt to EBITDA Ratio. The Borrower will maintain a
maximum Funded Debt to EBITDA Ratio of not greater than 3.50 to 1.0.
Section 6.23 Senior Debt to EBITDA. The Borrower will maintain a maximum
Senior Debt to EBITDA Ratio of not greater than 3.0 to 1.0.
Section 6.24 Tangible Assets to Senior Debt Ratio. The Borrower will
maintain a Tangible Assets to Senior Debt Ratio of at least 1.5 to 1.0.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES.
Section 7.1 Events of Default. Any one or more of the following shall
constitute an Event of Default:
(a) default by the Borrower in the payment of the principal amount of
any Loan, any Reimbursement Obligation or any interest thereon or any fees
payable hereunder within five (5) days following the date when due;
(b) default by the Borrower in the observance or performance of any
covenant set forth in Sections 6.6(e), 6.10(a), 6.11 or 6.16;
(c) default by the Borrower in the observance or performance of any
provision hereof or of any other Credit Document not mentioned in (a) or (b)
above (excluding any default of Section 6.21 solely as a result of distributions
or dividends made by the entity acquired in an Acquisition before the date of
such Acquisition), which is not remedied within thirty (30) days after the
earlier of (i) such default or event of default first becoming known to any
officer of the Borrower, or (ii) notice to the Borrower by the Agent of the
occurrence of such default or event of default;
(d) any representation or warranty made or deemed made herein, in any
other Credit Document or in any financial or other report or document furnished
in compliance herewith or therewith by the Borrower or any of its Subsidiaries
proves untrue in any material respect as of the date of the issuance or making,
or deemed issuance or making thereof;
(e) default occurs in the payment when due (after any applicable grace
period) of Indebtedness in an aggregate principal amount of $1,000,000 or more
of the Borrower or any of its Subsidiaries, or the occurrence of any other
default, which with the passage of time or notice would permit the holder or
beneficiary of such Indebtedness, or a trustee therefor, to cause the
acceleration of the maturity of any such Indebtedness or any mandatory
unscheduled prepayment, purchase, or other early funding thereof;
(f) the Borrower or any of its Subsidiaries (i) has entered
involuntarily against it an order for relief under the United States Bankruptcy
Code or a comparable action is taken under any bankruptcy or insolvency law of
another country or political subdivision of such country, (ii) generally does
not pay, or admits its inability generally to pay, its debts as they become due,
(iii)
44
makes a general assignment for the benefit of creditors, (iv) applies for,
seeks, consents to, or acquiesces in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any substantial part
of its property, (v) institutes any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code or any comparable
law, to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fails to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) makes any
board of directors resolution in direct furtherance of any matter described in
clauses (i)-(v) above, or (vii) fails to contest in good faith any appointment
or proceeding described in Section 7.1(f);
(g) a custodian, receiver, trustee, examiner, liquidator or similar
official is appointed for the Borrower or any of its Subsidiaries or any
substantial part of its property, or a proceeding described in Section 7.1(f)(v)
is instituted against the Borrower or any of its Subsidiaries, and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of sixty (60) days;
(h) the Borrower or any of its Subsidiaries fails within thirty (30)
days (or such earlier date as any steps to execute on such judgment or order
take place) to pay, bond or otherwise discharge, or to obtain an indemnity
against on terms and conditions satisfactory to the Lenders in their reasonable
discretion, any one or more judgments or orders for the payment of money in
excess of $1,000,000 in the aggregate which is uninsured or underinsured by at
least such amount (provided that there is adequate assurance, in the sole
discretion of the Lenders, that the insurance proceeds attributable thereto
shall be paid promptly upon the expiration of such time period or resolution of
such proceeding), which is not stayed on appeal or otherwise being appropriately
contested in good faith in a manner that stays execution;
(i) the Borrower or any of its Subsidiaries fails to pay when due an
amount aggregating in excess of $1,000,000 that it is liable to pay to the PBGC
or to a Plan under Title IV of ERISA; or a notice of intent to terminate a Plan
having Unfunded Vested Liabilities of the Borrower or any of its Subsidiaries in
excess of $1,000,000 (a "Material Plan") is filed under Title IV of ERISA; or
the PBGC institutes proceedings under Title IV of ERISA to terminate or to cause
a trustee to be appointed to administer any Material Plan; or a proceeding is
instituted by a fiduciary of any Material Plan against the Borrower or any of
its Subsidiaries to collect any liability under Section 515 or 4219(c)(5) of
ERISA and such proceeding is not dismissed within thirty (30) days thereafter;
or a condition exists by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated;
(j) the Borrower, any Guarantor, any Person acting on behalf of the
Borrower or any Guarantor, or any governmental, judicial or arbitral authority
challenges the validity of any Credit Document or the Borrower's or any
Guarantor's obligations thereunder, or any Credit Document ceases to be in full
force and effect in all material respects or ceases to give to the Agent and the
Lenders the rights and powers purported to be granted in its favor thereby in
all material respects other than for any reason solely caused by or within the
sole control of the Agent or any Lender; or
45
(k) any Person or two or more Persons acting in concert shall acquire
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934), directly or indirectly, of securities of the Borrower (or
other securities convertible into such securities) representing fifty percent
(50%) or more of the combined voting power of all outstanding securities of the
Borrower entitled to vote in the election of directors.
Section 7.2 Non-Bankruptcy Defaults. When any Event of Default other than
those described in subsections (f) or (g) of Section 7.1 has occurred and is
continuing, the Agent shall, by notice to the Borrower: (a) if so directed by
the Majority Lenders, terminate the remaining Commitments and all other
obligations of the Lenders hereunder on the date stated in such notice (which
may be the date thereof); (b) if so directed by the Majority Lenders, declare
the principal of and the accrued interest on all outstanding Notes to be
forthwith due and payable and thereupon all outstanding Notes, including both
principal and interest thereon, shall be and become immediately due and payable
together with all other amounts payable under the Credit Documents without
further demand, presentment, protest or notice of any kind, including, but not
limited to, notice of intent to accelerate and notice of acceleration, each of
which is expressly waived by the Borrower; and (c) if so directed by the
Majority Lenders, demand that the Borrower immediately pay to the Agent (to be
held by the Agent pursuant to Section 7.4) the full amount then available for
drawing under each or any outstanding Letter of Credit; and the Borrower agrees
to immediately make such payment and acknowledges and agrees that neither the
Agent nor the Lenders would have an adequate remedy at law for failure by the
Borrower to honor any such demand and that the Agent, for the benefit of the
Lenders shall have the right to require the Borrower to specifically perform
such undertaking whether or not any drawings or other demands for payment have
been made under any Letter of Credit. The Agent, after giving notice to the
Borrower pursuant to Section 7.1(c) or (d) or this Section 7.2, shall also
promptly send a copy of such notice to the other Lenders, but the failure to do
so shall not impair or annul the effect of such notice.
Section 7.3 Bankruptcy Defaults. When any Event of Default described in
subsections (f) or (g) of Section 7.1 has occurred and is continuing with
respect to the Borrower, then (i) all outstanding Notes shall immediately become
due and payable together with all other amounts payable under the Credit
Documents without presentment, demand, protest or notice of any kind, each of
which is expressly waived by the Borrower, (ii) all obligations of the Agent or
any Lender to extend further credit pursuant to any of the terms hereof shall
immediately terminate, and (iii) the Borrower shall immediately pay to the Agent
(to be held by the Agent pursuant to Section 7.4) the full amount then available
for drawing under all outstanding Letters of Credit, the Borrower acknowledging
and agreeing that neither the Agent nor the Lenders would have an adequate
remedy at law for failure by the Borrower to honor any such demand and that the
Agent and the Lenders shall have the right to require the Borrower to
specifically perform such undertaking whether or not any drawings or other
demands for payment have been made under any of the Letters of Credit.
Section 7.4 Collateral for Undrawn Letters of Credit.
(a) If the prepayment of the amount available for drawing under any or
all outstanding Letters of Credit is required under Section 7.2 or 7.3, the
Borrower shall forthwith pay the amount required to be so prepaid, to be held by
the Agent as provided in subsection (b) below.
46
(b) All amounts prepaid pursuant to subsection (a) above shall be held
by the Agent in a separate collateral account (such account, and the credit
balances, properties and any investments from time to time held therein, and any
substitutions for such account, any certificate of deposit or other instrument
evidencing any of the foregoing and all proceeds of and earnings on any of the
foregoing being collectively called the "Collateral Account") as security for,
and for application by the Agent (to the extent available) to, the reimbursement
of any drawing under any Letter of Credit then or thereafter made by the Agent,
and to the payment of the unpaid balance of any Loans and all other due and
unpaid Obligations (collectively, the "Collateralized Obligations"). The
Collateral Account shall be held in the name of and subject to the exclusive
dominion and control of the Agent, for the benefit of the Lenders, as pledgee
hereunder. If and when requested by the Borrower, the Agent shall invest and
reinvest funds held in the Collateral Account from time to time in Cash
Equivalents specified from time to time by the Borrower, provided that the Agent
is irrevocably authorized to sell investments held in the Collateral Account
when and as required to make payments out of the Collateral Account for
application to Collateralized Obligations due and owing from the Borrower to the
Lenders. If such funds have been deposited pursuant to Section 7.2 or 7.3, when
and if either (i) the Borrower shall have made payment of all Collateralized
Obligations then due and payable, all relevant preference or other disgorgement
periods relating to the receipt of such payments have passed, and no Letters of
Credit, Commitments, Loans, Reimbursement Obligations or other Obligations
remain outstanding or (ii) no Default or Event of Default shall be continuing
hereunder, the Agent shall repay to the Borrower any remaining amounts held in
the Collateral Account.
Section 7.5 Notice of Default. The Agent shall give notice to the Borrower
under Section 7.1(c) and (d) and 7.2 promptly upon being requested to do so by
the Majority Lenders and shall thereupon notify all the Lenders thereof.
Section 7.6 Application of Proceeds. After the occurrence of and during
the continuance of an Event of Default, any payment to the Agent hereunder or
from the proceeds of any cash collateral shall be applied as the Agent and the
Lenders shall elect in their sole discretion.
SECTION 8. CHANGE IN CIRCUMSTANCES.
Section 8.1 Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time any change in applicable law or regulation
or in the interpretation thereof makes it unlawful for any Lender to make or
continue to maintain LIBOR Loans or to give effect to its obligations as
contemplated hereby, such Lender shall promptly give written notice thereof
(which notice shall specify in reasonable detail the basis therefor) to the
Borrower and such Lender's obligations to make, continue or convert Loans into
LIBOR Loans under this Agreement shall be suspended until it is no longer
unlawful for such Lender to make or maintain LIBOR Loans. The Borrower shall
prepay on demand the outstanding principal amount of any such affected LIBOR
Loans, together with all interest accrued thereon and all other amounts then due
and payable to such Lender under this Agreement; provided, however, subject to
all of the terms and conditions of this Agreement, the Borrower may then elect
to borrow the principal amount of the affected LIBOR Loans from such Lender by
means of Base Rate Loans from such Lender that shall not be made ratably by the
Lenders but only by such affected Lender.
47
Section 8.2 Unavailability of Deposits or Inability to Ascertain LIBOR
Rate. If on or before the first day of any Interest Period for any Borrowing of
LIBOR Loans the Agent determines (after consultation with other Lenders) that,
due to changes in circumstances since the date hereof, adequate and fair means
do not exist for determining the Adjusted LIBOR Rate or such rate will not
accurately reflect the cost to the Majority Lenders of funding LIBOR Loans for
such Interest Period, the Agent shall give written notice of such determination
(which notice shall specify in reasonable detail the basis therefor) to the
Borrower and the Lenders, whereupon until the Agent notifies the Borrower and
Lenders that the circumstances giving rise to such suspension no longer exist,
the obligations of the Lenders to make, continue or convert Loans into LIBOR
Loans shall be suspended.
Section 8.3 Increased Cost and Reduced Return.
(a) If, on or after the Effective Date, the adoption of or any change
in any applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its Lending Office), including the Agent in its
capacity as the issuer of Letters of Credit, with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) subjects any Lender of that type (or its Lending Office) to
any tax, duty or other charge related to any LIBOR Loan, Letter of Credit or
Reimbursement Obligation, or its participation in any thereof, or its obligation
to advance or maintain LIBOR Loans, issue Letters of Credit or to participate
therein, or shall change the basis of taxation of payments to any Lender (or its
Lending Office) of the principal of or interest on its LIBOR Loans, Letters of
Credit or participations therein, or any other amounts due under this Agreement
related to its LIBOR Loans, Letters of Credit, Reimbursement Obligations or
participations therein, or its obligation to make LIBOR Loans, issue Letters of
Credit or acquire participations therein (except for changes in the rate of tax
on the overall net income of such Lender or its Lending Office imposed by the
jurisdiction in which such Lender's principal executive office or Lending Office
is located); or
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System)
against assets of, deposits with or for the account of, or credit extended by,
any Lender of that type (or its Lending Office) or imposes on any Lender of that
type (or its Lending Office) or on the interbank market any other condition
affecting its LIBOR Loans, its Letters of Credit, any Reimbursement Obligation
owed to it or its participation in any thereof, or its obligation to advance or
maintain LIBOR Loans, issue Letters of Credit or to participate in any thereof;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of advancing or maintaining any LIBOR Loan, issuing or
maintaining a Letter of Credit or participation therein, or to reduce the amount
of any sum received or receivable by such Lender (or its Lending Office) in
connection therewith under this Agreement or its Note(s), by an amount deemed by
such Lender to be material, then, within fifteen (15) days after demand in
reasonable detail by such Lender (with a copy to the Agent), the Borrower shall
be obligated to pay to such
48
Lender such additional amount or amounts as will compensate such Lender for such
increased cost or reduction.
(b) If, after the Effective Date, the Agent or any Lender shall have
determined that the adoption after the Effective Date of any applicable law,
rule or regulation regarding capital adequacy, or any change therein (including,
without limitation, any revision in the Final Risk-Based Capital Guidelines of
the Board of Governors of the Federal Reserve System (12 CFR Part 208, Appendix
A; ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇) or of the Office of the Comptroller of the
Currency (12 CFR Part 3, Appendix A), or in any other applicable capital
adequacy rules heretofore adopted and issued by any governmental authority), or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Agent or any Lender (or its Lending
Office) with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital, or on the capital of any corporation controlling such Lender,
as a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) by
an amount deemed by such Lender to be material, then from time to time, within
fifteen (15) days after demand in reasonable detail by such Lender (with a copy
to the Agent), the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) The Agent and each Lender that determines to seek compensation
under this Section 8.3 shall notify the Borrower and, in the case of a Lender
other than the Agent, the Agent of the circumstances that entitle the Agent or
Lender to such compensation and will designate a different Lending Office if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole judgment of such Lender, be otherwise
disadvantageous to it; provided that, the foregoing shall not in any way affect
the rights of any Lender or the obligations of the Borrower under this Section
8.3, and provided further that no Lender shall be obligated to make its LIBOR
Loans hereunder at any office located in the United States. A certificate of any
Lender claiming compensation under this Section 8.3 and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error and shall be deemed to contain a representation by
the Lender issuing such certificate that: (i) such Lender has used, in its sole
judgment, reasonable efforts to minimize said compensation, and (ii) the
increased costs and charges are common to substantially all of the comparable or
similarly situated loan customers of such Lender and are not unique to the
Borrower. In determining such amount, such Lender may use any reasonable
averaging and attribution methods.
Section 8.4 Lending Offices. The Agent and each Lender may, at its option,
elect to make its Loans hereunder at the Lending Office for each type of Loan
available hereunder or at such other of its branches, offices or Affiliates as
it may from time to time elect and designate in a written notice to the Borrower
and the Agent subject to Section 8.3(c).
Section 8.5 Discretion of Lender as to Manner of Funding. Notwithstanding
any other provision of this Agreement, each Lender shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes
49
of this Agreement all determinations hereunder shall be made as if each Lender
had actually funded and maintained each LIBOR Loan through the purchase of
deposits in the Eurodollar interbank market having a maturity corresponding to
such Loan's Interest Period and bearing an interest rate equal to LIBOR for such
Interest Period.
Section 8.6 Substitution of Lender. If (i) any Lender has demanded
compensation or given notice of its intention to demand compensation under
Section 8.3, or (ii) the Borrower is required to pay any additional amount to
any Lender under Section 2.12, the Borrower shall have the right, with the
assistance of the Agent, to seek a substitute lender or lenders reasonably
satisfactory to the Agent (which may be one or more of the Lenders) to replace
such Lender under this Agreement. The Lender to be so replaced shall cooperate
with the Borrower and substitute lender to accomplish such substitution on the
terms of Section 10.10, as applicable; provided that all the Commitments of such
Lender are replaced and such Lender is paid any amounts which it is owed
pursuant to Sections 2.12, 3.3, 7.6, 8.3 and 10.3. Any such replaced Lender
shall retain the benefits of Sections 3.3 and 10.13.
SECTION 9. THE AGENT.
Section 9.1. Appointment and Authorization of Agent and Co-Agent. Each
Lender hereby appoints Bank One as the Agent and National City Bank as the Co-
Agent under the Credit Documents and hereby authorizes the Agent and the Co-
Agent to take such action as Agent and Co-Agent on each of its behalf and to
exercise such powers under the Credit Documents as are delegated to the Agent
and the Co-Agent, respectively, by the terms thereof, together with such powers
as are reasonably incidental thereto.
Section 9.2. Rights and Powers. The Agent and the Co-Agent shall have
the same rights and powers under the Credit Documents as any other Lender and
may exercise or refrain from exercising such rights and powers as though it were
not an Agent or a Co-Agent, and the Agent and the Co-Agent and their respective
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower or any of its Subsidiaries or Affiliates as
if it were not an Agent or a Co-Agent under the Credit Documents. The term
Lender as used in all Credit Documents, unless the context otherwise clearly
requires, includes the Agent or the Co-Agent in their respective individual
capacities as a Lender. References herein to the Agent Loans, or to the amount
owing to the Agent for which an interest rate is being determined, refer to the
Agent in its individual capacity.
Section 9.3. Action by Agent and Co-Agent. The obligations of the Agent
and the Co-Agent under the Credit Documents are only those expressly set forth
therein. Without limiting the generality of the foregoing, the Agent shall not
be required to take any action concerning any Default or Event of Default,
except as expressly provided in Sections 7.2 and 7.5. Unless and until the
Majority Lenders give such direction the Agent may, except as otherwise
expressly provided herein or therein, take or refrain from taking such actions
as it deems appropriate and in the best interest of all the Lenders. In no
event, however, shall the Agent or any Co-Agent be required to take any action
in violation of applicable law or of any provision of any Credit Document, and
each of the Agent and the Co-Agent shall in all cases be fully justified in
failing or refusing to act hereunder or under any other Credit Document unless
it first receives any further assurances of its indemnification from the Lenders
that it may require, including prepayment of any related expenses and any other
50
protection it requires against any and all costs, expenses, and liabilities it
may incur in taking or continuing to take any such action. The Agent shall be
entitled to assume that no Default or Event of Default exists unless notified in
writing to the contrary by a Lender or the Borrower. In all cases in which the
Credit Documents do not require the Agent or any Co-Agent to take specific
action, the Agent and the Co-Agent shall be fully justified in using its
discretion in failing to take or in taking any action thereunder. Any
instructions of the Majority Lenders, or of any other group of Lenders called
for under specific provisions of the Credit Documents, shall be binding on all
the Lenders and holders of Notes.
Section 9.4. Consultation with Experts. Each of the Agent and the Co-
Agent may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
Section 9.5. Indemnification Provisions; Credit Decision. Neither the
Agent, the Co-Agent nor any of their directors, officers, agents, or employees
shall be liable for any action taken or not taken by them in connection with the
Credit Documents (i) with the consent or at the request of the Majority Lenders
or all the Lenders where unanimity is required or (ii) in the absence of their
own gross negligence or willful misconduct. Neither the Agent, the Co-Agent nor
any of their directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with this Agreement, any other
Credit Document or any Borrowing; (ii) the performance or observance of any of
the covenants or agreements of the Borrower or any Subsidiary contained herein
or in any other Credit Document; (iii) the satisfaction of any condition
specified in Section 4, except receipt of items required to be delivered to the
Agent; or (iv) the validity, effectiveness, genuineness, enforceability,
perfection, value, worth or collectability hereof or of any other Credit
Document or of any other documents or writing furnished in connection with any
Credit Document or of any Collateral; and the Agent and the Co-Agent make no
representation of any kind or character with respect to any such matters
mentioned in this sentence. The Agent and the Co-Agent may execute any of their
duties under any of the Credit Documents by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders or any other Person
for the default or misconduct of any such agents or attorneys-in-fact selected
with reasonable care. The Agent and the Co-Agent shall not incur any liability
by acting in reliance upon any notice, consent, certificate, other document or
statement (whether written or oral) believed by it to be genuine or to be sent
by the proper party or parties. In particular and without limiting any of the
foregoing, the Agent and the Co-Agent shall have no responsibility for
confirming the existence or worth of any Collateral or the accuracy of any
Compliance Certificate or other document or instrument received by any of them
under the Credit Documents. The Agent and the Co-Agent may treat the payee of
any Note as the holder thereof until written notice of transfer shall have been
filed with such Agent signed by such owner in form satisfactory to such agent.
Each Lender acknowledges that it has independently and without reliance on the
Agent or the Co-Agent or any other Lender obtained such information and made
such investigations and inquiries regarding the Borrower and its Subsidiaries as
it deems appropriate, and based upon such information, investigations and
inquiries, made its own credit analysis and decision to extend credit to the
Borrower in the manner set forth in the Credit Documents. It shall be the
responsibility of each Lender to keep itself informed about the creditworthiness
and business, properties, assets, liabilities, condition (financial or
otherwise) and prospects of the Borrower and
51
its Subsidiaries, the creditworthiness of all account debtors of the Borrower
and its Subsidiaries, and the Agent and the Co-Agent shall have no liability
whatsoever to any Lender for such matters. The Agent and the Co-Agent shall have
no duty to disclose to the Lenders information that is not required by any
Credit Document to be furnished by the Borrower or any Subsidiaries to such
agent at such time, but is voluntarily furnished to such agent (either in their
respective capacity as Agent or the Co-Agent or in their individual capacity).
Section 9.6. Indemnity. The Lenders shall ratably, in accordance with
their Percentages, indemnify and hold the Agent, the Co-Agent, and their
directors, officers, employees, agents and representatives harmless from and
against any liabilities, losses, costs or expenses suffered or incurred by it or
by any security trustee under any Credit Document or in connection with the
transactions contemplated thereby, regardless of when asserted or arising,
except to the extent they are promptly reimbursed for the same by the Borrower
or out of the proceeds of any Collateral and except to the extent that any event
giving rise to a claim was caused by the gross negligence or willful misconduct
of the party seeking to be indemnified. The obligations of the Lenders under
this Section 9.6 shall survive termination of this Agreement.
Section 9.7. Resignation of Agent and Successor Agent. The Agent and any
Co-Agent may resign at any time upon at least thirty (30) days' prior written
notice to the Lenders and the Borrower. Upon any such resignation of the Agent
or any Co-Agent, the Majority Lenders, with the consent of the Borrower, which
consent shall not be unreasonably withheld, shall have the right to appoint a
successor Agent or Co-Agent, as the case may be. If no successor Agent or Co-
Agent, as the case may be, shall have been so appointed by the Majority Lenders
and shall have accepted such appointment within thirty (30) days after the
retiring Agent's or Co-Agent's giving of notice of resignation, then the
retiring Agent or Co-Agent, as the case may be, may, on behalf of the Lenders,
appoint a successor Agent or Co-Agent, as the case may be, which shall be any
Lender hereunder or any commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $250,000,000. Upon the acceptance of its appointment as the
Agent or any Co-Agent hereunder, such successor Agent or Co-Agent, as the case
may be, shall thereupon succeed to and become vested with all the rights and
duties of the retiring Agent or Co-Agent, as the case may be, under the Credit
Documents, and the retiring Agent or any Co-Agent shall be discharged from its
duties and obligations thereunder. After any retiring Agent's or Co-Agent's
resignation hereunder as Agent or Co-Agent, as the case may be, the provisions
of this Section 9 and all protective provisions of the other Credit Documents
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent or Co-Agent, as the case may be.
Section 9.7. Co-Agent. The Lender identified on the facing page or
signature pages of this Agreement as Co-Agent shall have no rights, powers,
obligations, liabilities, responsibilities or duties under this Agreement other
than those applicable to all Lenders as such. Without limiting the foregoing,
such Lender shall not have and shall not be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied,
and will not rely, on such Lender in deciding to enter into this Agreement or in
taking any action hereunder.
SECTION 10. MISCELLANEOUS.
52
Section 10.1 No Waiver of Rights. No delay or failure on the part of the
Agent or any of the Lenders, or on the part of the holder or holders of the
Notes, in the exercise of any power, right or remedy under any Credit Document
shall operate as a waiver thereof or as an acquiescence in any default, nor
shall any single or partial exercise thereof preclude any other or further
exercise of any other power, right or remedy. To the fullest extent permitted
by applicable law, the powers, rights and remedies under the Credit Documents of
the Lenders and the holder or holders of the Notes are cumulative to, and not
exclusive of, any rights or remedies any of them would otherwise have.
Section 10.2 Non-Business Day. If any payment of principal or interest on
any Loan, Reimbursement Obligation or of any other Obligation shall fall due on
a day which is not a Business Day, interest or fees (as applicable) at the rate,
if any, for such Loan, such Reimbursement Obligation or such other Obligation or
Agent Obligation bears for the period prior to maturity shall continue to accrue
in the manner set forth herein on such Obligation from the stated due date
thereof to and including the next succeeding Business Day on which the same
shall be payable.
Section 10.3 Documentary Taxes. The Borrower agrees that it will pay any
documentary, stamp or similar taxes payable with respect to any Credit Document,
including interest and penalties, in the event any such taxes are assessed
irrespective of when such assessment is made and regardless whether any credit
is then in use or available hereunder.
Section 10.4 Survival of Representations. All representations and
warranties made herein or in certificates given pursuant hereto shall survive
the execution and delivery of this Agreement and the other Credit Documents, and
shall continue in full force and effect with respect to the date as of which
they were made as long as the Borrower has any Obligation hereunder or any
Commitment hereunder is in effect.
Section 10.5 Survival of Indemnities. All indemnities and all other
provisions relative to reimbursement to the Agent and the Lenders of amounts
sufficient to protect the yield of the Lenders or the Agent with respect to the
Loans or the Agent Loans, as applicable, shall survive the termination of this
Agreement and the other Credit Documents and the payment of the Loans and all
other Obligations or Agent Obligations, as applicable, for a period of one (1)
year.
Section 10.6 Setoff. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of, and throughout the continuance of, any Default or Event of
Default, the Agent and each of the Lenders and each subsequent holder of any of
the Notes is hereby authorized by the Borrower at any time or from time to time,
without notice to the Borrower, to any Subsidiary of the Borrower or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts, and in whatever currency
denominated) and any other Indebtedness at any time held or owing by the Agent
or the Lenders or that subsequent holder to or for the credit or the account of
the Borrower, whether or not matured, against and on account of the obligations
and liabilities of the Borrower to the Agent or the Lenders or that subsequent
holder under the Credit Documents, including, but not limited to, all claims of
any nature or description arising out of or connected with the Credit Documents,
irrespective of whether or not (i) the Agent or any of the Lenders or that
subsequent holder shall have made any demand
53
hereunder or (ii) the principal of or the interest on the Loans, the Notes and
other amounts due hereunder shall have become due and payable hereunder and
although said obligations and liabilities, or any of them, may be contingent or
unmatured. The Agent or such Lender, as applicable, shall promptly give the
Borrower notice of any such setoff, provided that any failure to give such
notice shall not impact the validity of any such setoff or give rise to any
liability of the Agent or any Lender as a result of any such failure. The Agent
and the Lenders agree, if there shall be any other Lenders pursuant to Section
10.10(b), that if a Lender receives and retains any payment, whether by setoff
or application of deposit balances or otherwise, on any of the Loans or L/C
Obligations in excess of its ratable share of payments on all such Obligations
then owed to the Lenders hereunder, then such Lender shall purchase for cash at
face value, but without recourse, ratably from each of the other Lenders such
amount of the Loans or L/C Obligations, or participations therein, held by such
Lender (or interest therein) as shall be necessary to cause such Lender to share
such excess payment ratably with all the other Lenders; provided, however, that
if any such purchase is made by any Lender, and if such excess payment or part
thereof is thereafter recovered from such purchasing Lender, the related
purchases from the other Lenders shall be rescinded ratably and the purchase
price restored as to the portion of such excess payment so recovered, with
interest pro rata, to the extent the purchasing Lender is required to pay
interest on the amount restored.
Section 10.7 Notices. Except as otherwise specified herein, all notices
under the Credit Documents shall be in writing (including cable, telecopy or
telex) and shall be given to a party hereunder at its address, telecopier number
or telex numbers set forth below or such other address, telecopier number or
telex as such party may hereafter specify by notice to the Lenders or the
Borrower, as applicable, given by courier, by United States certified or
registered mail, by telegram or by other telecommunication device capable of
creating a written record of such notice and its receipt. Notices under the
Credit Documents shall be addressed to the Agent and the Lenders as set forth on
the signature pages hereto and to the Borrower as follows:
Quanta Services, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
Quanta Services, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Each such notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 10.7 and a confirmation of receipt of such telecopy
has been received by the sender, (ii) if given by telex, when such telex is
transmitted to the telex number specified in this Section 10.7 and the answer
back is
54
received by sender, (iii) if given by courier, when delivered, (iv) if given by
mail, five (5) days after such communication is deposited in the mail,
registered with return receipt requested, addressed as aforesaid or (v) if given
by any other means, when delivered at the addresses specified in this Section
10.7; provided that any notice given pursuant to Section 2 shall be effective
only upon receipt and, provided further, that any notice that but for this
provision would be effective after the close of business on a Business Day or on
a day that is not a Business Day shall be effective at the opening of business
on the next Business Day.
Section 10.8 Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties on different counterpart signature
pages, each of which when executed shall be deemed an original but all such
counterparts taken together shall constitute one and the same Agreement.
Section 10.9 Successors and Assigns. This Agreement shall be binding upon
the Borrower, the Agent, the Co-Agent and the Lenders and their respective
successors and assigns, and shall inure to the benefit of the Borrower, the
Agent, the Co-Agent and the Lenders and their respective successors and assigns,
including any subsequent holder of the Notes. The Borrower may not assign any of
its rights or obligations under any Credit Document without the consent of the
Agent and all of the Lenders.
Section 10.10 Sales and Transfers of Borrowings and Notes; Participations
in Borrowings and Notes.
(a) Any Lender may at any time sell to one or more banks or other
financial institutions having a combined capital and surplus of at least
$250,000,000 ("Participants"), participating interests in any Borrowing owing to
such Lender, any Note held by such Lender, any Commitment of such Lender or any
other interest of such Lender hereunder, provided that no Lender may sell any
participating interests in any such Borrowing, Note, Commitment or other
interest hereunder without also selling to such Participant the appropriate pro
rata share of its Borrowings, Notes, Commitments and other interests hereunder,
and provided further that no Lender shall transfer, grant or assign any
participation under which the Participant shall have rights to vote upon or
consent to any matter to be decided by the Lender or the Majority Lenders
hereunder or under any Credit Document or approve any amendment to or waiver of
this Agreement or any other Credit Document except to the extent such amendment
or waiver would (i) increase the amount of such Lender's Commitment and such
increase would affect such Participant, (ii) reduce the principal of, or
interest on, any of such Lender's Borrowings, or any fees or other amounts
payable to such Lender hereunder and such reduction would affect such
Participant, (iii) postpone any date fixed for any scheduled payment of
principal of, or interest on, any of such Lender's Borrowings, or any fees or
other amounts payable to such Lender hereunder, or (iv) release any collateral
for any Obligation (including, without limitation, any Subsidiary Guaranty),
except as otherwise specifically provided in any Credit Document. In the event
of any such sale by a Lender of participating interests to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement and the Borrower and the Agent shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. The Borrower agrees that if
amounts outstanding under this Agreement and the Notes are due and unpaid, or
shall have been
55
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of setoff in respect
of its participating interest in amounts owing under this Agreement and any Note
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement or any Note, provided that such
right of setoff shall be subject to the obligation of such Participant to share
with the Lenders, and the Lenders agree to share with such Participant, as
provided in Section 10.6. The Borrower also agrees that each Participant shall
be entitled to the benefits of Sections 2.12 and 8.3 with respect to its
participation in the Commitments and the Borrowings outstanding from time to
time, provided that no Participant shall be entitled to receive any greater
amount pursuant to such Sections than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred.
(b) Any Lender may at any time sell to any Lender or any Affiliate
thereof, and, with the consent of the Agent and the Borrower (which shall not be
unreasonably withheld or delayed), to one or more banks or other financial
institutions having a combined capital and surplus of at least $250,000,000 (a
"Purchasing Lender"), all or any part of its rights and obligations under this
Agreement and the Notes, pursuant to an Assignment Agreement in the form
attached as Exhibit 10.10 hereto, executed by such Purchasing Lender and such
transferor Lender (and, in the case of a Purchasing Lender which is not then a
Lender or an Affiliate thereof, by the Borrower and the Agent) and delivered to
the Agent; provided that, each such sale to a Purchasing Lender shall be in an
amount of $5,000,000 or more, or if in a lesser amount, such sale shall be of
all of the Lender's rights and obligations under this Agreement and all of the
Notes payable to it to one eligible assignee. Notwithstanding the above, any
Lender may sell to one or more eligible assignees all or any part of their
rights and obligations under this Agreement and the Notes with only the consent
of the Agent (which shall not be unreasonably withheld) if an Event of Default
shall have occurred and be continuing. No Lender may sell any Loans to a
Purchasing Lender without also selling to such Purchasing Lender the appropriate
pro rata share of its Borrowings, Notes, Commitments and other interests
hereunder, including participations in Letters of Credit hereunder; provided
that, the Agent shall not be required to sell its Agent Loans at such time as it
may sell any other portion of its Borrowings, Notes, Commitments and other
interests hereunder. Upon such execution, delivery, acceptance and recording,
from and after the effective date of the transfer determined pursuant to such
Assignment Agreement (x) the Purchasing Lender thereunder shall be a party
hereto and, to the extent provided in such Assignment Agreement, have the rights
and obligations of a Lender hereunder with a Commitment as set forth therein and
(y) the transferor Lender thereunder shall, to the extent provided in such
Assignment Agreement, be released from its obligations under this Agreement
(and, in the case of an Assignment Agreement covering all or the remaining
portion of a transferor Lender's rights and obligations under this Agreement,
such transferor Lender shall cease to be a party hereto). Such Assignment
Agreement shall be deemed to amend this Agreement to the extent, and only to the
extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of Commitments and Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement, the Notes and the other Credit
Documents. On or prior to the effective date of the transfer determined
pursuant to such Assignment Agreement, the Borrower, at its own expense, shall
execute and deliver to the Agent in exchange for any surrendered Notes, new
Notes as appropriate to the order of such Purchasing Lender in an amount equal
to the Commitments assumed by it pursuant to such Assignment Agreement, and, if
the transferor Lender has retained a Commitment or Borrowing hereunder, new
Notes to the order of the transferor Lender in an amount equal to the
56
Commitments or Borrowings retained by it hereunder. Such new Notes shall be
dated the Initial Borrowing Date and shall otherwise be in the form of the Notes
replaced thereby. The Notes surrendered by the transferor Lender shall be
returned by the Agent to the Borrower marked "cancelled."
(c) Upon its receipt of an Assignment Agreement executed by a
transferor Lender, a Purchasing Lender and the Agent (and, in the case of a
Purchasing Lender that is not then a Lender or an Affiliate thereof, by the
Borrower), together with payment to the Agent hereunder of a registration and
processing fee of $3,500, the Agent shall (i) promptly accept such Assignment
Agreement, and (ii) on the effective date of the transfer determined pursuant
thereto give notice of such acceptance and recordation to the Lenders and the
Borrower.
(d) The provisions of the foregoing clauses (b) and (c) shall not
apply to or restrict, or require the consent of or any notice to any Person to
effectuate, the pledge or assignment by any Lender of its rights under this
Agreement and its Notes to any Federal Reserve Bank.
(e) If, pursuant to this Section 10.10 any interest in this Agreement
or any Note is transferred to any transferee which is organized under the laws
of any jurisdiction other than the United States of America or any State
thereof, the transferor Lender shall cause such transferee, concurrently with
the effectiveness of such transfer, (i) to represent to the transferor Lender
(for the benefit of the transferor Lender, the Agent and the Borrower) that
under applicable law and treaties no taxes will be required to be withheld by
the Agent, the Borrower or the transferor Lender with respect to any payments to
be made to such transferee in respect of the Loans or the L/C Obligations, (ii)
to furnish to the transferor Lender (and, in the case of any Purchasing Lender,
the Agent and the Borrower) either U.S. Internal Revenue Service Form 4224 or
U.S. Internal Revenue Service Form 1001 or such successor forms as shall be
adopted from time to time by the relevant United States taxing authorities
(wherein such transferee claims entitlement to complete exemption from U.S.
federal withholding tax on all interest payments hereunder), and (iii) to agree
(for the benefit of the transferor Lender, the Agent and the Borrower) to
provide the transferor Lender (and, in the case of any Purchasing Lender, the
Agent and the Borrower) a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments dully
executed and completed by such transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.
Section 10.11 Amendments. Any provision of the Credit Documents may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by (a) the Borrower, (b) the Majority Lenders (in the case of a consent
or waiver, the Borrower may rely on the consent or waiver of the Agent on behalf
of the Majority Lenders, the Agent agreeing to obtain the necessary consents or
waivers from the Majority Lenders before providing such consent or waiver), and
(c) if the rights or duties of the Agent are affected thereby, the Agent;
provided that:
(i) no amendment or waiver shall (A) increase the Commitment Amount
without the consent of all Lenders or increase any Commitment of any Lender
without the consent of such Lender, (B) postpone the Maturity Date without the
consent of all Lenders (and the Agent in the case of Agent Loans) or reduce the
amount of or postpone the date for any scheduled payment of any principal of or
interest on any Loan, Reimbursement Obligation or of any fee or any other
57
amounts payable hereunder without the consent of each Lender owed such
Obligation or (C) release any Subsidiary Guaranty or any Collateral without the
consent of all the Lenders and the Agent; and
(ii) no amendment or waiver shall, unless signed by each Lender,
change the provisions of this Section 10.11 or the definition of Majority
Lenders or affect the number of Lenders required to take any action under any
other provision of the Credit Documents.
Section 10.12 Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
Section 10.13 Legal Fees, Other Costs and Indemnification. The Borrower,
upon demand by the Agent, the Co-Agent or any of the Lenders, agrees to pay the
reasonable fees and disbursements of legal counsel to the Agent, the Co-Agent or
any Lender in connection with the preparation and execution of the Credit
Documents, any amendment, waiver or consent related thereto, whether or not the
transactions contemplated therein are consummated, any Default or Event of
Default by the Borrower hereunder and any enforcement (including, without
limitation, all workout and bankruptcy proceedings) of any of the Credit
Documents or collection of any Obligations; provided that the Borrower shall
only have to pay the reasonable fees and disbursements of one law firm in
connection therewith unless the Agent, the Co-Agent, any Lender or their counsel
is of the reasonable opinion that representation by one law firm would not be
feasible or that a conflict of interest would exist. The Borrower further agrees
to indemnify the Agent, the Co-Agent and each Lender and its respective
directors, officers, shareholders, employees and attorneys (collectively, the
"Indemnified Parties"), against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all
reasonable attorneys' fees and other reasonable expenses of litigation or
preparation therefor, whether or not the Indemnified Party is a party thereto)
which any of them may pay or incur arising out of or relating to (a) any Credit
Document, the Loans, the Letters of Credit or the application or proposed
application by the Borrower of the proceeds of any Loan, REGARDLESS OF WHETHER
SUCH CLAIMS OR ACTIONS ARE FOUNDED IN WHOLE OR IN PART UPON THE ALLEGED SIMPLE
OR CONTRIBUTORY NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES AND/OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES OR ATTORNEYS, (b) any
investigation of any third party or any governmental authority involving the
Agent, the Co-Agent or any Lender and related to any use made or proposed to be
made by the Borrower of the proceeds of the Borrowings, or any transaction
financed or to be financed in whole or in part, directly or indirectly with the
proceeds of any Borrowing, and (c) any investigation of any third party or any
governmental authority, litigation or proceeding, related to any environmental
cleanup, audit, compliance or other matter relating to any Environmental Law or
the presence of any Hazardous Material (including, without limitation, any
losses, liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any Environmental Law) with respect to the Borrower or any of its
Subsidiaries, regardless of whether caused by, or within the control of, the
Borrower or any of its Subsidiaries; provided, however, that the Borrower shall
not be obligated to indemnify any Indemnified Party for any of the foregoing
arising out of (i) such Indemnified Party's gross negligence or willful
misconduct, (ii) the Agent's failure to pay under any Letter of Credit after the
presentation to it of a request required to be paid under applicable law, (iii)
the Agent's, the Co-Agent's or any Lender's breach of any material provision of
any Credit Document, or any dispute solely among the Agent, the Co-Agent, the
Lenders or any of same. The Borrower, upon demand by the Indemnified Party at
any time, shall reimburse the Indemnified Party for any legal or other
58
expenses incurred in connection with investigating or defending against any of
the foregoing except if the same is excluded from indemnification pursuant to
the provisions of the foregoing sentence.
Section 10.14 Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial.
(a) The Credit Agreement, and the other Credit Documents, and the
rights and duties of the parties thereto, shall be construed in accordance with
and governed by the internal laws of the State of Texas.
(b) THE AGENT, THE CO-AGENT, EACH LENDER AND THE BORROWER HEREBY
WAIVES ITS RIGHT TO RESOLVE DISPUTES, CLAIMS, AND CONTROVERSIES ARISING FROM THE
CREDIT AGREEMENT, ANY OTHER CREDIT DOCUMENT OR ANY MATTER IN CONNECTION
THEREWITH, INCLUDING, WITHOUT LIMITATION, CONTRACT DISPUTES AND TORT CLAIMS,
THROUGH ANY COURT PROCEEDING OR LITIGATION AND ACKNOWLEDGES THAT ALL SUCH
DISPUTES, CLAIMS AND CONTROVERSIES SHALL BE RESOLVED PURSUANT TO THIS SECTION,
EXCEPT THAT EQUITABLE RELIEF AND CERTAIN OTHER RIGHTS AND REMEDIES SET FORTH
BELOW MAY BE SOUGHT FROM ANY COURT OF COMPETENT JURISDICTION. EACH PARTY
REPRESENTS TO THE OTHER PARTIES THAT THIS WAIVER IS MADE KNOWINGLY AND
VOLUNTARILY AFTER CONSULTATION WITH AND UPON ADVICE OF ITS COUNSEL AND IS A
MATERIAL PART OF THIS AGREEMENT. ALL SUCH DISPUTES, CLAIMS AND CONTROVERSIES
SHALL BE RESOLVED BY BINDING ARBITRATION PURSUANT TO THE COMMERCIAL RULES OF THE
AMERICAN ARBITRATION ASSOCIATION ("AAA"). Any arbitration proceeding held
pursuant to this arbitration provision shall be conducted in Houston, Texas or
at any other place selected by mutual agreement of the parties. No act to take
or dispose of any collateral shall constitute a waiver of this arbitration
agreement or be prohibited by this arbitration agreement. This arbitration
provision shall not limit the right of any party during any dispute, claim or
controversy to seek, use, and employ ancillary, or preliminary rights and/or
remedies, judicial or otherwise, for the purposes of realizing upon, preserving,
protecting, foreclosing upon or proceeding under forcible entry and detainer for
possession of, any real or personal property, and any such action shall not be
deemed an election of remedies. Such remedies include, without limitation,
obtaining injunctive relief or a temporary restraining order, invoking a power
of sale under any deed of trust or mortgage, obtaining a writ of attachment or
imposition of a receivership, or exercising any rights relating to personal
property, including exercising the right of set-off, or taking or disposing of
such property with or without judicial process pursuant to the Uniform
Commercial Code. Any disputes, claims or controversies concerning the lawfulness
or reasonableness of an act, or exercise of any right or remedy concerning any
collateral, including any claim to rescind, reform, or otherwise modify any
agreement relating to the collateral, shall also be arbitrated; provided,
however that no arbitrator shall have the right or the power to enjoin or
restrain any act of either party. Judgment upon any award rendered by any
arbitrator may be entered in any court having jurisdiction. The statute of
limitations, estoppel, waiver, laches and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of any action for these purposes. The federal
arbitration act (Title 9 of the United States Code) shall apply to the
construction, interpretation, and enforcement of this arbitration provision.
59
(c) To the fullest extent permitted by applicable law, each party
hereto agrees that any court proceeding or litigation permitted by Section
10.14(b) may be brought and maintained in the courts of the State of Texas
sitting in ▇▇▇▇▇▇ County or the United States District Court for the Southern
District of Texas. To the fullest extent permitted by applicable law, the
Borrower hereby expressly and irrevocably submits to the jurisdiction of the
courts of the State of Texas and the United States District Court for the
Southern District of Texas for the purpose of any such litigation as set forth
above and irrevocably agrees to be bound by any judgment rendered thereby in
connection with such litigation. To the fullest extent permitted by applicable
law, the Borrower further irrevocably consents to the service of process, by
registered mail, postage prepaid, or by personal service within or without the
state of Texas. To the fullest extent permitted by applicable law, the Borrower
hereby expressly and irrevocably waives any objection which it may have or
hereafter may have to the laying of venue of any such litigation brought in any
such court referred to above and any claim that any such litigation has been
brought in an inconvenient forum. To the extent that the Borrower has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to itself or its
property, the Borrower hereby irrevocably waives to the fullest extent permitted
by applicable law, such immunity in respect of its obligations under the Credit
Agreement and the other Credit Documents.
(d) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY
HERETO VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY (BY ITS
ACCEPTANCE HEREOF) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING PERMITTED BY SECTION 10.14(B) AND WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF THE CREDIT AGREEMENT, ANY OTHER CREDIT DOCUMENT, ANY
OTHER RELATED DOCUMENT OR ANY RELATIONSHIP BETWEEN THE AGENT, ANY LENDER, THE
BORROWER AND/OR ANY GUARANTOR, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR
DISPUTE SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A
MATERIAL INDUCEMENT TO THE LENDERS TO PROVIDE THE LOANS AND THE LETTERS OF
CREDIT."
Section 10.15 Confidentiality. The Agent, the Co-Agent and each Lender
agrees it will not disclose without the Borrower's consent (other than to its
employees, auditors, counsel or other professional advisors or to its Affiliates
on a need to know basis and provided that such Persons agree to be bound by this
Section 10.15) any information concerning the Borrower or any of its
Subsidiaries furnished pursuant to any of the Credit Documents; provided that
the Agent, the Co-Agent and any Lender may disclose any such information (i)
that has become generally available to the public other than through the Agent,
the Co-Agent or the Lenders or that was previously known to the Agent, the Co-
Agent or such Lender or comes from a source other than the Borrower or any of
its Subsidiaries, (ii) if required or appropriate in any examination or audit or
any report, statement or testimony submitted to any federal or state regulatory
body having or claiming to have jurisdiction over the Agent, the Co-Agent or
such Lender, (iii) if required or appropriate in response to any summons or
subpoena or in connection with any litigation, (iv) in order to comply with any
law, order, regulation or ruling applicable to Agent, the Co-Agent or such
Lender, (v) to any prospective or actual permitted transferee in connection with
any contemplated or actual permitted transfer of
60
any interest in the Note by such Lender (but only after the Borrower's
conditional approval has been obtained to such transfer to the extent any such
approval is required hereunder), and (vi) in connection with the exercise of any
remedies by the Agent, the Co-Agent or any Lender; provided that such actual or
prospective transferee executes an agreement with the applicable Lender
containing provisions substantially identical to those contained in this Section
10.15 prior to such transferee's receipt of any such information.
Section 10.16 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 10.17 Change in Accounting Principles or Tax Laws. If (i) any
change in accounting principles from those used in the preparation of the
financial statements of the Borrower referred to in Section 5.9 is hereafter
occasioned by the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accounts (or successors thereto or
agencies with similar functions) and such change materially affects the
calculation of any component of any financial covenant, standard or term found
in this Agreement, or (ii) there is a material change in federal or foreign tax
laws which materially affects the Borrower's ability to comply with the
financial covenants, standards or terms found in this Agreement, the Borrower,
the Agent and the Lenders agree to enter into negotiations in order to amend
such provisions so as to equitably reflect such changes with the desired result
that the criteria for evaluating the Borrower's and its Subsidiaries'
consolidated financial condition shall be the same after such changes as if such
changes had not been made. Unless and until such provisions have been so
amended, the provisions of this Agreement shall govern.
Section 10.18 Loans Under Prior Credit Agreement. On the Initial Borrowing
Date:
(a) The Borrower shall pay all accrued and unpaid commitment fees
outstanding under the Prior Credit Agreement;
(b) each Revolving Loan under the Prior Credit Agreement shall be
deemed to be repaid with the proceeds of a new LIBOR Loan(s) and each Agent Loan
under the Prior Credit Agreement shall be deemed to be repaid with the proceeds
of a new Base Rate Loan;
(c) each Letter of Credit outstanding under the Prior Credit
Agreement shall be deemed to have been issued under this Agreement without
payment of any further fronting fee (but subject to the other fees set forth in
Section 3.1(b)); and
(d) the Prior Credit Agreement and the commitments thereunder
shall be superseded by this Agreement and such commitments shall terminate.
Section 10.19 Effectiveness. This Agreement shall become effective on the
date (the "Effective Date") on which the Borrower, the Agent, the Co-Agent and
each Lender has signed and delivered to the Agent a counterparty signature page
hereto or, in the case of a Lender, the Agent has received telex or facsimile
notice that such a counterpart has been signed and mailed to the Agent.
61
Section 10.20 Notice. The Credit Documents constitute the entire
understanding among the Borrower, the Agent, the Co-Agent and the Lenders and
supersede all earlier or contemporaneous agreements, whether written or oral,
concerning the subject matter of the Credit Documents. THIS WRITTEN AGREEMENT
TOGETHER WITH THE OTHER CREDIT DOCUMENTS REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.
BORROWER:
QUANTA SERVICES, INC.
By:
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
62
LENDERS:
Percentage of Commitment: 80.0% BANK ONE, TEXAS, National Association, as
Administrative Agent and as a Lender
By:
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: Vice President
Bank One, Texas, National Association
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telex No.: 6734165
Answerback: BONE DAL
Payment Instructions:
---------------------
Name of Credit Bank: Bank ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇: Houston, Texas
Method of Payment: ABA #▇▇▇▇▇▇▇▇▇
For Credit To: Bank One, Texas, National Association
Account No.: 0749905618
Reference: Quanta Services, Inc.
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Lending Office:
---------------
Bank One, Texas, National Association
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
63
Percentage of Commitment: 20.0% NATIONAL CITY BANK, as Co-Agent and as a
Lender
By:
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address for Notices:
--------------------
National City Bank
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Payment Instructions:
---------------------
Name of Credit Bank: National City Bank
City, State: Columbus, Ohio
Method of Payment: ABA #▇▇▇▇▇▇▇▇▇
For Credit To: National City Bank
Account No.: 151804
Reference: Quanta Services, Inc.
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
---------------
National City Bank
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
64
EXHIBIT 2.2A
FORM OF BORROWING REQUEST
65
EXHIBIT 2.2B
FORM OF APPLICATION
66
EXHIBIT 2.11
FORM OF NOTE
67
EXHIBIT 4.1A
FORM OF SUBSIDIARY GUARANTY
68
EXHIBIT 4.1B
FORM OF STOCK PLEDGE AGREEMENT
69
EXHIBIT 4.1C
FORM OF FINANCIAL CONDITION CERTIFICATE
70
EXHIBIT 6.6
FORM OF COMPLIANCE CERTIFICATE
71
EXHIBIT 10.10
FORM OF ASSIGNMENT AGREEMENT
72
SCHEDULE 5.1
LIST OF SUBSIDIARIES
A. Quanta Services, Inc.
B. PAR Electrical Contractors, Inc.
C. Potelco, Inc.
D. Trans Tech Electric, Inc.
E. Union Power Construction Co.
F. Underground Acquisition, Inc.
G. TNS Acquisition, Inc.
▇. ▇▇▇▇▇▇ Acquisition, Inc.
I. Environmental Professional Associates Ltd.
▇. ▇▇▇▇▇ Acquisition DE, Inc.
K. NorAm Telecommunications Inc.
L. NPCC Acquisition, Inc.
▇. ▇▇▇▇▇▇ State Utility Co.
▇. ▇▇▇▇▇▇ Acquisition, Inc.
▇. ▇▇▇▇▇ Construction Co.
P. Advanced Communications Technologies, Inc.
Q. RT Telecommunications, Inc.
R. Span-Con of Deerwood, Inc.
S. W.H.O.M. Corporation
T. Coast to Coast LLC
U. Quanta Delaware, Inc.
V. QSI, Inc.
W. Quanta Services Management Partnership, L.P.
X. Quanta Services of Canada, Inc.
▇. ▇▇▇▇▇▇▇ Technologies, Inc.
73
SCHEDULE 5.4
LIST OF LITIGATION
None
74
SCHEDULE 5.12
LIST OF OUTSTANDING TAX ISSUES
Potelco, Inc., one of the Founding Companies, received a tax deficiency notice
for the year ended 4/30/94. Sole issue is the amount of deductible compensation
paid to an officer. Potelco has formally appealed the deficiency and has no
reason to believe that it will not prevail at the appeal hearing. No hearing
date has been set. The amount of tax and interest assessed is approximately
$200,000. The former owner of Potelco, has indemnified Quanta Services, Inc.
for any liability incurred by Quanta as a result of this deficiency notice.
75
SCHEDULE 5.20
LIST OF EXISTING LIENS AND INDEBTEDNESS
76
SCHEDULE 6.13
LIST OF PERMITTED LIENS AND INDEBTEDNESS
77
SCHEDULE 6.14
LIST OF EXISTING INDEBTEDNESS
78
[AMENDED AND RESTATED] GUARANTY
THIS [AMENDED AND RESTATED] GUARANTY (this "Guaranty") dated as of
_____________, 199__, is from _____________________________, a ___________
corporation (the "Guarantor"), to the Lenders referred to hereinafter and Bank
One, Texas, National Association, as Agent for the Lenders (in such capacity the
"Agent").
RECITALS:
[A. Quanta Services, Inc. (the "Borrower"), a Delaware corporation, the
various financial institutions as are or may from time to time become parties
thereto (collectively, the "Lenders") and the Agent have entered into that
certain Amended and Restated Credit Agreement dated as of August 3, 1998
(herein, as the same may be amended, modified, supplemented, extended,
rearranged, and/or restated from time to time, called the "Credit Agreement"),
pursuant to which, upon the terms and conditions therein set forth, (i) the
Lenders have agreed to make Loans to the Borrower, which Revolving Loans are
evidenced by Notes of the Borrower dated August 3, 1998, in the aggregate
original principal amount of $125,000,000, payable the order of the Lenders,
respectively, and the Agent may, in its sole discretion, make Agent Loans to the
Borrower, in a principal amount of up to $5,000,000 pursuant to its Note
(herein, as amended, extended, modified, rearranged and/or supplemented, from
time to time together with any promissory notes given in extension, replacement,
rearrangement, modification and/or substitution thereof or therefor,
collectively called the "Notes") and (ii) the Agent on behalf of the Lenders has
agreed to issue Letters of Credit for the account of Borrower. Capitalized
terms used herein without definition shall have the meanings assigned in the
Credit Agreement.]
[A. Quanta Services, Inc. (the "Borrower"), a Delaware corporation, the
various financial institutions as are parties thereto (collectively, the
"Lenders") and the Agent have entered into that certain Credit Agreement dated
as of April 9, 1998 (the "Prior Credit Agreement") pursuant to which, upon the
terms and conditions set forth therein, the Lenders agreed to make loans to the
Borrower, and the Agent, on behalf of the Lenders, agreed to issue letters of
credit for the account of the Borrower in the aggregate principal amount of
$50,000,000, and the Guarantor has executed and delivered that certain Guaranty
in connection therewith dated as of ____________, 1998 (the "Prior Guaranty").
B. The parties to the Prior Credit Agreement have entered into that
certain Amended and Restated Credit Agreement dated as of August 3, 1998, which
amends and restates in its entirety the Prior Credit Agreement (herein, as the
same may be amended, modified, supplemented, extended, rearranged and/or
restated from time to time, called the "Credit Agreement"), pursuant to which,
upon the terms and conditions therein set forth, (i) the Lenders have agreed to
make Loans to the Borrower, which Loans are evidenced by Notes of the Borrower
dated August 3, 1998, in the aggregate original principal amount of
$125,000,000, payable the order of the Lenders, respectively, and the Agent may,
in its sole discretion, make Agent Loans to the Borrower, in an aggregate
principal amount of up to $5,000,000 pursuant to its Note (herein, as amended,
extended, modified, rearranged and/or supplemented from time to time, together
with any promissory notes given in
extension, replacement, rearrangement, modification and/or substitution thereof
or therefor, collectively called the "Notes") and (ii) the Agent on behalf of
the Lenders has agreed to issue Letters of Credit for the account of Borrower.
Capitalized terms used herein without definition shall have the meanings
assigned in the Credit Agreement.]
[B.][C.] As a condition precedent to the making of the Loans and the
issuance of the Letters of Credit under the Credit Agreement, the Guarantor is
required to execute and deliver this Guaranty [which amends and restates in its
entirety the Prior Guaranty.]
[C.][D.] The Guarantor has duly authorized the execution, delivery and
performance of this Guaranty.
[D.][E.] It is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Loans made from time to time to the Borrower and the issuance
of Letters of Credit by the Agent pursuant to the Credit Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Agent
and the Lenders to make Loans to the Borrower and to issue or participate in
Letters of Credit pursuant to the Credit Agreement, the Guarantor agrees, for
the benefit of the Agent and each Lender, as follows:
ARTICLE I
GUARANTY
1.1 Guaranty. For value received, and in consideration of any loan or
other financial accommodation, heretofore or hereafter at any time made or
granted to the Borrower by the Agent and the Lenders, the Guarantor hereby
unconditionally guarantees the full and prompt payment when due, whether by
acceleration or otherwise, and at all times thereafter, of all obligations of
the Borrower to the Agent and each Lender and their successors and assigns,
howsoever created, arising or evidenced, whether direct or indirect, primary or
secondary, absolute or contingent, joint or several, or now or hereafter
existing or due or to become due, including, without limitation, all such
amounts which would become due but for the operation of the automatic stay under
Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. (S) 362(a), and
the operation of Sections 502(b) and 506(b) of such Bankruptcy Code, 11 U.S.C.
(S) 502(b) and (S) 506(b), under and in connection with the Credit Agreement,
including, without limitation under (a) the Notes, and (b) the Letters of
Credit, including any Reimbursement Obligations with respect thereto (all such
obligations being hereinafter collectively called the "Liabilities"), and the
Guarantor further agrees to pay all reasonable expenses (including reasonable
attorneys' fees and legal expenses) paid or incurred by the Agent and any Lender
in endeavoring to collect the Liabilities, or any part thereof, and in enforcing
this Guaranty. Anything herein contained to the contrary notwithstanding, the
amount of this Guaranty, however, shall not exceed the maximum amount which the
Guarantor could pay under this Guaranty without
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having such payment set aside as a fraudulent transfer or conveyance or similar
action under such Bankruptcy Code or any applicable state law.
1.2 Bankruptcy. The Guarantor hereby agrees that, in the event of the
dissolution or insolvency of the Borrower or the Guarantor, or the inability or
failure of the Borrower or the Guarantor to pay its debts as they become due, or
an assignment by the Borrower or the Guarantor for the benefit of creditors, or
the commencement of any case or proceeding in respect of the Borrower or the
Guarantor under any bankruptcy, insolvency or similar laws, and if such event
shall occur at a time when any of the Liabilities may not then be due and
payable, the Guarantor will pay to the Lender forthwith the full amount which
would be payable hereunder by the Guarantor as if all Liabilities were then due
and payable.
1.3 Setoff. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of, and throughout the continuance of, any Event of Default under the
Credit Agreement, the Agent and each Lender and each subsequent holder of any of
the Notes is hereby authorized by the Guarantor without notice to the Borrower,
the Guarantor or any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts, and in whatever currency denominated) and any other Indebtedness at
any time held or owing by the Agent, that Lender or that subsequent holder to or
for the credit or the account of the Guarantor, whether or not matured, against
and on account of the obligations and liabilities of the Guarantor to the Agent,
such Lender or such subsequent holder under the Credit Documents, irrespective
of whether or not (a) the Agent, such Lender or such subsequent holder shall
have made any demand hereunder, or (b) the principal of or the interest on the
Loans, the L/C Obligations or any other amounts due hereunder shall have become
due and payable and although said obligations and liabilities, or any of them,
may be contingent or unmatured.
1.4 Guaranty Absolute, etc. This Guaranty shall in all respects be a
continuing, absolute and unconditional Guaranty, and shall remain in full force
and effect (notwithstanding, without limitation, the dissolution of the Borrower
or the Guarantor or that at any time or from time to time all Liabilities may
have been paid in full), until all Liabilities (including any renewals,
extensions and/or rearrangements of any thereof) and all interest thereon and
all reasonable expenses (including reasonable attorneys' fees and legal
expenses) paid or incurred by the Agent and the Lenders in endeavoring to
collect the Liabilities and in enforcing this Guaranty shall have been finally
paid in full and the Commitments have been permanently terminated.
1.5 Reinstatement. The Guarantor further agrees that, if at any time all
or any part of any payment theretofore applied by the Agent or any Lender to any
of the Liabilities is or must be rescinded or returned by the Agent or any
Lender for any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of the Borrower), such Liabilities shall, for the
purposes of this Guaranty, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence, notwithstanding
such application by the Agent or any
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Lender, and this Guaranty shall continue to be effective or be reinstated, as
the case may be, as to such Liabilities, all as though such application by the
Agent or any Lender had not been made.
1.6 Rights of the Agent and Lenders. The Agent or any Lender may, from
time to time, at its sole discretion and without notice to the Guarantor, take
any or all of the following actions:
(a) retain or obtain a lien upon or a security interest in any
property to secure any of the Liabilities or any obligation hereunder;
(b) retain or obtain the primary or secondary obligation of any
obligor or obligors, in addition to the Guarantor, with respect to any of
the Liabilities;
(c) extend or renew for one or more periods (whether or not longer
than the original period), alter or exchange any of the Liabilities, or
release or compromise any obligation of the Guarantor hereunder or any
obligation of any nature of any other obligor with respect to any of the
Liabilities;
(d) extend or renew for one or more periods (whether or not longer
than the original period) or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such property
securing any of the Liabilities; or
(e) resort to the Guarantor for payment of any of the Liabilities,
whether or not the Agent or the Lenders shall have proceeded against any
other obligor primarily or secondarily obligated with respect to any of the
Liabilities (all of the actions referred to in this clause being hereby
expressly waived by the Guarantor).
1.7 Application of Payments. Any amounts received by the Agent or any
Lender from whatsoever source on account of the Liabilities may be applied by it
toward the payment of such of the Liabilities, and in such order of application,
as the Agent or any Lender may from time to time elect.
1.8 Waiver.
(a) The Guarantor hereby expressly waives:
(i) notice of the acceptance by the Agent or any Lender of this
Guaranty;
(ii) notice of the existence or creation or non-payment of all
or any of the Liabilities;
(iii) presentment for payment, demand, protest, notice of intent
to accelerate, notice of acceleration, notice of dishonor and all
other notices whatsoever;
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(iv) all diligence in collection or protection of or realization
upon the Liabilities or any thereof, any obligation hereunder, or any
security for or guaranty of any of the foregoing; and
(v) any rights under, or any requirements imposed by, Chapter 34
of the Texas Business and Commerce Code, as amended, and any rights or
requirements that the Agent or any Lender first enforce any rights or
remedies against the Company or any other guarantor or against any
collateral for any of Liabilities.
(b) No delay on the part of the Agent or any Lender in the exercise
of any right or remedy shall operate as a waiver thereof, and no single or
partial exercise by the Agent or any Lender of any right or remedy shall
preclude other or further exercise thereof or the exercise of any other
right or remedy; nor shall any modification or waiver of any of the
provisions of this Guaranty be binding upon the Agent or any Lender except
as expressly set forth in a writing duly signed and delivered on behalf of
the Agent or such Lender. No action of the Agent or any Lender permitted
hereunder shall in any way affect or impair the rights of the Agent or any
Lender and the obligations of the Guarantor under this Guaranty. The
obligations of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of any circumstance whatsoever which might
constitute a legal or equitable discharge or defense of the Guarantor. The
Guarantor hereby acknowledges that there are no conditions to the
effectiveness of this Guaranty.
1.9 Subrogation. No payment made by or for the account of the Guarantor
pursuant to this Guaranty shall entitle the Guarantor by subrogation or
otherwise to demand or receive any payments by the Borrower or from or out of
any properties of the Borrower until the Liabilities shall have been paid in
full. The Guarantor shall not exercise any right or remedy against the Borrower
or any properties of the Borrower by reason of any performance by the Guarantor
of this Guaranty until the Liabilities shall have been paid in full.
1.10 Subordination. The Guarantor hereby subordinates its right to payment
from the Company of any obligations, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing or
due or to become due (collectively, the "Guarantor Liabilities"), to the
Liabilities of the Company to the Agent and the Lenders, and no payments or
other distributions whatsoever in respect of any such Guarantor Liabilities
shall be made, nor shall any property or assets of the Company be applied to the
purchase, acquisition or retirement of any such Guarantor Liabilities; provided
that payments on such Guarantor Liabilities may be made at any time no Event of
Default shall have occurred and be continuing. Any payments received by the
Guarantor in respect of any such Guarantor Liabilities owing to it other than as
expressly provided herein shall be held in trust for the Agent and the Lenders.
1.11 Excess Liabilities. The creation or existence from time to time of
Liabilities in excess of the amount to which the right of recovery under this
Guaranty is limited, if any, is hereby
-5-
authorized, without notice to the Guarantor, and shall in no way affect or
impair the rights of the Lender and the obligation of the Guarantor under this
Guaranty.
1.12 Successors, Transferees and Assigns. The Agent and each Lender may,
from time to time, without notice to the Guarantor, assign or transfer any or
all of the Liabilities or any interest therein in accordance with the terms of
the Credit Agreement; and, notwithstanding any such assignment or transfer or
any subsequent assignment or transfer thereof, such Liabilities shall be and
remain Liabilities for the purposes of this Guaranty, and each and every
immediate and successive assignee or transferee of any of the Liabilities or of
any interest therein shall, to the extent of the interest of such assignee or
transferee in the Liabilities, be entitled to the benefits of this Guaranty to
the same extent as if such assignee or transferee were the transferring Lender;
provided, however, that, unless the transferring Lender shall otherwise consent
in writing, the transferring Lender shall have an unimpaired right, prior and
superior to that of any such assignee or transferee, to enforce this Guaranty,
for the benefit of the transferring Lender as to those of the Liabilities which
the transferring Lender has not assigned or transferred.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Independent Means of Obtaining Information. The Guarantor hereby
represents and warrants to the Agent and each Lender that it now has and will
use its best commercial efforts to continue to have independent means of
obtaining information concerning the affairs, operations, financial condition,
business and prospects of the Borrower.
2.2 Authorization; No Conflict. The Guarantor hereby further represents
and warrants to the Agent and each Lender that
(a) the execution and delivery of this Guaranty, and the performance
by the Guarantor of its obligations hereunder, are within the Guarantor's
corporate powers and have been duly authorized by all necessary corporate
action on the part of the Guarantor; and
(b) this Guaranty has been duly executed and delivered on behalf of
the Guarantor and is the legal, valid and binding obligation of the
Guarantor, enforceable in accordance with its terms subject as to
enforcement only to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally
and equitable principles relating to or limiting creditors' rights
generally, the making and performance of which do not and will not
contravene or conflict with the articles or certificate of incorporation
and by-laws or other corporate governance documents of the Guarantor or
violate or constitute a default under any law, any presently existing
requirement or restriction imposed by any judicial, arbitral or
governmental instrumentality or any agreement, instrument or indenture by
which the Guarantor is bound.
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2.3 Validity and Binding Nature. This Guaranty shall be binding upon the
Guarantor, and upon the successors and assigns of the Guarantor, and shall
include any successor or successors, whether immediate or remote, to such
entity; provided, however, that the Guarantor may not assign any of its
obligations hereunder without the prior written consent of the Agent and the
Lenders except as may be provided in the Credit Agreement.
ARTICLE III
EVENTS OF DEFAULT
The Guarantor shall be in default under this Guaranty upon the occurrence
of and during the continuance of any of the events or conditions defined as
Events of Default in the Credit Agreement.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.1 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial;
Arbitration.
(a) This Guaranty and the other Credit Documents, and the rights and
duties of the parties thereto, shall be construed in accordance with and
governed by the internal laws of the State of Texas.
(b) THE GUARANTOR HEREBY WAIVES ITS RIGHT TO RESOLVE DISPUTES,
CLAIMS, AND CONTROVERSIES ARISING FROM THIS GUARANTY, ANY OTHER CREDIT
DOCUMENT OR ANY MATTER IN CONNECTION THEREWITH, INCLUDING, WITHOUT
LIMITATION, CONTRACT DISPUTES AND TORT CLAIMS, THROUGH ANY COURT PROCEEDING
OR LITIGATION AND ACKNOWLEDGES THAT ALL SUCH DISPUTES, CLAIMS AND
CONTROVERSIES SHALL BE RESOLVED PURSUANT TO THIS SECTION, EXCEPT THAT
EQUITABLE RELIEF AND CERTAIN OTHER RIGHTS AND REMEDIES SET FORTH BELOW MAY
BE SOUGHT FROM ANY COURT OF COMPETENT JURISDICTION. The Guarantor
represents to the Lenders that this waiver is made knowingly and
voluntarily after consultation with and upon advice of its counsel and
is a material part of this Guaranty. All such disputes, claims and
controversies shall be resolved by binding arbitration pursuant to the
commercial rules of the American Arbitration Association ("AAA"). Any
arbitration proceeding held pursuant to this arbitration provision shall be
conducted in Houston, Texas or at any other place selected by mutual
agreement of the Agent and the Guarantor. No act to take or dispose of any
collateral shall constitute a waiver of this arbitration agreement or be
prohibited by this arbitration agreement. This arbitration provision shall
not limit the right of either party during any dispute, claim or
controversy to seek, use, and employ
-7-
ancillary or preliminary rights and/or remedies, judicial or otherwise, for
the purposes of realizing upon, preserving, protecting, foreclosing upon or
proceeding under forcible entry and detainer for possession of, any real or
personal property, and any such action shall not be deemed an election of
remedies. Such remedies include, without limitation, obtaining injunctive
relief or a temporary restraining order, invoking a power of sale under any
deed of trust or mortgage, obtaining a writ of attachment or imposition of
a receivership or exercising any rights relating to personal property,
including exercising the right of set-off or taking or disposing of such
property with or without judicial process pursuant to the uniform
commercial code. Any disputes, claims or controversies concerning the
lawfulness or reasonableness of an act or exercise of any right or remedy
concerning any collateral, including any claim to rescind, reform or
otherwise modify any agreement relating to the collateral, shall also be
arbitrated; provided, however that no arbitrator shall have the right or
the power to enjoin or restrain any act of either party. Judgment upon any
award rendered by any arbitrator may be entered in any court having
jurisdiction. The statute of limitations, estoppel, waiver, laches and
similar doctrines which would otherwise be applicable in an action brought
by a party shall be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed the commencement
of any action for these purposes. The Federal Arbitration Act (Title 9 of
the United States Code) shall apply to the construction, interpretation,
and enforcement of this arbitration provision.
(c) To the fullest extent permitted by applicable law, the Guarantor
agrees that any court proceeding or litigation permitted by Section 4.1(b)
may be brought and maintained in the courts of the State of Texas sitting
in ▇▇▇▇▇▇ County or the United States District Court for the Southern
District of Texas. To the fullest extent permitted by applicable law, the
Guarantor hereby expressly and irrevocably submits to the jurisdiction of
the courts of the State of Texas and the United States District Court for
the Southern District of Texas for the purpose of any such litigation as
set forth above and irrevocably agree to be bound by any judgment rendered
thereby in connection with such litigation. To the fullest extent permitted
by applicable law, the Guarantor further irrevocably consents to the
service of process, by registered mail, postage prepaid or by personal
service within or without the State of Texas. To the fullest extent
permitted by applicable law, the Guarantor hereby expressly and irrevocably
waives any objection which it may have or hereafter may have to the laying
of venue of any such litigation brought in any such court referred to above
and any claim that any such litigation has been brought in an inconvenient
forum. To the extent that the Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid
of execution or otherwise) with respect to itself or its property, the
Guarantor hereby irrevocably waives to the fullest extent permitted by
applicable law, such immunity in respect of its obligations under this
Guaranty.
(d) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
-8-
UNCONDITIONALLY (BY ITS ACCEPTANCE HEREOF) WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY COURT PROCEEDING OR LITIGATION PERMITTED BY SECTION 4.1(B) AND
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF THIS GUARANTY
OR ANY OTHER CREDIT DOCUMENT, ANY OTHER RELATED DOCUMENT OR ANY
RELATIONSHIP BETWEEN THE AGENT, LENDERS, THE BORROWER AND/OR ANY GUARANTOR,
AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR DISPUTE TO THE EXTENT
PERMITTED BY SECTION 4.1(B) SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER TO PROVIDE THE
LOAN.
4.2 Severability. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable laws, but if any provision of this Guaranty shall be prohibited by or
invalid under such laws, 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 Guaranty.
4.3 Notices. Except as otherwise specified herein, all notices under this
Guaranty shall be in writing (including cable, telecopy or telex) and shall be
given to the Guarantor at its address, telecopier number or telex number set
forth on the signature page hereof or such other address, telecopier number or
telex number as the Guarantor may hereafter specify by notice to the Agent,
given by courier, by United States certified or registered mail, by telegram or
by other telecommunication device capable of creating a written record of such
notice and its receipt. Each such notice, request or other communication shall
be effective (i) if given by telecopier, when such telecopy is transmitted to
the telecopier number specified in this Section on the signature pages hereof
and a confirmation of receipt of such telecopy has been received by the sender,
(ii) if given by telex, when such telex is transmitted to the telex number
specified on the signature pages hereof and the answerback is received by
sender, (iii) if given by courier, when delivered, (iv) if given by mail, five
(5) days after such communication is deposited in the mail, certified or
registered with return receipt requested, or (v) if given by any other means,
when delivered at the addresses specified on the signature page hereof.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer as of the date first above
written.
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Address: By:
---------------------------
Name:
----------------------------- ----------------------
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Title:
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-10-
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") dated as of August ___,
1998, is by and between ___________________________, a ________ corporation
("Pledgor"), and Bank One, Texas, National Association, as Agent for the Lenders
("Secured Party").
RECITALS:
A. [Pledgor] [Quanta Services, Inc., a Delaware corporation (the
"Borrower")] the various financial institutions as are or may from time to time
become parties thereto (collectively, the "Lenders"), National City Bank, as Co-
Agent for the Lenders, and Secured Party have entered into that certain Amended
and Restated Credit Agreement dated as of August 3, 1998 (herein, as the same
may be amended, modified, supplemented, extended, rearranged, and/or restated
from time to time, collectively called the "Credit Agreement"), pursuant to
which, upon the terms and conditions therein set forth, the Lenders have agreed
to from time to time make Revolving Loans to [Pledgor] [the Borrower] and to
issue Letters of Credit for the account of [Pledgor] [the Borrower], which
Revolving Loans are evidenced by Revolving Notes of [Pledgor] [the Borrower]
dated August 3, 1998, in the aggregate original principal amount of
$125,000,000, payable to the order of the Lenders, and the Agent, in its sole
discretion, may make Agent Loans to [Pledgor] [the Borrower] in the aggregate
original principal amount of $5,000,000 pursuant to its Revolving Note
(together, herein, as the same may be amended, modified, supplemented, extended,
rearranged, and/or restated from time to time, together with any notes given by
Pledgor in extension, replacement, rearrangement, modification and/or
substitution thereof or therefor, collectively called the "Notes").
B. Under the terms of the Credit Agreement, Pledgor is required by
the Lenders to provide certain security in respect of the liabilities under the
Credit Agreement, and the Lenders require that this Agreement be entered into by
Pledgor as a condition precedent to the Loans to be made and the Letters of
Credit to be issued pursuant to the terms and conditions of the Credit
Agreement.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Definitions.
1.1 Unless otherwise defined herein, capitalized terms have the same
meaning assigned to such terms in the Credit Agreement.
1.2 "UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of Texas; provided that if by mandatory provisions of law
the perfection or the effect of perfection or non-perfection of the security
interests granted pursuant to Section 2, as well as all other security interests
created or assigned as additional security for the Obligations (defined
Stock Pledge Agreement - Page 1
hereinafter) pursuant to the provisions of this Agreement in any Collateral
(defined hereinafter) is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than the State of Texas, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or non-perfection.
Section 2. Security Interest and Pledge.
2.1. Security Interest and Pledge. Subject to the terms of this
Agreement, Pledgor hereby pledges, assigns and grants to Secured Party a first
priority security interest in the following property (such property being
hereinafter called the "Collateral"):
(a) all of shares of capital stock or membership interests, as applicable,
in the Persons listed on the attached Schedule 1 and any other entities
which hereafter become Subsidiaries of [Pledgor] [the Borrower] or any
of its Subsidiaries in which Pledgor has an ownership interest
(collectively, the "Companies");
(b) any other shares of capital stock or membership interests hereafter
pledged to Secured Party pursuant to this Agreement;
(c) all "investment property" as such term is defined in (S)9.115(a)(6) of
the UCC with respect thereto;
(d) any "security entitlement" as such term is defined in (S) 8.102(a)(17)
of the UCC with respect thereto; and
(e) all products and proceeds of the foregoing, including, without
limitation, all distributions, dividends, stock dividends, securities,
and other property, rights, and interests that Pledgor is at any time
entitled to receive on account of the same (all of the foregoing
described in this clause (e), the "Collateral Proceeds");
provided that in no event shall Secured Party's security interest encumber
capital stock of any of the Companies which is a "controlled foreign
corporation" (within the meaning of the Code) representing more than sixty-five
percent (65%) of the combined voting power of all classes of stock entitled to
vote (the "Voting Stock") of any such entity.
2.2. Obligations. The Collateral shall secure the following obligations,
indebtedness and liabilities (all such obligations, indebtedness and liabilities
being hereinafter sometimes called the "Obligations"):
(a) the payment of the indebtedness evidenced by the Notes;
(b) all obligations of [Pledgor] [the Borrower] to the Lenders under the
Credit Agreement;
Stock Pledge Agreement - Page 2
(c) the performance and payment of the obligations of [Pledgor] [the
Borrower] and the Guarantors under any of the Credit Documents,
including, without limitation, the performance and payment of
Pledgor's obligations hereunder; and
(d) all extensions, renewals, rearrangements and modifications of any of
the foregoing.
Section 3. Representations and Warranties. Pledgor represents and
warrants to Secured Party that:
3.1. Title. Pledgor owns or, with respect to Collateral acquired after the
date hereof, Pledgor will own, legally and beneficially, the Collateral free and
clear of any Lien, security interest, pledge, claim, or other encumbrance or any
right or option on the part of any third person to purchase or otherwise acquire
the Collateral or any part thereof, except for the security interest granted
hereunder. Pledgor has the unrestricted right to pledge the Collateral as
contemplated hereby.
3.2. Organization and Authority. Neither the execution, delivery or
performance by Pledgor of this Agreement nor compliance by it with the terms and
provisions hereof, nor the consummation of the transactions contemplated herein,
will (i) contravene any applicable provision of any law, statute, rule or
regulation, or any order, writ, injunction or decree of any court or
governmental instrumentality; or (ii) conflict with or result in any breach of
any term, covenant, condition or other provision of, or constitute a default
under, or (other than pursuant to the Security Documents) result in the creation
or imposition of (or the obligation to create or impose) any Lien upon any of
the property or assets of Pledgor under the terms of any contractual obligation
to which Pledgor is a party or by which it or any of its properties or assets
are bound or to which it may be subject.
3.3. Location of Pledgor. As of the date hereof, the principal office (if
applicable) of Pledgor, and the place where Pledgor keeps its books and records,
is located at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇.
3.4. First Priority Perfected Security Interest. This Agreement creates in
favor of Secured Party a first priority security interest in the Collateral
currently in existence, which will be perfected upon the filing of a duly
executed and completed UCC-1 Financing Statement in the Office of the Secretary
of State of the State of Texas. There is no financing statement (or other
evidence of a Lien or security interest) now on file in any public office
covering any of the Collateral.
Section 4. Covenants. Pledgor covenants and agrees with Secured Party
that:
4.1. Encumbrances. Except as permitted by the Credit Agreement, Pledgor
shall not create, permit, or suffer to exist, and shall defend the Collateral
against, any Lien on the Collateral except the pledge and security interest of
Secured Party hereunder except for Permitted Liens, and shall defend Pledgor's
rights in the Collateral and Secured Party's security interest in the Collateral
Stock Pledge Agreement - Page 3
against the claims of all persons and entities (other than any person or entity
claiming by, through or under Secured Party or any obligee of the Obligations).
4.2. Sale of Collateral. Pledgor shall not sell, assign, or otherwise
dispose of the Collateral or any part thereof except as permitted by the Credit
Agreement.
4.3. Dividends. If Pledgor shall become entitled to receive or shall
receive any distribution (including, without limitation, any dividend or
distribution in connection with any reclassification, increase, or reduction of
capital or issued in connection with any reorganization), option or rights
constituting Collateral, whether as an addition to, in substitution of, or in
exchange for any Collateral or otherwise, Pledgor agrees to accept the same as
Secured Party's agent and to hold the same in trust for Secured Party and to
deliver the same (to the extent in form capable of delivery) promptly to Secured
Party in the exact form received, with the appropriate endorsement of Pledgor
when necessary, to be held by Secured Party, as additional Collateral for the
Obligations, subject to the terms hereof. Any sums paid upon or in respect of
the Collateral upon the liquidation or dissolution of the issuer thereof in
violation of the Credit Agreement shall be paid over to Secured Party to be held
by it as additional Collateral for the Obligations subject to the terms hereof
except as otherwise provided in the Credit Agreement; and in case any
distribution shall be made on or in respect of the Collateral while a Default or
an Event of Default shall be continuing or any property shall be distributed
while a Default or an Event of Default shall be continuing upon or with respect
to the Collateral pursuant to any recapitalization or reclassification of the
capital of the issuer thereof or pursuant to any reorganization of the issuer
thereof, the property so distributed shall be delivered to the Secured Party to
be held by it, as additional Collateral for the Obligations, subject to the
terms hereof. All sums of money and property so paid or distributed in respect
of the Collateral that are received by Pledgor shall, until paid or delivered to
Secured Party, be held by Pledgor in trust as additional security for the
Obligations, provided that except to the extent that such sums of money or
property have theretofore been applied against the Obligations in accordance
with the Credit Agreement, such sums of money or property shall forthwith be
delivered to Pledgor at such time as no Default or Event of Default shall be
continuing under the Credit Agreement.
4.4. Further Assurances. At any time and from time to time, upon the
request of Secured Party, and at the sole expense of Pledgor, Pledgor shall
promptly execute and deliver all such further instruments and documents and take
such further action as Secured Party may deem reasonably necessary or desirable
to preserve and perfect its security interest in the Collateral and carry out
the provisions and purposes of this Agreement, including, without limitation,
the execution and filing of such financing statements as Secured Party may
require. A carbon, photographic, or other reproduction of this Agreement or of
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement and may be filed as a financing statement to
the extent provided by applicable law.
4.5. Inspection Rights. Upon reasonable notice from Secured Party, Pledgor
shall permit Secured Party and its representatives to examine, inspect, and copy
Pledgor's books and records
Stock Pledge Agreement - Page 4
concerning ownership of the Collateral at any reasonable time during normal
business hours and as often as Secured Party may desire.
4.6. Notification. Pledgor shall promptly after it has knowledge thereof,
notify Secured Party of (i) any Lien upon or claim made or threatened against
the Collateral, (ii) any change in the location of the office where records
concerning the Collateral are kept and any additional places of business of
Pledgor or the Borrower, and (iii) any change in its name, state of
incorporation or its type of entity.
4.7. Books and Records. Pledgor shall ▇▇▇▇ its books and records to
reflect the security interest of Secured Party under this Agreement.
4.8. Receipt after Default. If any Collateral is received by Pledgor
during the continuance of an Event of Default, Pledgor shall pay over to Secured
Party all such Collateral on the day received, including the cash and checks
endorsed by Pledgor evidencing the Collateral. Pledgor shall not commingle the
Collateral with any other funds, proceeds or monies of Pledgor, and shall keep
such proceeds separate and apart from any other funds, proceeds or monies of
Pledgor and shall hold the Collateral in trust for Secured Party until same
shall be paid over to Secured Party as agreed to herein.
4.9 Pledge of Shares of Controlled Foreign Corporation.
(a) In the event that the Collateral hereunder would, but for this Section
4.9(a), represent more than sixty-five percent (65%) of the Voting
Stock of a Company which is a controlled foreign corporation, then the
number of shares of Voting Stock of such Company in excess of such
sixty-five percent (65%) automatically shall be released from the Lien
of, and the terms and provisions of, this Agreement.
(b) In the event that the Collateral hereunder represents less than sixty-
five percent (65%) of the Voting Stock of any Company which is a
controlled foreign corporation (or, if less, 100% of the Voting Stock
of such Company owned by Pledgor), then Pledgor will promptly pledge
additional capital stock to increase the number of shares pledged
hereunder to such sixty-five percent (65%) (or, if less, 100% of the
Voting Stock of such Company owned by Pledgor).
Section 5. Rights of Secured Party and Pledgor.
5.1. Power of Attorney. Pledgor hereby irrevocably constitutes and
appoints Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead and in the name of Pledgor or in its
own name, from time to time in Secured Party's discretion during the continuance
of an Event of Default and prior to the Collateral Termination Date, to take any
and all action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish
Stock Pledge Agreement - Page 5
the purposes of this Agreement and, without limiting the generality of the
foregoing, hereby gives Secured Party the power and right on behalf of Pledgor
and in its own name to do any of the following after the occurrence and during
the continuance of an Event of Default and to the extent permitted by applicable
laws, without notice to or the consent of Pledgor:
(a) to demand, ▇▇▇ for, collect, or receive in the name of Pledgor or in
its own name, any money or property at any time payable or receivable
on account of or in exchange for any of the Collateral and, in
connection therewith, endorse checks, notes, drafts, acceptances,
money orders, or any other instruments for the payment of money under
the Collateral;
(b) to pay or discharge taxes, liens, security interests, or other
encumbrances (other than Permitted Liens) levied or placed on or
threatened against the Collateral;
(c) (i) to direct any parties liable for any payment under any of the
Collateral to make payment of any and all monies due and to become due
thereunder directly to Secured Party or as Secured Party shall direct;
(ii) to receive payment of and receipt for any and all monies, claims,
and other amounts due and to become due at any time in respect of or
arising out of any Collateral; (iii) to sign and endorse any drafts,
assignments, proxies, stock powers, verifications, notices, and other
documents relating to the Collateral; (iv) to commence and prosecute
any suit, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof
and to enforce any other right in respect of any Collateral; (v) to
defend any suit, action, or proceeding brought against Pledgor with
respect to any Collateral; (vi) to settle, compromise, or adjust any
suit, action, or proceeding described in clause (v) above and, in
connection therewith, to give such discharges or releases as Secured
Party may deem appropriate; (vii) to exchange any of the Collateral
for other property upon any merger, consolidation, reorganization,
recapitalization, or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Collateral with any
committee, depositary, transfer agent, registrar, or other designated
agency upon such terms as Secured Party may determine; (viii) to add
or release any guarantor, endorser, surety, or other party to any of
the Collateral or the Obligations; and (ix) to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Secured Party were the
absolute owner thereof for all purposes, and to do, at Secured Party's
option and Pledgor's expense, at any time, or from time to time, all
acts and things which Secured Party deems necessary to protect,
preserve, or realize upon the Collateral and Secured Party's security
interest.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Secured Party shall not be
liable for any act
Stock Pledge Agreement - Page 6
or omission or for any error of judgment or any mistake of fact or law in its
individual capacity or in its capacity as attorney-in-fact except acts or
omissions constituting or resulting from its willful misconduct or gross
negligence. This power of attorney is conferred on Secured Party solely to
protect, preserve, and realize upon its security interest in the Collateral.
5.2. Voting Rights. Until written notice shall be given to Pledgor in
accordance with Section 5.02(d) that Secured Party has exercised its rights
under Section 5.02(d) to vote the Collateral (provided, however, if Secured
Party is prevented from providing such notice as a result of Section 362 of the
United States Bankruptcy Code or similar law Pledgor shall be entitled to
exercise such rights so long as no Event of Default shall have occurred and be
continuing), Pledgor shall be entitled to exercise any and all voting and other
rights relating or pertaining to the Collateral or any part thereof (and the
Secured Party shall execute and deliver (or cause to be executed and delivered)
to Pledgor all such proxies and other instruments as Pledgor may reasonably
request for the purpose of enabling Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to this sentence).
5.3. Collateral Proceeds. Until written notice shall be given to Pledgor
in accordance with Section 5.02(d) that Secured Party has exercised its rights
under Section 5.02(d) to vote the Collateral, Pledgor shall be entitled to
receive and collect for its own use all Collateral Proceeds.
5.4. Performance by Secured Party of Pledgor's Obligations. If an Event of
Default has occurred and is continuing or if Pledgor fails to perform or comply
with any of its agreements contained herein and Secured Party itself shall cause
performance of or compliance with such agreement, the reasonable expenses of
Secured Party, together with interest thereon at the rate of interest provided
in the Credit Agreement, shall be payable by Pledgor to Secured Party on demand
and shall constitute Obligations secured by this Agreement.
5.5. Secured Party's Duty of Care. Other than the exercise of reasonable
care in the physical custody of the Collateral while held by Secured Party
hereunder, Secured Party shall have no responsibility for or obligation or duty
with respect to all or any part of the Collateral or any matter or proceeding
arising out of or relating thereto, including, without limitation, any
obligation or duty to collect any sums due in respect thereof or to protect or
preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that Pledgor shall be responsible for
preservation of all rights in the Collateral. Without limiting the generality
of the foregoing, Secured Party shall be conclusively deemed to have exercised
reasonable care in the custody of the Collateral if Secured Party takes such
action, for purposes of preserving rights in the Collateral, as Pledgor may
reasonably request in writing, but no failure or omission or delay by Secured
Party in complying with any such request by Pledgor, and no refusal by Secured
Party to comply with any such request by Pledgor, shall of itself be deemed to
be a failure to exercise reasonable care.
Stock Pledge Agreement - Page 7
Section 6. Events of Default and Remedies.
6.1. Events of Default. Pledgor shall be in default under this Agreement
upon the occurrence of and during the continuation of any of the events or
conditions defined as Events of Default in the Credit Agreement (an "Event of
Default").
6.2. Rights and Remedies. Prior to the Collateral Termination Date, upon
the occurrence of an Event of Default and so long as the same shall be
continuing, Secured Party shall have the following rights and remedies to the
extent not prohibited by applicable laws:
(a) In addition to all other rights and remedies granted to Secured Party
in this Agreement and in any other instrument or agreement securing,
evidencing, or relating to the Obligations, Secured Party shall have
all of the rights and remedies of a secured party under the UCC.
Without limiting the generality of the foregoing, Secured Party may
(i) without demand or notice to Pledgor, collect, receive, or take
possession of the Collateral or any part thereof, (ii) sell or
otherwise dispose of the Collateral, or any part thereof, in one or
more parcels at public or private sale or sales, at Secured Party's
offices or elsewhere, for cash, on credit, or for future delivery
without assumption of any credit risk, and/or (iii) bid and become a
purchaser at any such sale free of any right or equity of redemption
in Pledgor, which right or equity is hereby expressly waived and
released by Pledgor. Upon the request of Secured Party, Pledgor shall
assemble the Collateral and make it available to Secured Party at any
place designated by Secured Party that is reasonably convenient to
Pledgor and Secured Party. Pledgor agrees that Secured Party shall
not be obligated to give more than ten (10) days' prior written notice
of the time and place of any public sale or of the time after which
any private sale may take place and that such notice shall constitute
reasonable notice of such matters. Pledgor shall be liable for all
reasonable expenses of retaking, holding, preparing for sale, or the
like, and all reasonable attorneys' fees and other reasonable expenses
incurred by Secured Party in connection with the collection of the
Obligations and the enforcement of Secured Party's rights under this
Agreement, in each case during the continuance of an Event of Default,
all of which expenses and fees shall constitute additional Obligations
secured by this Agreement. Secured Party may apply the Collateral
against the Obligations then due and payable in such order and manner
as it shall elect in its sole discretion. Pledgor shall remain liable
for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay the Obligations. Pledgor waives
all rights of marshaling in respect of the Collateral.
(b) Secured Party may cause any or all of the Collateral held by it to be
transferred into the name of Secured Party or the name or names of
Secured Party's nominee or nominees (in each case as pledgee
hereunder).
Stock Pledge Agreement - Page 8
(c) Secured Party shall be entitled to receive all cash distributions
payable in respect of the Collateral. Pledgor shall execute notice
letters, in form and substance satisfactory to Secured Party (as and
when requested by Secured Party), notifying the Borrower of the fact
of this Security Agreement and directing the Borrower to make payment
directly to Secured Party of all of the distributions which are due
and owing to Pledgor by the Borrower, and directing the Borrower to
accompany each transmission of such distributions to Secured Party
with a report in such form as Secured Party may reasonably require in
order to identify (i) the type of distribution being made, and (ii)
the calculations made by the Borrower to determine the amount of the
distribution distributed to Secured Party.
(d) Secured Party shall have the right, but shall not be obligated to,
exercise or cause to be exercised all voting rights and powers in
respect of the Collateral, and Pledgor shall deliver to Secured Party,
if requested by Secured Party, irrevocable proxies with respect to the
Collateral in form satisfactory to Secured Party. Pledgor shall
execute notice letters, in form and substance satisfactory to Secured
Party (as and when requested by Secured Party), notifying the Borrower
of the fact of this Security Agreement and directing the Borrower to
make payment directly to Secured Party of all of the distributions
which are due and owing to Pledgor by the Borrower, and directing the
Borrower to accompany each transmission of such distributions to
Secured Party with a report in such form as Secured Party may
reasonably require in order to identify (a) the type of distribution
being made, and (b) the calculations made by the Borrower to determine
the amount of the distribution distributed to Secured Party.
Because of applicable securities laws, including without limitation, the
Securities Act of 1933, as amended, the securities laws of Texas and other
applicable state securities laws, there may be legal restrictions or limitations
affecting attempts of Secured Party to dispose of the Collateral in the
enforcement of its rights and remedies hereunder. Secured Party is hereby
authorized by Pledgor, but not obligated, upon the occurrence and during the
continuance of an Event of Default, to the extent permitted by applicable law,
to sell all or any part of the Collateral at private sale, subject to investment
letters or in any other manner which will not require the Collateral or any part
thereof, to be registered in accordance with the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder, or any other
applicable securities law or regulation. Pledgor specifically agrees that under
these circumstances, such a sale is a commercially reasonable method of
disposition of the Collateral. Secured Party is also hereby authorized by
Pledgor, but not obligated, to take such actions, give such notices, obtain such
rulings and consents, and do such other things as Secured Party may deem
appropriate in the event of such a sale or disposition of any of the Collateral.
Pledgor acknowledges that Secured Party may, in its reasonable discretion,
approach a restricted number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Collateral or any part or parts
thereof than would otherwise be obtainable if the same were registered and sold
in the open market. Pledgor agrees that such private sale shall constitute a
commercially reasonable method of disposing of the Collateral in view of the
time, expense, and
Stock Pledge Agreement - Page 9
potential liability to the parties of such transactions of registration of the
Collateral in accordance with applicable securities laws.
6.3. PLEDGOR AGREES TO INDEMNIFY AND SAVE AND HOLD SECURED PARTY HARMLESS
FROM AND AGAINST ANY CLAIM OF ANY THIRD PERSON TO ANY COLLATERAL AND ANY CLAIM
BY ANY OTHER PARTY OR ENTITY ARISING (INCLUDING, WITHOUT LIMITATION, A
BANKRUPTCY TRUSTEE OR THE ISSUER OF THE OPTION SHARES), DIRECTLY OR INDIRECTLY,
AS A RESULT OF SECURED PARTY'S ENTERING INTO THIS AGREEMENT AND/OR PURSUING ANY
OF ITS RIGHTS AND REMEDIES HEREUNDER, PROVIDED THAT PLEDGOR SHALL HAVE NO
OBLIGATION UNDER THIS PROVISION TO SECURED PARTY WITH RESPECT TO LIABILITIES OF
OR CLAIMS AGAINST SECURED PARTY THAT ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NON-APPEALABLE JUDGMENT TO HAVE RESULTED FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SECURED PARTY.
Section 7. Miscellaneous.
7.1. No Waiver; Cumulative Remedies. No failure on the part of Secured
Party to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. To the fullest extent
permitted by applicable laws, the rights and remedies provided for in this
Agreement are cumulative and not exclusive of any rights and remedies provided
by law.
7.2. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Pledgor and Secured Party and their respective heirs,
successors, and assigns, except that Pledgor may not assign any of its rights or
obligations under this Agreement without the prior written consent of Secured
Party except to the extent permitted by the Credit Agreement.
7.3. Notices. Any notice, consent, or other communication required or
permitted to be given under this Agreement to Secured Party or Pledgor must be
in writing and delivered in person or by facsimile or by registered or certified
mail, return receipt requested, postage prepaid, as follows:
To Secured Party: Bank One, Texas, N.A.
Attention: Mr. ▇▇▇▇ ▇▇▇▇, Jr.
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Stock Pledge Agreement - Page 10
with a copy to: Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Pledgor: Quanta Services, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
Quanta Services, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice, consent, or other communication shall be deemed given when
delivered in person, sent by confirmed fax or, if given by mail, five (5) days
after such communication is deposited in the mail, certified or registered with
return receipt requested.
7.4. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial;
Arbitration.
(a) This Agreement and the other Credit Documents, and the rights and
duties of the parties thereto, shall be construed in accordance with and
governed by the internal laws of the State of Texas.
(b) PLEDGOR AND SECURED PARTY EACH HEREBY WAIVES ITS RIGHT TO RESOLVE
DISPUTES, CLAIMS, AND CONTROVERSIES ARISING FROM THIS AGREEMENT, ANY OTHER
CREDIT DOCUMENT OR ANY MATTER IN CONNECTION THEREWITH, INCLUDING, WITHOUT
LIMITATION, CONTRACT DISPUTES AND TORT CLAIMS, THROUGH ANY COURT PROCEEDING OR
LITIGATION AND ACKNOWLEDGES THAT ALL SUCH DISPUTES, CLAIMS AND CONTROVERSIES
SHALL BE RESOLVED PURSUANT TO THIS SECTION, EXCEPT THAT EQUITABLE RELIEF AND
CERTAIN OTHER RIGHTS AND REMEDIES SET
Stock Pledge Agreement - Page 11
FORTH BELOW MAY BE SOUGHT FROM ANY COURT OF COMPETENT JURISDICTION. PLEDGOR
REPRESENTS TO SECURED PARTY AND SECURED PARTY REPRESENTS TO PLEDGOR THAT THIS
WAIVER IS MADE KNOWINGLY AND VOLUNTARILY AFTER CONSULTATION WITH AND UPON ADVICE
OF ITS COUNSEL AND IS A MATERIAL PART OF THIS AGREEMENT. ALL SUCH DISPUTES,
CLAIMS AND CONTROVERSIES SHALL BE RESOLVED BY BINDING ARBITRATION PURSUANT TO
THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION ASSOCIATION ("AAA"). Any
arbitration proceeding held pursuant to this arbitration provision shall be
conducted in Houston, Texas or at any other place selected by mutual agreement
of Secured Party and Pledgor. No act to take or dispose of any collateral shall
constitute a waiver of this arbitration agreement or be prohibited by this
arbitration agreement. This arbitration provision shall not limit the right of
either party during any dispute, claim or controversy to seek, use, and employ
ancillary, or preliminary rights and/or remedies, judicial or otherwise, for the
purposes of realizing upon, preserving, protecting, foreclosing upon or
proceeding under forcible entry and detainer for possession of, any real or
personal property, and any such action shall not be deemed an election of
remedies. Such remedies include, without limitation, obtaining injunctive relief
or a temporary restraining order, invoking a power of sale under any deed of
trust or mortgage, obtaining a writ of attachment or imposition of a
receivership, or exercising any rights relating to personal property, including
exercising the right of set-off, or taking or disposing of such property with or
without judicial process pursuant to the Uniform Commercial Code. Any disputes,
claims or controversies concerning the lawfulness or reasonableness of an act,
or exercise of any right or remedy concerning any collateral, including any
claim to rescind, reform, or otherwise modify any agreement relating to the
collateral, shall also be arbitrated; provided, however that no arbitrator shall
have the right or the power to enjoin or restrain any act of either party.
Judgment upon any award rendered by any arbitrator may be entered in any court
having jurisdiction. The statute of limitations, estoppel, waiver, laches and
similar doctrines which would otherwise be applicable in an action brought by a
party shall be applicable in any arbitration proceeding, and the commencement of
an arbitration proceeding shall be deemed the commencement of any action for
these purposes. The federal arbitration act (Title 9 of the United States Code)
shall apply to the construction, interpretation, and enforcement of this
arbitration provision.
(c) To the fullest extent permitted by applicable law, each party hereto
agrees that any court proceeding or litigation permitted by Section 7.4(b) may
be brought and maintained in the courts of the State of Texas sitting in ▇▇▇▇▇▇
County or the United States District Court for the Southern District of Texas.
To the fullest extent permitted by applicable law, the Pledgor hereby expressly
and irrevocably submits to the jurisdiction of the courts of the State of Texas
and the United States District Court for the Southern District of Texas for the
purpose of any such litigation as set forth above and irrevocably agrees to be
bound by any judgment rendered thereby in connection with such litigation. To
the fullest extent permitted by applicable law, the Pledgor further irrevocably
consents to the service of process, by registered mail, postage prepaid, or by
personal service within or without the state of Texas. To the fullest extent
permitted by applicable law, the Pledgor hereby expressly and irrevocably waives
any objection which it may have or hereafter may have to the laying of venue of
any such litigation brought in any such court referred to above and any
Stock Pledge Agreement - Page 12
claim that any such litigation has been brought in an inconvenient forum. To the
extent that the Pledgor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service of
notice, attachment prior to judgment, attachment in aid of execution or
otherwise) with respect to itself or its property, the Borrower hereby
irrevocably waives to the fullest extent permitted by applicable law, such
immunity in respect of its obligations under this Agreement and the other Credit
Documents.
(D) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY (BY THEIR ACCEPTANCE
HEREOF) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
PERMITTED BY SECTION 7.4(B) AND WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT
OF THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT, ANY OTHER RELATED DOCUMENT OR ANY
RELATIONSHIP BETWEEN THE LENDER, THE BORROWER AND/OR ANY GUARANTOR, AND AGREES
THAT ANY SUCH ACTION, PROCEEDING OR DISPUTE SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER TO
PROVIDE THE LOANS AND THE LETTERS OF CREDIT.
7.5. Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
7.6. Survival of Representations and Warranties. All representations and
warranties made in this Agreement or in any certificate delivered pursuant
hereto shall survive the execution and delivery of this Agreement, and no
investigation by Secured Party shall affect the representations and warranties
or the right of Secured Party to rely upon them.
7.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.8. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.9. Construction. Pledgor and Secured Party acknowledge that each of them
has had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its legal counsel and that this
Agreement shall be construed as if jointly drafted by Pledgor and Secured Party.
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7.10. Obligations Absolute. The obligations of Pledgor under this
Agreement shall be absolute and unconditional and shall not be released,
discharged, reduced, or in any way impaired by any circumstance whatsoever,
including, without limitation, any amendment, modification, extension, or
renewal of this Agreement, the Obligations, or any document or instrument
evidencing, securing, or otherwise relating to the Obligations, or any release,
subordination, or impairment of collateral, or any waiver, consent, extension,
indulgence, compromise, settlement, or other action or inaction in respect of
this Agreement, the Obligations, or any document or instrument evidencing,
securing, or otherwise relating to the Obligations, or any exercise or failure
to exercise any right, remedy, power, or privilege in respect of the
Obligations.
7.11. Termination. On the Collateral Termination Date, the Liens created
hereby shall terminate, and Secured Party, at the request and expense of
Pledgor, forthwith will execute and deliver to Pledgor a proper instrument or
instruments acknowledging the satisfaction and termination of the Liens created
hereby and will duly assign, transfer and deliver to Pledgor (without recourse
and without any representation or warranty), such of the Collateral as may be in
the possession of the Lender and as has not theretofore been sold or otherwise
applied pursuant to this Agreement or the Credit Agreement. Upon such release
and redelivery, this Agreement shall terminate. The term "Collateral
Termination Date" shall mean the first date on which no Note or Letter of Credit
is outstanding under the Credit Agreement, the Commitments have been permanently
terminated and no other Obligation is due and payable thereunder or under any
other Credit Document.
7.12. AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER WITH THE
OTHER CREDIT DOCUMENTS, EMBODIES THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES
HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THE PROVISIONS OF THIS AGREEMENT MAY BE AMENDED OR
WAIVED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
SECURED PARTY:
BANK ONE, TEXAS, NATIONAL ASSOCIATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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PLEDGOR:
, a corporation
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By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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SCHEDULE 1
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