EXHIBIT 10.2
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FOURTH AMENDED AND RESTATED SECURED CREDIT AGREEMENT
DATED AS OF
NOVEMBER 12, 2003
AMONG
QUANTA SERVICES, INC., AS BORROWER
AND
THE FINANCIAL INSTITUTIONS PARTIES HERETO, AS LENDERS
AND
BANK OF AMERICA, N.A.,
AS ADMINISTRATIVE AGENT
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS; INTERPRETATION............................................................ 1
Section 1.1 Definitions.................................................................. 1
Section 1.2 Interpretation............................................................... 14
SECTION 2. THE CREDIT FACILITY.................................................................... 15
Section 2.1 Term Loan.................................................................... 15
Section 2.2 Letters of Credit............................................................ 15
Section 2.3 Types of Loans and Minimum Borrowing Amounts................................. 18
Section 2.4 Manner of Borrowing.......................................................... 18
Section 2.5 Interest Periods............................................................. 19
Section 2.6 Interest Payments............................................................ 19
Section 2.7 Default Rates................................................................ 20
Section 2.8 Maturity of Loans............................................................ 21
Section 2.9 Optional Prepayments......................................................... 21
Section 2.10 Mandatory Prepayments of Loans............................................... 22
Section 2.11 The Notes.................................................................... 22
Section 2.12 Breakage Fees................................................................ 22
Section 2.13 L/C Commitment Terminations.................................................. 23
Section 2.14 Agent Reliance on Borrower Payment........................................... 23
SECTION 3. FEES AND PAYMENTS...................................................................... 24
Section 3.1 Fees......................................................................... 24
Section 3.2 Place and Application of Payments............................................ 24
Section 3.3 Withholding Taxes............................................................ 24
SECTION 4. CONDITIONS PRECEDENT................................................................... 26
Section 4.1 Conditions Precedent to Initial Borrowing.................................... 26
Section 4.2 Conditions Precedent to all Loans............................................ 28
SECTION 5. REPRESENTATIONS AND WARRANTIES......................................................... 29
Section 5.1 Organization................................................................. 29
Section 5.2 Power and Authority; Validity................................................ 30
Section 5.3 No Violation................................................................. 30
Section 5.4 Litigation................................................................... 30
Section 5.5 Use of Proceeds; Margin Regulations.......................................... 30
Section 5.6 Investment Company Act....................................................... 31
Section 5.7 Public Utility Holding Company Act........................................... 31
Section 5.8 True and Complete Disclosure................................................. 31
Section 5.9 Financial Statements......................................................... 31
Section 5.10 No Material Adverse Change................................................... 31
Section 5.11 Labor Controversies.......................................................... 31
Section 5.12 Taxes........................................................................ 31
Section 5.13 ERISA........................................................................ 32
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Section 5.14 Consents..................................................................... 32
Section 5.15 Capitalization............................................................... 32
Section 5.16 Ownership of Property........................................................ 32
Section 5.17 Compliance with Statutes..................................................... 32
Section 5.18 Environmental Matters........................................................ 33
Section 5.19 [Intentionally Omitted]...................................................... 33
Section 5.20 Existing Indebtedness and Liens.............................................. 33
SECTION 6. COVENANTS.............................................................................. 33
Section 6.1 Existence.................................................................... 33
Section 6.2 Maintenance.................................................................. 34
Section 6.3 Taxes........................................................................ 34
Section 6.4 ERISA........................................................................ 34
Section 6.5 Insurance.................................................................... 35
Section 6.6 Financial Reports and Other Information...................................... 35
Section 6.7 Lenders' Inspection Rights................................................... 36
Section 6.8 Conduct of Business.......................................................... 36
Section 6.9 New Subsidiaries and Additional Collateral................................... 36
Section 6.10 Dividends and Negative Pledges............................................... 37
Section 6.11 Restrictions on Fundamental Changes.......................................... 37
Section 6.12 Environmental Laws........................................................... 38
Section 6.13 Liens........................................................................ 39
Section 6.14 Indebtedness................................................................. 40
Section 6.15 Loans, Advances and Investments.............................................. 41
Section 6.16 Transfer of Assets........................................................... 42
Section 6.17 Transactions with Affiliates................................................. 42
Section 6.18 Compliance with Laws......................................................... 42
Section 6.19 Capital Expenditures......................................................... 43
Section 6.20 Minimum Consolidated Net Worth............................................... 43
Section 6.21 Minimum Interest Coverage Ratio.............................................. 43
Section 6.22 Net Funded Debt to EBITDA Ratio.............................................. 44
Section 6.23 Net Senior Funded Debt to EBITDA............................................. 44
Section 6.24 Minimum Asset Coverage....................................................... 44
Section 6.25 Subordinated Debt Investment................................................. 44
SECTION 7. EVENTS OF DEFAULT AND REMEDIES......................................................... 44
Section 7.1 Events of Default............................................................ 44
Section 7.2 Non-Bankruptcy Defaults...................................................... 46
Section 7.3 Bankruptcy Defaults.......................................................... 47
Section 7.4 Collateral for Undrawn Letters of Credit..................................... 47
Section 7.5 Notice of Default............................................................ 48
Section 7.6 Application of Proceeds...................................................... 48
SECTION 8. CHANGE IN CIRCUMSTANCES................................................................ 48
Section 8.1 Change of Law................................................................ 48
Section 8.2 Unavailability of Deposits or Inability to Ascertain LIBOR Rate.............. 48
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Section 8.3 Increased Cost and Reduced Return............................................ 48
Section 8.4 Lending Offices.............................................................. 50
Section 8.5 Discretion of Lender as to Manner of Funding................................. 50
Section 8.6 Substitution of Lender....................................................... 50
SECTION 9. THE AGENT.............................................................................. 51
Section 9.1 Appointment and Authorization................................................ 51
Section 9.2 Rights and Powers............................................................ 51
Section 9.3 Action by Agent.............................................................. 51
Section 9.4 Consultation with Experts.................................................... 51
Section 9.5 Indemnification Provisions; Credit Decision.................................. 51
Section 9.6 Indemnity.................................................................... 52
Section 9.7 Resignation of Agent and Successor Agent..................................... 52
SECTION 10. MISCELLANEOUS.......................................................................... 53
Section 10.1 No Waiver of Rights.......................................................... 53
Section 10.2 Non-Business Day............................................................. 53
Section 10.3 Documentary Taxes............................................................ 53
Section 10.4 Survival of Representations.................................................. 53
Section 10.5 Survival of Indemnities...................................................... 53
Section 10.6 Setoff....................................................................... 53
Section 10.7 Notices...................................................................... 54
Section 10.8 Counterparts................................................................. 55
Section 10.9 Successors and Assigns....................................................... 55
Section 10.10 Sales and Transfers of Loans and Notes; Participations in Loans and
Notes........................................................................ 55
Section 10.11 Amendments................................................................... 58
Section 10.12 Headings..................................................................... 58
Section 10.13 Legal Fees, Other Costs and Indemnification.................................. 58
Section 10.14 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.............. 59
Section 10.15 Confidentiality.............................................................. 61
Section 10.16 Severability................................................................. 61
Section 10.17 Change in Accounting Principles or Tax Laws.................................. 61
Section 10.18 Refinancing of Senior Notes and Loans Under Existing Credit Agreement........ 62
Section 10.19 Effectiveness................................................................ 62
Section 10.20 Notice....................................................................... 62
EXHIBITS
2.11 - Form of Note
4.1 - Financial Condition Certificate
6.6 - Compliance Certificate
10.10 - Form of Assignment Agreement
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SCHEDULES
Schedule 1.1 Initial Commitments
Schedule 2.2 Existing Letters of Credit
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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FOURTH AMENDED AND RESTATED SECURED CREDIT AGREEMENT dated as of
November 12, 2003, between Quanta Services, Inc., a Delaware corporation (the
"BORROWER"), the lenders from time to time parties hereto (each a "LENDER" and
collectively, the "LENDERS"), and Bank of America, N.A., as administrative agent
for the Lenders (in such capacity, the "AGENT").
RECITALS
A. The Borrower, certain of the Lenders and Bank of America,
N.A., as agent ("EXISTING AGENT") previously entered into that certain Third
Amended and Restated Secured Credit Agreement dated as of June 14, 1999 (as
amended prior to the date hereof, the "EXISTING CREDIT AGREEMENT").
B. The parties hereto desire to amend and restate such Existing
Credit Agreement in its entirety and refinance the "Obligations" thereunder by
providing an L/C Commitment Amount of $120,000,000 and a single advance term
loan in the amount of $60,000,000.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained in this Agreement, the parties to this Agreement agree to
amend and restate the Existing Credit Agreement in its entirety, as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
Section 1.1. Definitions. Unless otherwise defined in this Agreement,
the following terms shall have the following meanings:
"ACQUISITION" means, a direct or indirect purchase by the Borrower or
any of its Subsidiaries for cash, stock, or other securities or property,
whether in one or more related transactions, of all or substantially all of the
assets or more than 50% of 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 LIBOR Loan, 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 of America, N.A. acting in its capacity as
administrative agent for the Lenders, and any successor agent appointed
hereunder pursuant to SECTION 9.7.
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"AGREEMENT" means this Credit Agreement, as amended, restated or
supplemented from time to time.
"APPLICABLE MARGIN" means, for Base Rate Loans, 1.50% per annum, and
for LIBOR Loans, 3.25% per annum.
"APPLICATION" means an application for a Letter of Credit in the form
from time to time used by Agent's letter of credit department.
"ASSIGNMENT AGREEMENT" means an agreement in substantially the form of
EXHIBIT 10.10 whereby a Lender conveys part or all of its L/C Commitments and
Loans and participations in Letters of Credit to another Person that thereupon
becomes a Lender, or that increases its L/C Commitments, outstanding Loans and
outstanding participations in Letters of Credit pursuant to SECTION 10.10.
"BASE RATE" means, for any day, the higher of (i) 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), or (ii) the Federal Funds Rate plus one-half of one percent (0.5%)
per annum, with any change in the Base Rate resulting from a change in either
such rate to be effective on the date of the relevant change.
"BASE RATE LOAN" means any portion of the Term Loan bearing interest
prior to maturity at the Base Rate plus the Applicable Margin.
"BENEFICIAL OWNERSHIP," and "BENEFICIAL OWNER" shall have the meanings
assigned to them in Rule 13d-3 under the Exchange Act in effect on the date of
this Agreement.
"BORROWER" means Quanta Services, Inc., a Delaware corporation.
"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 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 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 COLLATERAL SECURITY AGREEMENT" means that certain Security
Agreement of the Borrower dated as of October 31, 2003, in favor of the Existing
Agent pursuant to which the Borrower deposited with the Existing Agent certain
proceeds of the 2003 Convertible
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Subordinated Notes as security for the "Obligations" under the Existing Credit
Agreement, as amended, restated, or supplemented from time to time.
"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
Moody's; (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 Moody's; (iv) commercial paper or
Eurocommercial paper with a rating of at least A-1 from S&P or P-1 from Moody's,
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 Moody's, which are secured by a fully perfected
security interest in any obligation of the type described in (i) above and has a
market value as 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 Moody's; 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.
"CHANGE IN CONTROL" shall be deemed to have occurred if (i) any Person
acquires, directly or indirectly, the Beneficial Ownership of any voting
security of the Borrower and immediately after such acquisition such Person is,
directly or indirectly, the Beneficial Owner of voting securities representing
50% or more of the total voting power of all the then outstanding voting
securities of the Borrower entitled to vote generally in the election of
directors; or (ii) individuals who on November 12, 2003, constituted the
Borrower's Board of Directors, or their approved successors, cease for any
reason to constitute at least a majority of the Borrower's Board of Directors.
An approved successor is a new director elected when the election or nomination
for the election by the Borrower's stockholders of such new director was
approved by vote of at least two-thirds of the directors then still in office
who were directors on November 12, 2003, or their approved successors.
"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 TERMINATION DATE" means the earliest of (i) the Maturity
Date; (ii) the date on which the L/C Commitments are terminated in full or
reduced to zero pursuant to
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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 L/C 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.
Notwithstanding any of the paragraph above to the contrary, (a) for the
fiscal quarter ending December 31, 2003, Consolidated Interest Expense shall be
equal to $21,500,000, (b) for any fiscal quarter ending during the period
commencing March 31, 2004 and ending September 30, 2004, Consolidated Interest
Expense shall be equal to (i) the amount set forth in the table below for the
applicable fiscal quarter set forth in the table below plus (ii) "Consolidated
Interest Expense" (as defined in the paragraph above) for the period commencing
January 1, 2004 and ending on the last day of such applicable fiscal quarter;
and (c) for any fiscal quarter ending after September 30, 2004, Consolidated
Interest Expense shall be equal to "Consolidated Interest Expense" (as defined
in the paragraph above) for the four fiscal quarters then ending.
FISCAL QUARTER ENDED APPLICABLE AMOUNT
- -------------------------------------------------------
March 31, 2004 $ 16,125,000
- -------------------------------------------------------
June 30, 2004 $ 10,750,000
- -------------------------------------------------------
September 30, 2004 $ 5,375,000
- -------------------------------------------------------
"CONSOLIDATED NET ACCOUNTS" means, as of any date of determination,
accounts receivable set out in the consolidated balance sheet of the Borrower
and its Subsidiaries as accounts receivable, net of allowances, and in each
case, as determined in accordance with GAAP.
"CONSOLIDATED NET ASSETS" means, as of any date of determination, the
sum of (a) Consolidated Net Accounts, plus (b) Consolidated Net PP&E.
"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 PP&E" means, as of any date of determination, the
difference of (a) total property, plant and equipment of the Borrower and its
Subsidiaries set out in the consolidated balance sheet of the Borrower and its
Subsidiaries, minus (b) accumulated depreciation expense attributed to such
items, set out in the consolidated balance sheet of the
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Borrower and its Subsidiaries as "property and equipment, net", and in each
case, as 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.
"CONVERTIBLE SUBORDINATED NOTES" means the notes, guarantees, and all
other obligations now or hereafter arising under, or pursuant to, the First
Supplemental Indenture, including, without limitation, the "2007 Notes" (as
defined in the First Supplemental Indenture).
"CREDIT DOCUMENTS" means this Agreement, the Notes, the Existing
Subsidiary Guaranties (and any ratifications thereof), the Existing Pledge
Agreements (and any ratifications thereof), the Existing Security Agreements
(and any ratifications thereof), the Existing Patent Collateral Assignments (and
any ratifications thereof), the Applications, Interest Rate Protection
Agreements with any Lender or any Affiliate of Lender, and any other pledge
agreements, documents or instruments now or hereafter executed by the Borrower
or any of its Subsidiaries 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.
"EBIT" means, for any period, the sum of Consolidated Net Income plus,
without duplication, each of the following to the extent actually deducted in
determining Consolidated Net Income: (a) Consolidated Interest Expense; (b)
provisions for taxes based on income or revenues; (c) provisions made in
accordance with SFAS 142 or SFAS 144, which taken together with all other
charges previously taken in connection with SFAS 142 or SFAS 144, do not, in the
aggregate, exceed $850,000,000; (d) to the extent applicable, Permitted Charges;
and (e) Non-Cash Charges, in each case calculated on a consolidated basis for
the Borrower and its Subsidiaries and as determined in accordance with GAAP.
Notwithstanding any of the paragraph above to the contrary, (a) for any
fiscal quarter ending during the period commencing December 31, 2003 and ending
June 30, 2004, EBIT shall be equal to Historical EBIT plus "EBIT" (as defined in
the paragraph above) for the period commencing October 1, 2003 and ending on
last day of the applicable fiscal quarter; and (b) for any fiscal quarter ending
after June 30, 2004, EBIT shall be equal to "EBIT" (as defined in the paragraph
above) for the four fiscal quarters then ending.
"EBITDA" means, for any period (using the historical financial results
of any business acquired in an Acquisition through the Effective Date, to the
extent applicable, all on a pro forma basis, consistent with SEC regulations),
the sum of Consolidated Net Income plus, without duplication, each of the
following to the extent actually deducted in determining Consolidated Net
Income: (a) Consolidated Interest Expense; (b) provisions for taxes based on
income or revenues; (c) the amount of all depreciation and amortization expense
deducted in determining Consolidated Net Income; (d) charges taken in accordance
with SFAS 142 or SFAS 144, which when taken together with all other charges
previously taken in connection with SFAS 142 or SFAS 144, do not, in the
aggregate, exceed $850,000,000; (e) without duplication, Permitted
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Charges; and (f) without duplication, Non-Cash Charges, 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 after the
Effective Date, EBITDA may be calculated, subject to the immediately following
sentence, using a calculation which (y) includes the historical financial
results of the acquired business on a pro forma trailing four fiscal quarter
basis (consistent with SEC regulations), and (z) assumes that the consummation
of such Acquisition (and the incurrence, refinancing, or assumption of any
Indebtedness in connection with such Acquisition) occurred on the first day of
the trailing four fiscal quarter period. The foregoing adjustment to EBITDA to
take into account an Acquisition may only be made if the balance sheet and
statements of income, retained earnings, and cash flows of the acquired Person
(or the Person from whom the assets, securities or other equity interests were
acquired), are in compliance with SEC regulations and requirements regarding the
preparation and presentation of historical financial information and pro forma
financial information.
Notwithstanding any of the paragraph above to the contrary, (a) for any
fiscal quarter ending during the period commencing December 31, 2003 and ending
June 30, 2004, EBITDA shall be equal to Historical EBITDA plus "EBITDA" (as
defined in the paragraph above) for the period commencing October 1, 2003 and
ending on last day of the applicable fiscal quarter; and (b) for any fiscal
quarter ending after June 30, 2004, EBITDA shall be equal to "EBITDA" (as
defined in the paragraph above) for the four fiscal quarters then ending.
"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
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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
as such in SECTION 7.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"EXISTING AGENT" is defined in the Preamble.
"EXISTING CREDIT AGREEMENT" is defined in the Preamble.
"EXISTING L/Cs" means the one or more letters of credit issued by the
Existing Agent under the Existing Credit Agreement for the account of the
Borrower before the date of this Agreement and that are described on SCHEDULE
2.2.
"EXISTING L/C OBLIGATIONS" means the total undrawn face amount of
outstanding Existing L/Cs.
"EXISTING PATENT COLLATERAL ASSIGNMENT" means the patent collateral
assignment executed in connection with the Existing Credit Agreement, as
amended, restated or supplemented from time to time.
"EXISTING PLEDGE AGREEMENTS" means each pledge agreement of the
Borrower and any of its Subsidiaries executed in connection with the Existing
Credit Agreement, as amended, restated or supplemented from time to time.
"EXISTING SECURITY AGREEMENTS" means each security agreement of the
Borrower and any of its Subsidiaries executed in connection with the Existing
Credit Agreement, including without limitation the Cash Collateral Security
Agreement, as amended, restated or supplemented from time to time.
"EXISTING SUBSIDIARY GUARANTY" means each Guaranty of each direct or
indirect domestic Subsidiary of the Borrower executed in connection with the
Existing Credit Agreement, as amended, restated or supplemented from time to
time.
"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 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.
"FIRST SUPPLEMENTAL INDENTURE" means that certain First Supplemental
Indenture dated as of July 25, 2000, by the Borrower, as Issuer, to Chase Bank
of Texas, National Association, as
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Trustee, executed and delivered pursuant to the Subordinated Indenture, as the
same may be amended, restated or supplemented from time to time.
"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 L/C Obligations, and all reimbursement obligations relative
to the face amount of all other letters of credit issued for the account of the
Borrower or any of its Subsidiaries, and (iii) all Capitalized Lease
Obligations.
"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 domestic 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 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
8
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.
"HISTORICAL EBIT" means the amount set forth in the table below for the
applicable fiscal quarter set forth in the table below:
FISCAL QUARTER ENDED HISTORICAL EBIT
- ------------------------------------------------------------------------------------------------
December 31, 2003 and March 31, 2004 $18,050,000 plus EBIT for fiscal quarter
ended 9-30-03
- ------------------------------------------------------------------------------------------------
June 30, 2004 EBIT for fiscal quarter ended 9-30-03
- ------------------------------------------------------------------------------------------------
"HISTORICAL EBITDA" means the amount set forth in the table below for
the applicable fiscal quarter set forth in the table below:
FISCAL QUARTER ENDED HISTORICAL EBITDA
- -----------------------------------------------------------------------------
December 31, 2003 $48,550,000 plus EBITDA for fiscal quarter
ended 9-30-03
- -----------------------------------------------------------------------------
March 31, 2004 $33,750,000 plus EBITDA for fiscal quarter
ended 9-30-03
- -----------------------------------------------------------------------------
June 30, 2004 EBITDA for fiscal quarter ended 9-30-03
- -----------------------------------------------------------------------------
"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
9
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; (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 Loans are satisfied or waived in
writing and the Term Loan hereunder is made.
"INTEREST PAYMENT DATE" means (i) for a Base Rate Loan, the last
Business Day of each calendar quarter such Loan is outstanding commencing
December 31, 2003, 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 Loan
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.
"L/C COMMITMENT AMOUNT" means $120,000,000, as such amount may be
reduced from time to time pursuant to the terms of this Agreement.
"L/C DOCUMENTS" means this Agreement, the Letters of Credit and
Applications with respect thereto and any draft or other document presented in
connection with a drawing thereunder.
10
"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 (a) the letters of credit issued by the
Agent on behalf of the Lenders for the account of the Borrower pursuant to
SECTION 2.2, and (b) the Existing L/Cs.
"LIBOR LOAN" means any portion of the Term 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, as applicable, each of
which is a "TYPE" of Loan hereunder. A Loan is "CONTINUED" (in the case of LIBOR
Loans) on the date a new Interest Period commences for such Loan, and is
"CONVERTED" when such Loan is changed from one type of Loan to the other, all as
requested by the Borrower pursuant to SECTION 2.4(a).
"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 more than fifty percent (50%) of the sum of (a) the outstanding
principal owed under the Term Loan, and (b) the aggregate amount of the L/C
Commitments, or if the L/C Commitments have terminated pursuant to the terms
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.
11
"MATERIAL ADVERSE EFFECT" means an effect that results in a material
adverse change since June 30, 2003, in (i) the business, properties, assets,
financial condition or, prior to June 30, 2003, prospects of the Borrower and
its Subsidiaries taken as a whole, or (ii) in the ability of the Borrower, or
Borrower or the Guarantors taken as a whole, to perform the Obligations under
the Credit Documents to which they are a party.
"MATURITY DATE" means January 1, 2005.
"MINIMUM ASSET COVERAGE RATIO" means, when determined, the ratio of (a)
Consolidated Net Assets, to (b) Net Senior Funded Debt.
"MINIMUM INTEREST COVERAGE RATIO" means, for any period, on a trailing
four fiscal quarter basis, the ratio of (a) EBIT to (b) Consolidated Interest
Expense, less interest expense attributable to capitalized loan costs and the
amount of fees paid pursuant to SECTION 3.1 of this Agreement.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
thereto.
"NET FUNDED DEBT" means, as of any date of determination, for the
Borrower and its Subsidiaries, Funded Debt less the amount of unrestricted cash
on hand and the fair market value of marketable securities owned by such Persons
having a value in excess of $25,000,000.
"NET FUNDED DEBT TO EBITDA RATIO" means, when determined, the ratio of
(i) Net Funded Debt to (ii) EBITDA.
"NET SENIOR FUNDED DEBT" means, as of any date of determination, for
the Borrower and its Subsidiaries, Net Funded Debt less the amount of
Subordinated Debt Investments.
"NET SENIOR FUNDED DEBT TO EBITDA RATIO" means, when determined, the
ratio of (i) Net Senior Funded Debt to (ii) EBITDA.
"NON-CASH CHARGES" means, for any period, the amount of non-cash
charges determined in accordance with GAAP; provided that (a) if any cash outlay
is made during such period in respect of such non-cash charge, only the amount
of such non-cash charge which exceeds the amount of the cash outlay may be added
back to Consolidated Net Income for purposes of calculating EBITDA and (b) the
amount of non-cash charges related to dispositions of equipment and fixed assets
shall not exceed $5,000,000.
"NOTE PURCHASE AGREEMENT" means that certain Note Purchase Agreement
dated as of March 1, 2000, among the Borrower, as issuer, and the purchasers
listed on "Schedule A" attached thereto, as lenders, as it may be amended,
restated or supplemented from time to time.
"NOTES" is 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
and interest on Loans and Reimbursement Obligations and to pay any other
obligations to the Agent or the Lenders arising under any Credit Document.
12
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PERCENTAGE" means, for each Lender, the percentage of the L/C
Commitments represented by such Lender's L/C Commitment; provided that, if the
L/C Commitments are terminated, each Lender's Percentage shall be calculated
based on its L/C 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 CHARGES" means, for any period, on a trailing four fiscal
quarter basis, lease termination expenses and severance costs not exceeding
$5,000,000, which relate to the organizational restructuring of the Borrower and
its Subsidiaries, plus amounts attributable to written off loan costs and any
make whole amounts.
"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.
"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).
"S&P" means Standard & Poor's Rating Group or any successor thereto.
"SEC" means the Securities and Exchange Commission.
"SENIOR NOTES" means the notes, guarantees, and all other obligations
owing from time to time under or pursuant to the Note Purchase Agreement.
"SFAS 142" means the Statement of Financial Accounting Standards No.
142 (Goodwill and Other Intangible Assets), as issued by the Financial
Accounting Standards Board in June, 2001, and applicable to all fiscal years
beginning after December 15, 2001.
"SFAS 144" means the Statement of Financial Accounting Standards No.
144 (Accounting for the Impairment or Disposal of Long-Lived Assets), as issued
by the Financial Accounting Standards Board in August, 2001 and adopted by the
Borrower on January 1, 2002.
"SUBORDINATED DEBT INVESTMENT" means (a) any issue of Indebtedness of
the Borrower or its Subsidiaries which is subordinated in right of payment and
collection to the Obligations on
13
terms acceptable to the Majority Lenders or on terms not materially less
favorable to the Lenders than either the Convertible Subordinated Notes or the
2003 Convertible Subordinated Notes, and (b) publicly issued senior subordinated
fixed rate debt securities (including any such debt securities issued under Rule
144A) that mature after the Maturity Date and are issued on then existing market
terms that are acceptable to the Agent or on terms not materially less favorable
to the Lenders than either the Convertible Subordinated Notes or the 2003
Convertible Subordinated Notes.
"SUBORDINATED INDENTURE" means that certain Subordinated Indenture
dated as of July 25, 2000, by the Borrower, as Issuer, to Chase Bank of Texas,
National Association, as Trustee, as the same may be 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.
"TAXES" shall have the meaning ascribed to such term in SECTION 5.12.
"TERM LOAN" means the $60,000,000 single advance term loan described in
the recitals of this Agreement.
"TERM NOTES" is defined in SECTION 2.11.
"2003 CONVERTIBLE SUBORDINATED NOTES" means the notes, guarantees, and
all other obligations now or hereafter arising under, or pursuant to, the 2003
Note Purchase Agreement.
"2003 NOTE PURCHASE AGREEMENT" means that certain Purchase Agreement
dated as of October 9, 2003, by and among the Borrower, as issuer, and the
purchasers listed on "Schedule A" attached thereto, as initial purchasers of the
Borrower's 4.50% convertible subordinated debentures due 2023, as the same may
be amended, restated or supplemented from time to time.
"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.
14
SECTION 2. THE CREDIT FACILITY.
Section 2.1. Term Loan. On the terms and subject to the conditions
hereof, each Lender severally but not jointly agrees to lend to the Borrower
that Lender's pro rata share of the Term Loan in a single advance on the date
hereof. If the Borrower pays or prepays any portion of the Term Loan under this
Agreement, such portion may not be reborrowed.
Section 2.2. Letters of Credit.
(a) Issuance of Letters of Credit. On the terms and subject to
the 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 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 L/C Obligations would thereby exceed the L/C Commitment Amount
then in effect, or (ii) 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. The Existing L/C Obligations are refinanced under this Agreement and,
to the extent then outstanding, shall be included in any calculation of L/C
Obligations, and such Existing L/Cs shall for all purposes constitute Letters of
Credit issued under this Agreement.
(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 Application for the relevant Letter of Credit, 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
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 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
15
the conditions precedent for all Loans of SECTION 4.2 and the other terms and
conditions of this SECTION 2.2.
(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 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 funds not borrowed hereunder. 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
16
respect or any statement therein being untrue or inaccurate in
any respect, 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;
(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
17
SETOFF, COUNTERCLAIM OR DEFENSE TO PAYMENT ANY LENDER MAY HAVE OR HAVE HAD
AGAINST THE BORROWER, THE AGENT, ANY OTHER LENDER OR ANY OTHER 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 L/C 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. Portions of
the Term Loan may be outstanding as either Base Rate Loans or LIBOR Loans, as
selected by the Borrower pursuant to SECTION 2.4. All LIBOR Loans advanced on
the Initial Borrowing Date shall be advanced as Base Rate Loans unless a notice
for a requested LIBOR Loan has been given by 11:00 a.m. at least three (3)
Business Days before the Initial Borrowing Date and indemnification has been
provided to the Lenders in connection therewith in the event the Initial
Borrowing Date does not occur on the date requested. Each Base Rate Loan shall
be in an amount of not less than $1,000,000, or a greater integral multiple of
$500,000. Each LIBOR Loan shall be in an amount of not less than $5,000,000, or
a greater integral multiple of $1,000,000.
Section 2.4 Manner of Borrowing.
(a) Selection of Interest Periods. The Borrower may select
multiple Interest Periods for LIBOR Loans, provided that at no time shall the
number of different Interest Periods for outstanding LIBOR Loans exceed eight
(8). The Borrower may from time to time elect to change or continue the type of
interest rate borne by each Loan or, subject to SECTION 2.3's minimum amount
requirement for each outstanding Loan, a portion thereof, as follows: (i) if
such Loan is a LIBOR Loan, the Borrower may continue part or all of such Loan as
a LIBOR Loan for an Interest Period specified by the Borrower or convert part or
all of such Loan into a Base Rate Loan on the last day of the Interest Period
applicable thereto, or the Borrower may earlier convert part or all of such Loan
into a Base Rate Loan so long as it pays the breakage fees and funding losses
provided in SECTION 2.12 and all interest accrued on such Loan, and (ii) if such
Loan is a Base Rate Loan, the Borrower may convert all or part of such Loan into
a LIBOR Loan for an Interest Period specified by the Borrower on any Business
Day. Notices of the continuation of a LIBOR Loan for an additional Interest
Period or of the conversion of part or all of a LIBOR Loan into a Base Rate Loan
or conversion of a Base Rate Loan into a LIBOR Loan must be given by no later
than 11:00 a.m. at least three (3) Business Days before the date of the
requested continuation or conversion. The Borrower shall give such notices
concerning the continuation or conversion of a Loan by telephone or facsimile
(which notice shall be irrevocable once given and, if by telephone, shall be
promptly confirmed in writing) which shall specify the date of the requested
continuation or conversion (which shall be a Business Day), the amount of the
applicable Loan(s), the type of Loan(s) to comprise such continued or converted
Loan(s), and, if any such Loan is to be a LIBOR Loan, the Interest Period
applicable thereto. The Borrower agrees that the Agent and each Lender may rely
on any such telephonic or facsimile
18
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.
(b) Borrower's Failure to Notify. If the Borrower fails to
give notice pursuant to SECTION 2.4(A) of the continuation or conversion of any
outstanding principal amount of a LIBOR Loan and has not notified the Agent by
11:00 a.m. at least three (3) Business Days before the last day of the Interest
Period for such LIBOR Loan, the Borrower shall be deemed to have requested the
continuation of such Loan as a LIBOR Loan with an Interest Period of one (1)
month, so long as no Default or Event of Default shall have occurred and be
continuing or would occur as a result of such continuation or conversion. 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 continue or convert Loans into LIBOR Loans shall be suspended.
Section 2.5 Interest Periods. As provided in SECTION 2.4(a), at the
time of each request for the continuation of, or conversion into, a LIBOR Loan,
the Borrower shall select an Interest Period applicable to such LIBOR Loan 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 LIBOR
Loan 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(a) hereof, at a rate per annum
equal to the lesser of (i) the Highest Lawful Rate or (ii) the sum of the Base
Rate from time to time in effect 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 LIBOR Loan in accordance with
SECTION 2.4(a).
(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
19
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(a) 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(a).
(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 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 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; and
(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.
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
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
20
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 Ann. (Vernon 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 Ann. (Vernon
1998), regulating certain revolving credit accounts shall not apply to this
Agreement or any of the Notes.
Section 2.8 Maturity of Loans. Each 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.
Section 2.9 Optional Prepayments. The Borrower shall have the privilege
of prepaying the Term Loan without premium or penalty in whole or in part at any
time, provided that, each voluntary partial prepayment of the Term Loan must be
in a principal amount of not less than $5,000,000, or a greater integral
multiple of $1,000,000. If the Borrower is prepaying LIBOR Loans, it shall give
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 Loans
shall be accompanied by accrued interest thereon, together with, if such Loans
being prepaid are LIBOR Loans, any applicable breakage fees and funding losses
pursuant to SECTION 2.12. The Borrower
21
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.
(a) If the aggregate amount of outstanding L/C Obligations
shall at any time for any reason exceed the L/C 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
pre-funding of cash collateral for Letters of Credit to the extent such Letters
of Credit are not fully cash collateralized at the time of such pre-funding.
(b) Any mandatory prepayment of Loans pursuant to this
Agreement 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.
(c) Proceeds of the initial Loan shall be used in accordance
with SECTION 2.10(c) of the Existing Credit Agreement.
Section 2.11 The Notes. The Term Loans outstanding to the Borrower from
the Lenders 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 (each such
promissory note, together with any replacements thereof, a "TERM NOTE", and
collectively, 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:
22
(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);
(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 continue,
prepay or convert to a LIBOR Loan on the date specified in a notice
given pursuant to SECTION 2.4(a) (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 L/C 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 L/C
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 L/C Commitments, as applicable; provided that the L/C Commitment
Amount may not be reduced to an amount less than the sum of the aggregate amount
of 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 L/C 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 L/C
Commitments.
Section 2.14 Agent Reliance on Borrower Payment. Except as otherwise
provided under SECTION 2.2(c), unless the Borrower has notified the Agent prior
to the date any payment or prepayment to be made by it is due (or if the
Borrower has given notice of its intention to prepay a Loan on such date), that
it does not intend to make such payment or prepayment, the Agent may assume that
the Borrower has made such payment when due (or on the date stated in its
prepayment notice) and in reliance upon such assumption may (but shall not be
required to) make available to each Lender its Percentage of such payment. If
such payment was not in fact made to the Agent in immediately available funds,
then each Lender shall promptly on demand
23
repay to the Agent the amount of such assumed payment made available to such
Lender, together with interest thereon in respect of each day from and including
the date such amount was made available by the Agent to such Lender to the date
such amount is repaid to the Agent at the Federal Funds Rate.
SECTION 3. FEES AND PAYMENTS.
Section 3.1 Fees.
(a) Letter of Credit Fees. Commencing upon the Effective Date,
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 (based on their respective Percentages) 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 multiplied by a rate equal to 0.50% per annum,
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 fronting fee of 1/8% of the face
amount of each Letter of Credit (other than the Existing L/Cs). All fees paid to
the Agent or any other parties before the date of this Agreement in respect of
any Existing L/Cs are solely for the account of those parties without any
accounting for them or sharing of them with the Agent or Lenders notwithstanding
any contrary provision in this Agreement.
(b) Agent Fees. The Borrower shall pay to the Agent the fees
agreed to from time to time by the Borrower and the Agent.
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
24
(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, 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, 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
25
(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.
(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 its portion of the Term Loan 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
26
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 Term 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) Issuance of 2003 Convertible Subordinated
Notes and Execution of Cash Collateral Security Agreement. Evidence
that the Borrower has issued at least $270,000,000 principal amount of
2003 Convertible Subordinated Notes and the net cash proceeds from the
issuance of such Indebtedness shall have been applied in accordance
with Section 2.10(c) of the Existing Credit Agreement, and the Cash
Collateral Security Agreement shall have been executed and all
Collateral required to be delivered pursuant to the terms thereof shall
have been delivered;
(iii) Termination and Release Agreement. A
Termination and Release Agreement with respect to the Existing Credit
Agreement, in form and substance reasonably satisfactory to the Agent,
duly executed by the Borrower;
(iv) Ratifications. Duly executed ratifications
of the Existing Subsidiary Guaranties, the Existing Pledge Agreements
and the Existing Security Agreements in form and substance reasonably
satisfactory to the Agent;
(v) Debt Rating. Evidence reasonably
satisfactory to the Agent that the Borrower's senior unsecured
unenhanced debt is rated (A) B1 or higher with a stable outlook by
Moody's, and (B) B+ or higher with a stable outlook by S&P;
(vi) 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 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;
(vii) 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 the Borrower is authorized
to do business;
(viii) Fees. Payment of all fees and all expenses
incurred through the Effective Date then due and owing to the Agent
pursuant to this Agreement or any other written agreement between the
Borrower and Bank of America, N.A. (or any of its Affiliates) in effect
on the date of this Agreement;
27
(ix) 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;
(x) Financial Condition Certificate. A
certificate of the principal financial officer of the Borrower in
substantially the form of EXHIBIT 4.1;
(xi) Financial Statements. Consolidated financial
statements of the Borrower and its Subsidiaries for the fiscal year
ending December 31, 2002, and the fiscal quarter ending June 30, 2003
(in each case including balance sheets and statements of income,
retained earnings, and cash flows, with the December 31, 2002 financial
statements being audited by independent public accountants of
recognized national standing and prepared in accordance with GAAP),
which financial statements are acceptable to Agent;
(xii) Opinions of Counsel. The opinions of (1)
Dana Gordon, General Counsel to the Borrower and the Guarantors, and
(2) Weil, Gotshal & Manges, LLP, in each case covering such matters as
the Lenders may reasonably require; and
(xiii) 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 Loans. In the case of each
issuance of, increase in the amount of, or extension of the expiry date of, a
Letter of Credit:
(a) Notices. The Agent shall have received a duly completed
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 shall be true and correct in all
material respects as of the time of such issuance, increase or extension, 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 issuance, increase
or extension;
(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 by the Borrower 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;
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(e) Regulation U; Other Laws. The issuance, increase or
extension 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;
(f) No Material Adverse Change. There shall have occurred no
event or effect that has had or could reasonably be expected to have a Material
Adverse Effect; and
(g) Cash Collateral. With respect to the issuance of a
requested Letter of Credit, the Borrower shall provide the Agent with cash
collateral in an amount equal to the face amount of such Letter of Credit.
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 issuance of, increase in the amount
of, or extension of the expiry date of, such Letter of Credit that all
conditions precedent to such issuance, increase or extension have been satisfied
or fulfilled unless the Borrower gives the Agent written notice to the contrary,
in which case 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 and be continuing, 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(a) 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, the Borrower may only convert any 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 (or organized) 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.
29
(b) As of the date hereof, the Borrower has no Subsidiaries
other than the Subsidiaries listed on SCHEDULE 5.1, and the Borrower directly or
indirectly owns one hundred percent (100%) of each class of capital stock or
ownership interests of each 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 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). 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.
30
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, superseded or otherwise modified information
except as so updated, corrected, supplemented, superseded 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.
Section 5.9 Financial Statements. The financial statements heretofore
delivered to the Lenders for the fiscal year ending December 31, 2002 and the
fiscal quarter ending June 30, 2003, 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 June 30, 2003, 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
31
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 transactions
hereunder have been obtained or made and are or will be in full force and
effect.
Section 5.15 Capitalization. All outstanding capital stock of the
Borrower and its Subsidiaries has been duly and validly issued, is 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 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.
32
Section 5.18 Environmental Matters.
(a) Borrower and its Subsidiaries have complied with, and on
the date any Letter of Credit is issued, increased or extended 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 Environmental Law, except for such violations 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 [Intentionally Omitted].
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.
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 L/C Commitment is
outstanding hereunder:
Section 6.1 Existence. The Borrower and its Subsidiaries will preserve
and maintain their existence except (a) for the dissolution of any Subsidiaries
whose assets are transferred to the Borrower or any of its Subsidiaries; (b) 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
33
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
(a) 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; (b) receipt of any notice from PBGC of its intention to seek
termination of any Plan or appointment of a trustee therefor; (c) 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 (d) 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).
34
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, all of which policies shall name the Agent as a loss payee
for losses in excess of $50,000 and provide that no policy shall terminate
without at least thirty (30) days' advance written notice to the Agent and
otherwise be reasonably acceptable to the Agent. The Borrower and each of its
Subsidiaries will also insure employers' and public and product liability risks,
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 (with each liability insurance policy to name the Agent as an
additional insured) 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, and a summary of asset dispositions during such
period and in the aggregate to date under SECTION 6.16(c), (d) and (e),
all of which under this clause (ii) shall be in form and detail
satisfactory to the Agent 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 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, whose
opinion shall be in scope and substance in accordance with generally
accepted auditing standards and, with respect to
35
the audited financial statements for the Borrower's fiscal year 2002,
shall not contain a going concern or other like qualification.
(b) Each financial statement furnished to the Agent pursuant
to SECTION 6.6(a)(i) and (ii) 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 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 substantially in the form of EXHIBIT 6.6.
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 reasonably 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 and Additional Collateral. The Borrower
shall (i) cause 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 the Existing Subsidiary Guaranties and to execute
and deliver a security agreement substantially in the form of the Existing
Security Agreements (and if applicable, a patent collateral assignment
substantially in the form of the Existing Patent Collateral Assignment),
together with a UCC-1 Financing Statement with respect to the assets of such
Guarantor as set forth therein, and (ii) execute and deliver and cause any
domestic Subsidiary to execute and deliver to the Agent a pledge agreement
substantially in the form of the Existing Pledge Agreements, in respect of any
domestic Subsidiary formed or acquired after the Effective Date 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
36
executed in blank with respect thereto, in each case within five (5) 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). Upon demand by the Agent, the Borrower shall promptly
execute and deliver to the Agent, and shall cause its domestic Subsidiaries to
promptly execute and deliver to the Agent, such other and further security
documents as may be reasonably requested by the Agent to perfect a Lien on its
rolling stock and all equipment with certificates of title. Nothing in this
SECTION 6.9 may be construed as permitting any action not permitted by SECTION
6.11.
Section 6.10 Dividends and Negative Pledges.
(a) The Borrower shall not pay any dividends or other
distributions on its capital stock other than (i) dividends made wholly in the
form of additional shares of the Borrower's capital stock, provided that, in
respect of any stock split, the Borrower may make cash distributions in lieu of
issuing fractional shares of capital stock which would otherwise result from
such stock split, and (ii) repurchases of common stock of the Borrower from
officers, directors and employees pursuant to the Borrower's restricted stock
option or compensation programs, to pay withholdings in respect of taxes owed as
a result of grants of stock options and stock compensation thereunder, so long
as the Borrower's performance of its obligations under such restricted stock
option or compensation programs cannot reasonably be expected to have a material
negative impact on projected cash flows.
(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.
(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 or stock (other than as permitted under SECTION 6.16), except:
37
(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, so long as (i) the
Borrower is the surviving entity to any such merger or consolidation to which
the Borrower is a party, or, if the Borrower is not a party to such transaction,
a domestic Subsidiary is the surviving entity to any such merger or
consolidation or the other Person will thereby become a domestic Subsidiary
(unless no party to such transaction is a domestic Subsidiary, in which case the
applicable foreign Subsidiary must be the surviving entity to any such merger or
consolidation or the other Person must thereby become a foreign Subsidiary),
(ii) the nature of the business of such acquired Person is a Permitted Business,
provided that, Acquisitions will be primarily focused on acquiring Persons whose
business activities are restricted to the specialty electric and infrastructure
contracting service business and utility outsourcing business, (iii) 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,
(iv) such merger, consolidation, purchase or Acquisition is non-hostile in
nature, (v) with respect to any such merger, consolidation, purchase or
Acquisition, the amount of the cash portion of the consideration paid by the
Borrower and its Subsidiaries in respect thereof does not exceed (A) $20,000,000
if, at the time of such transaction, the Borrower's Net Funded Debt to EBITDA
Ratio as of the end of the immediately preceding fiscal quarter is greater than
or equal to 3.50 to 1.00, or (B) $40,000,000 if, at the time of such
transaction, the Borrower's Net Funded Debt to EBITDA Ratio as of the end of the
immediately preceding fiscal quarter is less than 3.50 to 1.00, and (vi) with
respect to all such mergers, consolidations, purchases or Acquisitions, the
aggregate amount of the cash portion of the consideration paid by the Borrower
and its Subsidiaries in respect thereof during any 12 month period, does not
exceed (A) $40,000,000 if, at the time of any such transaction, the Borrower's
Net Funded Debt to EBITDA Ratio as of the end of the immediately preceding
fiscal quarter is greater than or equal to 3.50 to 1.00, or (B) $80,000,000 if,
at the time of any such transaction, the Borrower's Net Funded Debt to EBITDA
Ratio as of the end of the immediately preceding fiscal quarter is less than
3.50 to 1.00; and
(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 (i) if the transaction is with the Borrower, the Borrower shall be the
surviving entity to any such merger or consolidation, or (ii) if the transaction
is not with the Borrower, a domestic Subsidiary shall be the surviving entity to
any such merger or consolidation (unless no party to such transaction is a
domestic Subsidiary).
Except as otherwise permitted in this SECTION 6.11 and SECTION 6.16, 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.
Borrower shall give the Agent the notice required under SECTION 6.9.
Section 6.12 Environmental Laws. The Borrower and its Subsidiaries
shall comply with all Environmental Laws (including, without limitation,
obtaining and maintaining all necessary permits, licenses and other necessary
authorizations) applicable to or affecting the
38
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, 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;
39
(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 on assets acquired securing Indebtedness permitted
by SECTION 6.14(e); 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;
(j) existing Liens listed on SCHEDULE 6.13 and any extension,
renewal or replacement (but not increase) thereof;
(k) Liens created by the Credit Documents;
(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 and any notice thereof removed from the public
records on or before thirty (30) days after the date of such Acquisition; and
(m) Liens on assets acquired with Indebtedness permitted by
SECTION 6.14(E), so long as such Liens attach only to the assets acquired with
such Indebtedness.
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) 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 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;
(d) Indebtedness under any Interest Rate Protection Agreements
entered into to protect the Borrower against fluctuations in interest rates and
not for speculative purposes;
(e) Purchase money Indebtedness incurred in the ordinary
course of business not to exceed an aggregate amount of $25,000,000 outstanding
at any time;
40
(f) Indebtedness under the Subordinated Indenture, including
without limitation, the Indebtedness under the Convertible Subordinated Notes
and the First Supplemental Indenture; provided that the principal amount of such
Indebtedness shall not at any time exceed $172,500,000;
(g) Indebtedness under the 2003 Note Purchase Agreement,
including without limitation, the Indebtedness under the 2003 Convertible
Subordinated Notes; provided that, the principal amount of such Indebtedness
shall not at any time exceed $275,000,000; and
(h) Guaranties from domestic Subsidiaries entered into or
delivered in connection with the 2003 Convertible Subordinated Notes and
obligations covered by CLAUSE (vi) of the definition of Indebtedness to the
extent that such obligations are entered into or arise in connection with the
2003 Convertible Subordinated Notes.
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) to the extent permitted by, and in compliance with,
applicable law, 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) Investments made in Persons other than Borrower or its
Subsidiaries, provided that, such Investments made after the date of this
Agreement, may not, in the aggregate, exceed $5,000,000;
(h) as permitted by SECTION 6.11;
(i) Investments in Lightwave L.L.C., an Alabama limited
liability company (or any of its successors or assigns), provided that all such
Investments (whether by cash or contribution of assets, but excluding the
reinvestment of its retained earnings) after December 31, 1999 may not in the
aggregate exceed $5,000,000;
41
(j) [intentionally omitted]; and
(k) Investments made prior to the date of this Agreement in
"landfill gas to energy" projects and other cogeneration projects, including
without limitation, Investments in Network Electric Company.
Section 6.16 Transfer of Assets. The Borrower and its Subsidiaries
shall not permit any sale, transfer, conveyance, assignment or other disposition
of any asset of the Borrower or any of its Subsidiaries except:
(a) transfers of inventory 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 (i) the Borrower and its
non-domestic Subsidiaries not to exceed, in the aggregate, $5,000,000, or (ii)
the Borrower and any of its domestic Subsidiaries;
(d) sales, transfers or conveyances of accounts receivable for
fair and adequate consideration and for cash; and
(e) to the extent not included in clauses (a) through (d)
above, dispositions of assets (including for the avoidance of doubt, the capital
stock of any Subsidiary provided that all of the capital stock of such
Subsidiary owned by the Borrower and/or any of its other Subsidiaries is sold or
disposed), for fair and adequate consideration and for cash, provided that,
dispositions under this SUBSECTION (e) may not, in the aggregate, exceed
$10,000,000 in book value during any 12 month period.
In connection with any transfer or other disposition of assets
of the Borrower or any of its Subsidiaries or of any other Collateral, in each
case that is permitted by this Agreement or any other Credit Document
(including, without limitation, any such transfer or disposition pursuant to
this SECTION 6.16), the Agent and the Lenders shall, in connection with the
consummation of such transfer or disposition, promptly release all security
interests in and other Liens on any such assets and Collateral.
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
42
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.
(a) Neither the Borrower nor any of its Subsidiaries shall
make or commit to make Capital Expenditures during any fiscal year, which, in
the aggregate, exceed 50% of EBITDA for the 12 month period ending on the last
day of the immediately preceding fiscal year.
(b) In addition to the annual limits under SECTION 6.19(a), if
the Borrower executes an eligible contract, then the Borrower may make Capital
Expenditures in respect of such contract in an amount equal to the lesser of (i)
the actual amount required by such contract, and (ii) $30,000,000, provided
that, (A) in respect of each such contract, Capital Expenditures not made within
12 months after the date of such contract shall be applied against the annual
limits under SECTION 6.19(a), and (b) the amount of Capital Expenditures under
this SECTION 6.19(b) for all such contracts may not, in the aggregate, exceed
$30,000,000 in any fiscal year. Upon execution of each eligible contract, the
Borrower shall promptly deliver a copy of such contract to the Agent, together
with a summary of the Capital Expenditures required by such contract in form and
detail reasonably acceptable to the Agent. As used in this SECTION 6.19(b),
"ELIGIBLE CONTRACT" means, a utility outsourcing contract with quantifiable
revenues to the Borrower of at least $30,000,000 during any period of 12
consecutive months prior to the date that is 18 months after the date of such
contract.
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
(a) $570,000,000, plus (b) for each fiscal quarter ended prior to (but not on)
such date of determination, commencing with the fiscal quarter ended December
31, 2003, the total of (i) an amount equal to 50% of Consolidated Net Income for
such fiscal quarter, if positive, plus (ii) an amount equal to 100% of the
amount of any equity issuance by the Borrower, including equity issued in a
secondary offering or equity issued to acquire another entity in an Acquisition,
minus (iii) Permitted Charges which are applicable to such period, minus (iv)
without duplication, all Non-Cash Charges. Increases in Consolidated Net Worth
shall be appropriately adjusted to eliminate any adverse effects occasioned by
the expensing of Make-Whole Amounts (as defined in the Note Purchase Agreement)
paid pursuant to the Note Purchase Agreement.
Section 6.21 Minimum Interest Coverage Ratio. The Borrower will
maintain a Minimum Interest Coverage Ratio not less than the ratio set out below
for the applicable period:
For the period ending December 31, 2003: 1.50 to 1.00
For the period ending March 31, 2004: 1.50 to 1.00
For the period ending June 30, 2004: 1.50 to 1.00
For the period ending September 30, 2004: 1.75 to 1.00
For the period ending December 31, 2004: 2.00 to 1.00
43
Section 6.22 Net Funded Debt to EBITDA Ratio. The Borrower will
maintain a maximum Net Funded Debt to EBITDA Ratio not greater than the ratio
set out below for the applicable period:
For the period ending December 31, 2003: 5.00 to 1.00
For the period ending March 31, 2004: 5.00 to 1.00
For the period ending June 30, 2004: 5.00 to 1.00
For the period ending September 30, 2004: 4.50 to 1.00
For the period ending December 31, 2004: 4.50 to 1.00
Section 6.23 Net Senior Funded Debt to EBITDA. The Borrower will
maintain a maximum Net Senior Funded Debt to EBITDA Ratio not greater than 2.00
to 1.00, tested quarterly as of the last day of each fiscal quarter for the
fiscal quarter then ended.
Section 6.24 Minimum Asset Coverage. The Borrower will maintain a
Minimum Asset Coverage Ratio of not less than 2.50 to 1.00, tested quarterly as
of the last day of each fiscal quarter for the fiscal quarter then ended.
Section 6.25 Subordinated Debt Investment. The Borrower shall provide
written notice to the Agent (by confirmed fax to each of the Agent and its legal
counsel, Winstead Sechrest & Minick P.C., attention: Ms. Valinda Wolfert (fax
no.: 214-745-5390)) of (i) any Change in Control within two (2) Business Days
following any such Change in Control, and (ii) any notice received by the
Borrower from any holder of a Subordinated Debt Investment exercising any right
to (a) require the Borrower to redeem or (b) in respect of the Convertible
Subordinated Notes or 2003 Convertible Subordinated Notes, convert, in either
case as applicable, all or any part of a Subordinated Debt Investment within two
(2) Business Days of the Borrower's receipt thereof. The Borrower shall not
redeem, pursuant to any optional redemption right it may have, all or any part
of a Subordinated Debt Investment before the Maturity Date. The Borrower shall
not amend, modify or change in any way any provision of a Subordinated Debt
Investment so as to change the stated maturity date of the principal of such
Indebtedness, or any installment of interest thereon, to an earlier date,
increase the rate of interest thereon or any premium payable on the redemption
thereof, change any of the redemption or subordination provisions thereof (or
the definitions of any defined terms contained therein) or otherwise change in
any respect materially adverse to the interests of the Lenders any of the terms
thereof, in each case, without the consent of the Majority Lenders.
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 or any Reimbursement Obligation when it becomes due and
payable under this Agreement, or in the payment of 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 out in SECTIONS 6.10(a), 6.11, 6.16, or 6.25;
44
(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 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) 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(g);
(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
45
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;
(k) a Change in Control shall occur or the common stock of the
Borrower shall be delisted from the New York Stock Exchange;
(l) an Event of Default shall occur and be continuing under
any documents evidencing a Subordinated Debt Investment;
(m) an event of default shall occur and be continuing under
(i) the Subordinated Indenture, the First Supplemental Indenture or the
Convertible Subordinated Notes, or any other document evidencing Indebtedness
under the Subordinated Indenture, the First Supplemental Indenture or the
Convertible Subordinated Notes, or (ii) the 2003 Note Purchase Agreement or the
2003 Convertible Subordinated Notes, or any other document evidencing
Indebtedness under the 2003 Note Purchase Agreement or the 2003 Convertible
Subordinated Notes.
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 L/C 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 to the extent
46
any such Letter of Credit is not already cash collateralized; 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 and
automatically 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 to the extent
any such Letter of Credit is not already cash collateralized, 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.
(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
47
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, L/C 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.
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 LIBOR Loan
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
48
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 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; 12 CFR Part 225, 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
49
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 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 L/C 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.
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SECTION 9. THE AGENT.
Section 9.1 Appointment and Authorization. Each Lender hereby appoints
Bank of America, N.A. as the Agent under the Credit Documents and hereby
authorizes the Agent to take such action as Agent on each of its behalf and to
exercise such powers under the Credit Documents as are delegated to the Agent,
by the terms thereof, together with such powers as are reasonably incidental
thereto.
Section 9.2 Rights and Powers. The 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,
and the Agent and its 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 under the Credit
Documents. The term Lender as used in all Credit Documents, unless the context
otherwise clearly requires, includes the Agent in its individual capacity as a
Lender.
Section 9.3 Action by Agent. The obligations of the 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 be
required to take any action in violation of applicable law or of any provision
of any Credit Document, and the 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
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 to take specific action, the 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. The 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 nor any of its directors, officers, agents, Affiliates, 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 nor any of its
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 Loan or Letter of Credit; (ii) the performance or observance of
51
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 collectibility 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 makes no representation of
any kind or character with respect to any such matters mentioned in this
sentence. The Agent may execute any of its duties under any of the Credit
Documents by or through employees, agents, Affiliates, 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 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 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 it under the Credit Documents. The 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 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 its Subsidiaries, the creditworthiness of all account debtors of
the Borrower and its Subsidiaries, and the Agent shall have no liability
whatsoever to any Lender for such matters. The 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 its respective capacity as
Agent or in its individual capacity).
Section 9.6 Indemnity. The Lenders shall ratably, in accordance with
their Percentages, indemnify and hold the Agent and its 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 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, 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. If no
successor Agent shall have been so appointed by the Majority Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent, may, on behalf
of the Lenders, appoint a successor Agent
52
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 hereunder, such successor Agent shall thereupon
succeed to and become vested with all the rights and duties of the retiring
Agent under the Credit Documents, and the retiring Agent shall be discharged
from its duties and obligations thereunder. After any retiring Agent's
resignation hereunder as Agent, 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.
SECTION 10. MISCELLANEOUS.
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. Subject to SECTION 2.5(b), 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 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 L/C
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 shall survive the termination of this Agreement and the other Credit
Documents and the payment of the Loans and all other 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
53
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 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.
1360 Post Oak Blvd., Suite 2100
Houston, Texas 77056
Attention: Mr. James Haddox
Telephone: (713) 629-7600
Fax No.: (713) 629-7676
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with a copy to
Quanta Services, Inc.
1360 Post Oak Blvd., Suite 2100
Houston, Texas 77056
Attention: General Counsel
Telephone: (713) 629-7600
Fax No.: (713) 629-7676
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 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.
Telecopies of signatures shall be binding and effective as originals.
Section 10.9 Successors and Assigns. This Agreement shall be binding
upon the Borrower, the Agent, the Lenders and their respective successors and
assigns, and shall inure to the benefit of the Borrower, the Agent, 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 Loans and Notes; Participations in
Loans 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 Loan owing to such
Lender, any Note held by such Lender, any L/C Commitment of such Lender or any
other interest of such Lender hereunder, provided that no Lender may sell any
participating interests in any such Loan, Note, L/C Commitment or other interest
hereunder without also selling to such Participant the appropriate pro rata
share of its Loans, Notes, L/C 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 L/C Commitment and such
increase would affect such
55
Participant, (ii) reduce the principal of, or interest on, any of such Lender's
Loans, 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 Loans,
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 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 L/C Commitments and the
Loans 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, (i) each such sale to a
Purchasing Lender is for an identical percentage of the transferor Lender's
rights and obligations under the Term Loan and the L/C Commitment, and (ii) 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 Notes,
L/C Commitments and other interests hereunder, including participations in
Letters of Credit 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 an L/C Commitment as set forth
therein and (y) the transferor Lender thereunder shall, to the extent
56
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 L/C 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 Loans assumed by it pursuant to such Assignment Agreement,
and, if the transferor Lender has retained a Loan hereunder, new Notes to the
order of the transferor Lender in an amount equal to the Loans 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, or any successor forms
thereto, 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
57
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 L/C Commitment Amount without the consent of all Lenders or
increase any L/C Commitment of any Lender without the consent of such
Lender, (B) postpone the Maturity Date without the consent of all
Lenders 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 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 or any Lender, agrees to pay the reasonable
fees and disbursements of legal counsel and financial advisors to the Agent or
any Lender in connection with (a) the preparation and execution of the Credit
Documents, any amendment, waiver or consent related thereto, whether or not the
transactions contemplated therein are consummated, (b) 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, and (c) any refinancings,
restructures or "work out" of the transactions contemplated by the Credit
Documents; provided that the Borrower shall only have to pay the reasonable fees
and disbursements of one law firm and one financial advisory firm in connection
therewith unless the Agent, any Lender or their counsel is of the reasonable
opinion that representation by one law firm or one financial advisory firm, as
applicable, would not be feasible or that a conflict of interest would exist.
The Borrower further agrees to indemnify the 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
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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 or any Lender and related to any use made or proposed to be made by
the Borrower of the proceeds of the Loans, or any transaction financed or to be
financed in whole or in part, directly or indirectly with the proceeds of any
Loan, 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 or any Lender's breach of any material provision of any Credit
Document, or any dispute solely among the Agent and 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 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, 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
59
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.
(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 Harris 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 TO THIS AGREEMENT VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY
(BY ITS ACCEPTANCE OF THIS AGREEMENT) 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
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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 and each Lender (each a
"RESTRICTED PARTY", and collectively, the "RESTRICTED PARTIES") agrees it will
not disclose without the Borrower's consent (other than to its employees,
contract employees, auditors, counsel or other professional advisors or to its
Affiliates) any information concerning the Borrower or any of its Subsidiaries
furnished to the Restricted Parties pursuant to any of the Credit Documents,
including, but not limited to, information which is marked or otherwise
designated as "confidential" by Borrower or any of its Subsidiaries; provided
that any Restricted Party may disclose any information (i) to any other
Restricted Party or its Affiliates or to the employees, contract employees,
auditors, counsel or other professional advisors of any other Restricted Party
or its Affiliates, (ii) that has become generally available to the public, other
than by the Restricted Party making such disclosure, (iii) that was previously
known to a Restricted Party, (iv) becomes known or available to a Restricted
Party from a source other than the Borrower or any of its Subsidiaries, (v) 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 such Restricted Party, (vi) if required or appropriate
in response to any summons or subpoena or in connection with any litigation,
(vii) in order to comply with any law, order, regulation or ruling applicable to
such Restricted Party, (viii) to any prospective or actual permitted transferee
in connection with any contemplated or actual permitted transfer of any interest
in any Note by any Lender subject to the terms of this Agreement, (ix) in
connection with the exercise of any remedies by any Restricted Party, and (x)
disclosed publicly by Borrower or any of its Subsidiaries.
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
61
amended, the provisions of this Agreement shall govern, provided that, for
purposes of this SECTION 10.17, the Borrower shall have 90 days from the date of
any such change to amend the appropriate provisions of this Agreement to reflect
such change in accordance with the immediately preceding sentence.
Section 10.18 Refinancing of Senior Notes and Loans Under Existing
Credit Agreement. This Agreement constitutes a refinancing of the Senior Notes
and the "Obligations" under the Existing Credit Agreement. On the date hereof:
(a) The Borrower shall pay all accrued and unpaid commitment
fees outstanding under the Existing Credit Agreement;
(b) The Senior Notes and each "Swing Line Loan" under the
Existing Credit Agreement shall be deemed to be repaid with the proceeds of the
Term Loan;
(c) each Existing L/C outstanding under the Existing 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(a)); and
(d) the Existing Credit Agreement and the commitments
thereunder shall terminate.
Section 10.19 Effectiveness. This Agreement shall become effective on
the date (the "EFFECTIVE DATE") on which the Borrower, the Agent and each Lender
has signed and delivered to the Agent a counterpart 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.
Section 10.20 Notice. The Credit Documents constitute the entire
understanding among the Borrower, the 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.
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IN WITNESS WHEREOF, the parties to this Agreement 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: /s/ JAMES H. HADDOX
-------------------------------------
James H. Haddox
Chief Financial Officer
Fourth Amended and Restated Secured Credit Agreement
Signature Page
LENDERS:
BANK OF AMERICA, N.A.,
as Administrative Agent and as a Lender
By: /s/ GARY L. MINGLE
--------------------------------------
Gary L. Mingle
Senior Vice President
Address for Notices:
Bank of America, N.A.
700 Louisiana St.
Houston, TX 77002
Attention: Gary L. Mingle
Telephone No.: (713) 247-6447
Fax No.: (713) 247-7175
Fourth Amended and Restated Secured Credit Agreement
Signature Page