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EXHIBIT 10.11
CONFORMED COPY
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GRANITE CONSTRUCTION INCORPORATED
$60,000,000 6.54% Senior Notes due March 15, 2010
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NOTE PURCHASE AGREEMENT
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Dated as of March 1, 1998
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THE INFORMATION SET FORTH ON SCHEDULES 5.15, 5.16 AND 5.18 TO THIS NOTE PURCHASE
AGREEMENT IS "CONFIDENTIAL INFORMATION" SUBJECT TO THE REQUIREMENTS OF SECTION
20 HEREOF.
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TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. AUTHORIZATION OF NOTES........................................... 1
SECTION 2. SALE AND PURCHASE OF NOTES; GUARANTY............................. 1
Section 2.1 Sale and Purchase of Notes....................................... 1
Section 2.2. Guaranty of Notes................................................ 1
SECTION 3. CLOSING.......................................................... 2
SECTION 4. CONDITIONS TO CLOSING............................................ 2
Section 4.1. Representations and Warranties................................... 2
Section 4.2. Performance; No Default.......................................... 2
Section 4.3. Compliance Certificates.......................................... 3
Section 4.4. Guaranty Agreement............................................... 3
Section 4.5. Opinions of Counsel.............................................. 3
Section 4.6. Purchase Permitted by Applicable Law, Etc........................ 4
Section 4.7. Payment of Special Counsel Fees.................................. 4
Section 4.8. Private Placement Number......................................... 4
Section 4.9. Changes in Corporate Structure................................... 4
Section 4.10. Proceedings and Documents........................................ 4
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................... 5
Section 5.1. Organization; Power and Authority................................ 5
Section 5.2. Authorization, Etc............................................... 5
Section 5.3. Disclosure........................................... 5
Section 5.4. Organization and Ownership of Shares of Subsidiaries............. 5
Section 5.5. Financial Statements............................................. 6
Section 5.6. Compliance with Laws, Other Instruments, Etc..................... 6
Section 5.7. Governmental Authorizations, Etc................................. 7
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders........ 7
Section 5.9. Taxes............................................................ 7
Section 5.10. Title to Property; Leases........................................ 7
Section 5.11. Licenses, Permits, Etc........................................... 8
Section 5.12. Compliance with ERISA............................................ 8
Section 5.13. Private Offering by the Company.................................. 9
Section 5.14. Use of Proceeds; Margin Regulations.............................. 9
Section 5.15. Existing Debt.................................................... 9
Section 5.16. Existing Investments............................................. 10
Section 5.17. Status under Certain Statutes.................................... 10
Section 5.18. Environmental Matters............................................ 10
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Section 5.19. Foreign Assets Control Regulations, Etc.......................... 10
SECTION 6. REPRESENTATIONS OF THE PURCHASERS................................ 10
Section 6.1. Purchase for Investment.......................................... 10
Section 6.2. Source of Funds.................................................. 11
SECTION 7. INFORMATION AS TO COMPANY........................................ 12
Section 7.1. Financial and Business Information............................... 12
Section 7.2. Officer's Certificate............................................ 15
Section 7.3. Inspection....................................................... 16
SECTION 8. PREPAYMENT OF THE NOTES.......................................... 16
Section 8.1. Required Prepayments............................................. 16
Section 8.2. Optional Prepayments with Make-Whole Amount...................... 16
Section 8.3. Allocation of Partial Prepayments................................ 17
Section 8.4. Maturity; Surrender, Etc......................................... 17
Section 8.5. Purchase of Notes................................................ 17
Section 8.6. Make-Whole Amount................................................ 18
SECTION 9. AFFIRMATIVE COVENANTS............................................ 19
Section 9.1. Compliance with Law.............................................. 19
Section 9.2. Insurance........................................................ 19
Section 9.3. Maintenance of Properties........................................ 20
Section 9.4. Payment of Taxes and Claims...................................... 20
Section 9.5. Corporate Existence, Etc......................................... 20
Section 9.6. Additional Guarantors............................................ 20
SECTION 10. NEGATIVE COVENANTS............................................... 21
Section 10.1. Nature of Business............................................... 22
Section 10.2. Consolidated Net Worth........................................... 22
Section 10.3. Incurrence of Debt............................................... 22
Section 10.4. Restricted Subsidiary Debt....................................... 22
Section 10.5. Liens............................................................ 23
Section 10.6. Restrictions on Dividends of Subsidiaries, Etc................... 25
Section 10.7. Mergers, Consolidations, Etc..................................... 25
Section 10.8. Sale of Assets, Etc.............................................. 26
Section 10.9. Disposal of Ownership of a Restricted Subsidiary................. 27
Section 10.10.Sale-and-Leasebacks.............................................. 27
Section 10.11.Transactions with Affiliates..................................... 28
Section 10.12.Designation of Restricted and Unrestricted Subsidiaries.......... 28
SECTION 11. EVENTS OF DEFAULT............................................... 28
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SECTION 12. REMEDIES ON DEFAULT, ETC....................................... 31
Section 12.1. Acceleration................................................... 31
Section 12.2. Other Remedies................................................. 31
Section 12.3. Rescission..................................................... 31
Section 12.4. No Waivers or Election of Remedies, Expenses, Etc.............. 32
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.................. 32
Section 13.1. Registration of Notes.......................................... 32
Section 13.2. Transfer and Exchange of Notes................................. 32
Section 13.3. Replacement of Notes........................................... 33
SECTION 14. PAYMENTS ON NOTES.............................................. 33
Section 14.1. Place of Payment............................................... 33
Section 14.2. Home Office Payment............................................ 34
SECTION 15. EXPENSES, ETC.................................................. 34
Section 15.1. Transaction Expenses........................................... 34
Section 15.2. Survival....................................................... 35
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT...................................................... 35
SECTION 17. AMENDMENT AND WAIVER........................................... 35
Section 17.1. Requirements................................................... 35
Section 17.2. Solicitation of Holders of Notes............................... 35
Section 17.3. Binding Effect, Etc............................................ 36
Section 17.4. Notes Held by Company, Etc..................................... 36
SECTION 18. NOTICES........................................................ 36
SECTION 19. REPRODUCTION OF DOCUMENTS...................................... 37
SECTION 20. CONFIDENTIAL INFORMATION....................................... 37
SECTION 21. SUBSTITUTION OF A PURCHASER.................................... 38
SECTION 22. MISCELLANEOUS.................................................. 39
Section 22.1. Successors and Assigns......................................... 39
Section 22.2. Payments Due on Non-Business Days.............................. 39
Section 22.3. Severability................................................... 39
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Section 22.4. Construction................................................... 39
Section 22.5. Counterparts................................................... 39
Section 22.6. Governing Law.................................................. 39
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ATTACHMENTS TO THE NOTE PURCHASE AGREEMENT:
SCHEDULE A - Information Relating to Purchasers
SCHEDULE B - Defined Terms
SCHEDULE 4.9 - Changes in Corporate Structure
SCHEDULE 5.3 - Disclosure Materials
SCHEDULE 5.4 - Subsidiaries of the Company and Ownership of Subsidiary
Stock
SCHEDULE 5.5 - Financial Statements
SCHEDULE 5.8 - Certain Litigation
SCHEDULE 5.11 - Patents, Etc.
SCHEDULE 5.14 - Use of Proceeds
SCHEDULE 5.15 - Existing Debt
SCHEDULE 5.16 - Existing Investments
SCHEDULE 5.18 - Environmental Matters
EXHIBIT 1 - Form of 6.54% Senior Note due March 15, 2010 Agreement
EXHIBIT 2 - Form of Guaranty
EXHIBIT 4.5(a) - Form of Opinion of Special Counsel for the Company and the
Guarantors
EXHIBIT 4.5(b) - Form of Opinion of Special Counsel for the Purchasers
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GRANITE CONSTRUCTION INCORPORATED
585 West Beach Street
Watsonville, California 95076
6.54% Senior Notes due March 15, 2010
Dated as of
March 1, 1998
TO THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
GRANITE CONSTRUCTION INCORPORATED, a Delaware corporation (the
"Company"), agrees with the Purchasers listed in the attached Schedule A as
follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $60,000,000
aggregate principal amount of its 6.54% Senior Notes due March 15, 2010 (the
"Notes", such term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement (as hereinafter defined)). The Notes
shall be substantially in the form set out in Exhibit 1, with such changes
therefrom, if any, as may be approved by each Purchaser and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES; GUARANTY.
Section 2.1. Sale and Purchase of Notes. Subject to the terms and
conditions of this Agreement, the Company will issue and sell to each Purchaser
and each Purchaser will purchase from the Company, at the Closing provided for
in Section 3, Notes in the principal amount specified opposite such Purchaser's
name in Schedule A at the purchase price of 100% of the principal amount
thereof. The obligations of each Purchaser hereunder are several and not joint
obligations and each Purchaser shall have no obligation and no liability to any
Person for the performance or nonperformance by any other Purchaser thereunder.
Section 2.2. Guaranty of Notes. The payment by the Company of all
amounts due with respect to the Notes and the performance by the Company of its
obligations under this Agreement are fully and unconditionally guaranteed by
Granite Construction Company, a California corporation, Wilcott Corporation, a
Colorado corporation, Desert Aggregates Incorporated, a California corporation,
Granite SR 91 Corporation, a California corporation, Intermountain Slurry Seal,
Inc., a Utah corporation, Pozzolan Products
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Company, a Utah corporation, GILC Incorporated, a California corporation,
Granite SR 91, L.P., a California limited partnership, Bear River Contractors, a
Wyoming corporation, GILC, L.P., a California limited partnership, G.G.&R.,
Inc., a Utah corporation, and GTC, Inc., a Texas corporation, and each other
from time to time Material Subsidiary (collectively, the "Guarantors") pursuant
to that certain Subsidiary Guaranty Agreement dated as of March 1, 1998 (the
"Guaranty Agreement") from the initial Guarantors to each Purchaser and each
other from time to time holder of Notes substantially in the form attached
hereto as Exhibit 2.
SECTION 3. CLOSING.
The sale and purchase of the Notes to be purchased by each Purchaser
shall occur at the offices of Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, at 10:00 a.m. Chicago time, at a closing on March 19,
1998 (the "Closing"). At the Closing, the Company will deliver to each Purchaser
the Notes to be purchased by such Purchaser in the form of a single Note (or
such greater number of Notes in denominations of at least $1,000,000 as such
Purchaser may request) dated the date of the Closing and registered in such
Purchaser's name (or in the name of such Purchaser's nominee), against delivery
by such Purchaser to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to account number 12334-16946 at
Bank of America National Trust and Savings Association Bank, NAD Corporate
Service Center #1233, ABA No. 121000358. If at the Closing the Company shall
fail to tender such Notes to any Purchaser as provided above in this Section 3,
or any of the conditions specified in Section 4 shall not have been fulfilled to
any Purchaser's satisfaction, such Purchaser shall, at such Purchaser's
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights such Purchaser may have by reason of such failure or
such nonfulfillment.
SECTION 4. CONDITIONS TO CLOSING.
The obligation of each Purchaser to purchase and pay for the Notes
to be sold to such Purchaser at the Closing is subject to the fulfillment to
such Purchaser's satisfaction, prior to or at the Closing, of the following
conditions:
Section 4.1. Representations and Warranties. (a) The representations
and warranties of the Company in this Agreement shall be correct when made and
at the time of the Closing.
(b) The representations and warranties of each Guarantor in the
Guaranty Agreement shall be correct when made and at the time of the Closing.
Section 4.2. Performance; No Default. The Company shall have
performed and complied with all agreements and conditions contained in this
Agreement required to he performed or complied with by it prior to or at the
Closing, and after giving effect to the
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issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Schedule 5.14), no Default or Event of Default shall exist.
Section 4.3. Compliance Certificates.
(a) Officer's Certificate. (1) The Company shall have
delivered to such Purchaser an Officer's Certificate, dated the date
of the Closing, certifying that the conditions specified in Sections
4.1, 4.2 and 4.9 have been fulfilled.
(2) Each Guarantor shall have delivered to such
Purchaser a certificate of an authorized officer, dated the date of
the Closing, certifying that the condition specified in Section
4.1(b) has been fulfilled.
(b) Secretary's Certificate. (1) The Company shall have
delivered to such Purchaser a certificate certifying as to the
resolutions attached thereto and other corporate proceedings
relating to the authorization, execution and delivery of the Notes
and this Agreement.
(2) Each Guarantor shall have delivered to such
Purchaser a certificate certifying as to the resolutions attached
thereto and the other corporate or partnership proceedings relating
to the authorization, execution and delivery of the Guaranty
Agreement.
(c) ERISA Certificate. If such Purchaser shall have made
the disclosures referred to in Section 6.2(b), (c) or (e), such
Purchaser shall have received the certificate from the Company
described in the penultimate paragraph of Section 6.2 and such
certificate shall state that (1) the Company is neither a "party in
interest" nor a "disqualified person" (as defined in Section
4975(e)(2) of the Code), with respect to any plan identified
pursuant to Section 6.2(b) or (e) or (2) with respect to any plan,
identified pursuant to Section 6.2(c), neither the Company nor any
"affiliate" (as defined in Section V(c) of the QPAM Exemption) has,
at such time or during the immediately preceding one year, exercised
the authority to appoint or terminate the QPAM as manager of the
assets of any plan identified in writing pursuant to Section 6.2(c)
or to negotiate the terms of said QPAM's management agreement on
behalf of any such identified plans.
Section 4.4. Guaranty Agreement. The Guaranty Agreement shall have
been duly authorized, executed and delivered by each Guarantor and shall be in
full force and effect.
Section 4.5 Opinions of Counsel. Such Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser, dated the date of
the Closing (a) from Gray Cary Ware & Freidenrich, special counsel for the
Company and the Guarantors, covering the matters set forth in Exhibit 4.5(a) and
covering such other matters incident to the transactions contemplated hereby as
such Purchaser or such Purchaser's counsel may reasonably request (and the
Company hereby instructs its counsel to deliver such opinion to such Purchaser)
and (b) from Chapman and Cutler, such Purchaser's special counsel in
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connection with such transactions, substantially in the form set forth in
Exhibit 4.5(b) and covering such other matters incident to such transactions as
such Purchaser may reasonably request.
Section 4.6. Purchase Permitted by Applicable Law, Etc. On the date
of the Closing, such Purchaser's purchase of Notes shall (a) be permitted by the
laws and regulations of each jurisdiction to which such Purchaser is subject,
without recourse to provisions (such as Section 1405(a)(8) of the New York
Insurance Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (b) not violate
any applicable law or regulation (including, without limitation, Regulation G, T
or X of the Board of Governors of the Federal Reserve System) and (c) not
subject such Purchaser to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect on the
date hereof. If requested by such Purchaser, such Purchaser shall have received
an Officer' s Certificate certifying as to such matters of fact as such
Purchaser may reasonably specify to enable such Purchaser to determine whether
such purchase is so permitted.
Section 4.7. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the Closing
the fees, charges and disbursements of Chapman and Cutler, the Purchasers'
special counsel referred to in Section 4.5 and the only counsel retained by the
Purchasers in connection with the preparation, negotiation, execution and
delivery of this Agreement, to the extent reflected in a statement of such
counsel rendered to the Company at least one Business Day prior to the Closing.
Section 4.8. Private Placement Number. A Private Placement Number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Notes.
Section 4.9. Changes in Corporate Structure. Except as specified in
Schedule 4.9, the Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements referred
to in Schedule 5.5.
Section 4.10. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to such Purchaser and such Purchaser's special counsel, and such
Purchaser and such Purchaser's special counsel shall have received all such
counterpart originals or certified or other copies of such documents as such
Purchaser or such Purchaser' s special counsel may reasonably request.
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser that:
Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and the Notes
and to perform the provisions hereof and thereof.
Section 5.2. Authorization, Etc. This Agreement and the Notes have
been duly authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 5.3. Disclosure. The Company, through its agent, BancAmerica
Robertson Stephens, has delivered to each Purchaser a copy of a Private
Placement Memorandum, dated January 1998 (the "Memorandum"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company and its Subsidiaries. This Agreement, the Memorandum, the
documents, certificates or other writings identified in Schedule 5.3 and the
financial statements listed in Schedule 5.5, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Memorandum
or as expressly described in Schedule 5.3, or in one of the documents,
certificates or other writings identified therein, or in the financial
statements listed in Schedule 5.5, since December 31, 1996, there has been no
adverse Material change in the financial condition, operations, business,
properties or prospects of the Company or any of its Subsidiaries, taken as a
whole.
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (1) of the Company's Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (2) of the
Company's Affiliates, other than Subsidiaries and (3) of the Company's directors
and senior officers.
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(b) All of the outstanding shares of capital stock or similar equity
interests of each Restricted Subsidiary shown in Schedule 5.4 as being owned by
the Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Restricted Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Restricted Subsidiary has the
corporate or other power and authority to own or hold under lease the properties
it purports to own or hold under lease and to transact the business it transacts
and proposes to transact.
(d) No Restricted Subsidiary is a party to, or otherwise subject to,
any legal restriction or any agreement or instrument (other than this Agreement,
the agreements listed on Schedule 5.4 and customary limitations imposed by
corporate law statutes) restricting the ability of such Restricted Subsidiary to
pay dividends out of profits or make any other similar distributions of profits
to the Company or any of its Restricted Subsidiaries that own outstanding shares
of capital stock or similar equity interests of such Restricted Subsidiary.
Section 5.5. Financial Statements. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its Subsidiaries
listed on Schedule 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such financial statements and the consolidated
results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end
adjustments).
Section 5.6. Compliance with Laws, Other instruments, Etc. The
execution, delivery and performance by the Company of this Agreement and the
Notes will not (a) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company or any Restricted Subsidiary under, any indenture, mortgage, deed of
trust, loan, purchase or credit agreement, lease, corporate charter or by-laws,
or any other agreement or instrument to which the Company or any Restricted
Subsidiary is bound or by which the Company or any Restricted Subsidiary or any
of their respective properties may be bound or affected, (b) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Restricted Subsidiary or (c) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Restricted Subsidiary.
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Section 5.7. Governmental Authorizations, Etc. No consent, approval
or authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution, delivery or
performance by the Company of this Agreement or the Notes.
Section 5.8. Litigation; Observance of agreements, Statutes and
Orders. (a) Except as disclosed in Schedule 5.8, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Restricted Subsidiary or any property of the
Company or any Restricted Subsidiary in any court or before any arbitrator of
any kind or before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, Rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. The Company and its Subsidiaries have filed all
income tax returns that are required to have been filed in any jurisdiction, and
have paid all taxes shown to be due and payable on such returns and all other
taxes and assessments payable by them, to the extent such taxes and assessments
have become due and payable and before they have become delinquent, except for
any taxes and assessments (a) the amount of which is not individually or in the
aggregate Material or (b) the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which the Company or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. The Company knows of no
basis for any other tax or assessment that could reasonably be expected to have
a Material Adverse Effect. The charges, accruals and reserves on the books of
the Company and its Subsidiaries in respect of Federal, state or other taxes for
all fiscal periods are adequate. The Federal income tax liabilities of the
Company and its Subsidiaries have been determined by the Internal Revenue
Service and paid for all fiscal years up to and including the fiscal year ended
December 31, 1991.
Section 5.10. Title to Property; Leases. The Company and its
Restricted Subsidiaries have good and sufficient title to their respective
properties that individually or in the aggregate are Material, including all
such properties reflected in the most recent audited balance sheet referred to
in Section 5.5 or purported to have been acquired by the Company or any
Restricted Subsidiary after said date (except as sold or otherwise disposed of
in the ordinary course of business), in each case free and clear of Liens
prohibited by this Agreement. All leases that individually or in the aggregate
are Material are valid and subsisting and are in full force and effect in all
material respects.
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Section 5.11. Licenses, Permits, Etc. Except as disclosed in
Schedule 5.11,
(a) the Company and its Restricted Subsidiaries own or possess all
Material licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto;
(b) to the best knowledge of the Company, no product of the Company
or any Restricted Subsidiary infringes in any material respect any license,
permit, franchise, authorization, patent, copyright, service mark, trademark,
trade name or other right with respect thereto owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its Restricted
Subsidiaries with respect to any patent, copyright, service mark, trademark,
trade name or other right with respect thereto owned or used by the Company or
any of its Restricted Subsidiaries.
Section 5.12. Compliance with ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws in all material respects. Neither the Company nor any ERISA
Affiliate has incurred any Material liability pursuant to Title I or IV of ERISA
or the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
Incurrence of any such Material liability by the Company or any ERISA Affiliate,
or in the imposition of any Material Lien on any of the rights, properties or
assets of the Company or any ERISA Affiliate, in either case pursuant to Title I
or IV of ERISA or to such penalty or excise tax provisions or to Section
401(a)(29) or 412 of the Code.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the end of
such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit liabilities by more than $5,000,000 in the
aggregate for all Plans. The term "benefit liabilities" has the meaning
specified in Section 4001 of ERISA and the terms "current value" and "present
value" have the meanings specified in Section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred Material
withdrawal liabilities (and are not subject to Material contingent withdrawal
liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer
Plans.
(d) The expected postretirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 4980B of
the Code) of the Company and its Restricted Subsidiaries is not Material.
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(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is subject
to the prohibitions of Section 406 of ERISA or in connection with which a tax
could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The
representation by the Company in the first sentence of this Section 5.12(e) is
made in reliance upon and subject to the accuracy of each Purchaser's
representation in Section 6.2 as to the source of the funds to be used to pay
the purchase price of the Notes to be purchased by such Purchaser.
Section 5.13. Private Offering by the Company. Neither the Company
nor anyone acting on its behalf has offered the Notes or the Guaranty Agreement
or any similar Securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than the Purchasers and not more than 41 other Institutional
Investors, each of which has been offered the Notes and the Guaranty Agreement
at a private sale for investment pursuant to an exemption from the registration
requirements under the Securities Act. Neither the Company nor anyone acting on
its behalf has taken, or will take, any action that would subject the issuance
or sale of the Notes or the delivery of the Guaranty Agreement to the
registration requirements of Section 5 of the Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will
apply the proceeds of the sale of the Notes as set forth in Schedule 5.14. No
part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System
(12 CFR 207), or for the purpose of buying or carrying or trading in any
Securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). The Company does not own
any margin stock and the Company does not have any present intention to acquire
any margin stock; provided, however, that, pursuant to the Bank Credit
Agreement, the Company may acquire margin stock in an amount not to exceed 25%
of the value of the consolidated assets of the Company and its Subsidiaries. As
used in this Section, the terms "margin stock" and "purpose of buying or
carrying" shall have the meanings assigned to them in said Regulation G.
Section 5.15. Existing Debt. Except as described therein, Schedule
5.15 sets forth a complete and correct list of all outstanding Debt of the
Company and its Restricted Subsidiaries as of December 31, 1997, since which
date there has been no Material change in the amounts, interest rates, sinking
funds, installment payments or maturities of the Debt of the Company or its
Subsidiaries. Neither the Company nor any Restricted Subsidiary is in default
and no waiver of default is currently in effect, in the payment of any principal
or interest on any Debt of the Company or such Restricted Subsidiary and no
event or condition exists with respect to any Debt of the Company or any
Restricted Subsidiary that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.
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Section 5.16. Existing Investments. Schedule 5.16 sets forth a
complete and correct list of all outstanding Investments of the Company and its
Restricted Subsidiaries as of December 31, 1997, since which date there has been
no Material change in the amounts of such Investments.
Section 5.17. Status under Certain Statutes. Neither the Company nor
any Restricted Subsidiary is an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended, or is
subject to regulation under the Public Utility Holding Company Act of 1935, as
amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act,
as amended.
Section 5.18. Environmental Matters. Neither the Company nor any
Restricted Subsidiary has knowledge of any Material claim or has received any
notice of any Material claim, and no proceeding has been instituted raising any
Material claim against the Company or any of its Restricted Subsidiaries or any
of their respective real properties now or formerly owned, leased or operated by
any of them or other assets, alleging any damage to the environment or violation
of any Environmental Laws. Except as otherwise disclosed in Schedule 5.18:
(a) neither the Company nor any Restricted Subsidiary
has knowledge of any facts which would give rise to any Material
claim, public or private, or Material violation of Environmental
Laws or damage to the environment emanating from, occurring on or in
any way related to real properties now or formerly owned, leased or
operated by any of them or to other assets or their use;
(b) neither the Company nor any of its Restricted
Subsidiaries (1) has stored any Hazardous Materials on real
properties now or formerly owned, leased or operated by any of them
or (2) has disposed of any Hazardous Materials in a manner contrary
to any Environmental Laws; in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned,
leased or operated by the Company or any of its Subsidiaries are in
material compliance with applicable Environmental Laws.
Section 5.19. Foreign Assets Control Regulations, Etc. Neither the
sale of the Notes by the Company hereunder nor its use of the proceeds thereof
will violate the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto.
SECTION 6. REPRESENTATIONS OF THE PURCHASERS.
Section 6.1. Purchase for Investment. Each Purchaser represents that
it is purchasing the Notes for its own account or for one or more separate
accounts maintained by it or for the account of one or more pension or trust
funds and not with a view to the
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distribution thereof, provided that the disposition of such Purchaser's or such
pension or trust funds' property shall at all times be within such Purchaser's
or such pension or trust funds' control. Each Purchaser understands that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
Section 6.2. Source of Funds. Each Purchaser represents that at
least one of the following statements is an accurate representation as to each
source of funds (a "Source") to be used by it to pay the purchase price of the
Notes to be purchased by it hereunder:
(a) the Source is an "insurance company general account"
within the meaning of Department of Labor Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995) and, as of the date
of the Closing or as of the date of transfer, as applicable, there
is no employee benefit plan, treating as a single plan, all plans
maintained by the same employer or employee organization or
affiliate thereof, with respect to which the amount of the general
account reserves and liabilities for all contracts held by or on
behalf of such plan, exceeds 10% of the total reserves and
liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the NMC Annual Statement
filed with such Purchaser's state of domicile; or
(b) the Source is either (1) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29,
1990), or (2) a bank collective investment fund, within the meaning
of the PTE 91-38 (issued July 12, 1991) and, as of the date of the
Closing or as of the date of transfer, as applicable, except as such
Purchaser has disclosed to the Company in writing pursuant to this
paragraph (b), no employee benefit plan or group of plans maintained
by the same employer or employee organization or affiliate thereof
beneficially owns more than 10% of all assets allocated to such
pooled separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment
fund" (within the meaning of Part V of the QPAM Exemption) managed
by a "qualified professional asset manager" or "QPAM" (within the
meaning of Part V of the QPAM Exemption), no employee benefit plan's
assets that are included in such investment fund, when combined with
the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the
meaning of Section V(c)(1) of the QPAM Exemption) of such employer
or by the same employee organization and managed by such QPAM,
exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a Person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (1) the
identity of such QPAM and (2) the names of all employee benefit
plans whose assets are included in such investment fund have been
disclosed to the Company in writing pursuant to this paragraph (c);
or
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(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or
a separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
If any Purchaser or any subsequent transferee of the Notes indicates
that such Purchaser or such transferee is relying on any representation
contained in paragraph (b), (c) or (e) above, the Company shall deliver on the
date of the Closing or on the date of transfer, as applicable, a certificate,
which shall state whether (i) it is a party in interest or a "disqualified
person" (as defined in Section 4975(e)(2) of the Internal Revenue Code of 1986,
as amended), with respect to any plan identified pursuant to paragraphs (b) or
(e) above, or (ii) with respect to any plan, identified pursuant to paragraph
(c) above, whether it or any "affiliate" (as defined in Section V(c) of the QPAM
Exemption) has at such time, and during the immediately preceding one year,
exercised the authority to appoint or terminate the QPAM as manager of any plan
identified in writing pursuant to paragraph (c) above or to negotiate the terms
of said QPAM's management agreement on behalf of any such identified plan.
As used in this Section 6.2, the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
SECTION 7. INFORMATION AS TO COMPANY.
Section 7.1. Financial and Business Information. The Company shall
deliver to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements - within 60 days after the end
of each quarterly fiscal period in each fiscal year of the Company
(other than the last quarterly fiscal period of each such fiscal
year), duplicate copies of,
(1) a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such
quarter, and
(2) consolidated statements of income,
stockholders' equity and cash flows of the Company and
its Subsidiaries, for such quarter and (in the case of
the second and third quarters) for the portion of the
fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a
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Senior Financial Officer as fairly presenting, in all material respects, the
financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above of
copies of the Company's Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1(a);
(b) Annual Statements - within 105 days after the end of
each fiscal year of the Company, duplicate copies of,
(1) a consolidated balance sheet of the
Company and its Subsidiaries, as at the end of such
year, and
(2) consolidated statements of income,
stockholders' equity and cash flows of the Company and
its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by
(i) an opinion thereon of independent
certified public accountants of recognized national
standing, which opinion shall state that such financial
statements present fairly, in all material respects, the
financial position of the companies being reported upon
and their results of operations and cash flows and have
been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in
the circumstances, provided that the delivery within the
time period specified above of the Company's Annual
Report on Form 10-K for such fiscal year (together with
the Company's annual report to shareholders, if any,
prepared pursuant to Rule 14a-3 under the Exchange Act)
prepared in accordance with the requirements therefor
and filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this
Section 7.1(b), and
(ii) a certificate of such accountants
stating that they have reviewed this Agreement and
stating further whether, in making their audit, they
have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if
they are aware that any such condition or event then
exists, specifying the nature and period of the
existence thereof (it being understood that such
accountants shall not be liable, directly or indirectly,
for any failure to obtain knowledge of any Default or
Event of Default unless such accountants should have
obtained knowledge thereof in making an audit in
accordance with generally accepted auditing standards or
did not make such an audit);
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(c) SEC and Other Reports - promptly upon their becoming
available, one copy of (1) each financial statement, report, notice
or proxy statement sent by the Company or any Subsidiary to public
Securities holders generally, (2) each regular or periodic report,
each registration statement that shall have become effective
(without exhibits except as expressly requested by such holder), and
each final prospectus and all amendments thereto filed by the
Company or any Subsidiary with the Securities and Exchange
Commission and (3) all press releases and other statements made
available generally by the Company or any Subsidiary to the public
concerning developments that are Material;
(d) Notice of Default or Event of Default - promptly,
and in any event within five Business Days after a Responsible
Officer becoming aware of the existence of any Default or Event of
Default, a written notice specifying the nature and period of
existence thereof and what action the Company is taking or proposes
to take with respect thereto;
(e) ERISA Matters - promptly, and in any event within
five Business Days after a Responsible Officer becoming aware of any
of the following, a written notice setting forth the nature thereof
and the action, if any, that the Company or an ERISA Affiliate
proposes to take with respect thereto:
(1) with respect to any Plan, any reportable
event, as defined in Section 4043(b) of ERISA and the
regulations thereunder, for which notice thereof has not
been waived pursuant to such regulations as in effect on
the date hereof; or
(2) the taking by the PBGC of steps to
institute, or the threatening by the PBGC of the
institution of, proceedings under Section 4042 of ERISA
for the termination of' or the appointment of a trustee
to administer, any Plan, or the receipt by the Company
or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with
respect to such Multiemployer Plan; or
(3) any event, transaction or condition that
could result in the incurrence of any liability by the
Company or any ERISA Affiliate pursuant to Title I or IV
of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties
or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together
with any other such liabilities or Liens then existing,
would exceed $5,000,000 in the aggregate;
(f) Notices from Governmental Authority - promptly, and
in any event within 30 days of receipt thereof, copies of any notice
to the Company or any Subsidiary from any Federal or state
Governmental Authority relating to any order,
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ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;
(g) Unrestricted Subsidiaries - within 120 days after
the end of each fiscal year of the Company, duplicate copies of
financial statements of the character and for the dates and periods
as provided in paragraph (b) above covering each Unrestricted
Subsidiary (or groups of Unrestricted Subsidiaries on a consolidated
basis);
(h) Rule 144A - except at such times as the Company is a
reporting company under Section 13 or 15(d) of the Exchange Act or
has complied with the requirements for the exemption from
registration under the Exchange Act set forth in Rule 12g3-2(b)
under the Exchange Act, such financial or other information as any
holder of Notes or any Person designated by such holder may
reasonably determine is required to permit such holder to comply
with the requirements of Rule 144A promulgated under the Exchange
Act in connection with the resale by it of the Notes, in any such
case promptly after the same is requested; and
(i) Requested Information - with reasonable promptness,
such other data and information relating to the business,
operations, affairs, financial condition, assets or properties of
the Company or any of its Subsidiaries or relating to the ability of
the Company to perform its obligations hereunder and under the Notes
as from time to time may be reasonably requested by any such holder
of Notes.
Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance - the information (including
detailed calculations) required in order to establish whether the
Company was in compliance with the requirements of Section 10.2
through Section 10.5 hereof, inclusive, Section 10.8 and Section
10.10 during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or
minimum amount, ratio or percentage, as the case may be, permissible
under the terms of such Sections, and the calculation of the amount,
ratio or percentage then in existence); and
(b) Event of Default - a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be
made, under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of
the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall
not have disclosed the existence during such period of any condition
or event that constitutes a Default or an Event of Default or, if
any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure
of the Company or any Subsidiary to comply with any Environmental
Law),
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specifying the nature and period of existence thereof and what
action the Company shall have taken or proposes to take with respect
thereto.
Section 7.3. Inspection. The Company shall permit the
representatives of each holder of Notes that is an Institutional Investor:
(a) No Default - if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior
notice to the Company, to visit the principal executive office of
the Company, to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with the Company's officers, and, with
the consent of the Company (which consent will not be unreasonably
withheld) to visit the other offices and properties of the Company
and each Subsidiary, all at such reasonable times and as often as
may be reasonably requested in writing; and
(b) Default - if a Default or Event of Default then
exists, at the expense of the Company, to visit and inspect any of
the offices or properties of the Company or any Subsidiary, to
examine all their respective books of account, records, reports and
other papers, 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 Company authorizes said accountants to discuss the
affairs, finances and accounts of the Company and its Subsidiaries),
all at such times and as often as may be requested.
SECTION 8. PREPAYMENT OF THE NOTES.
Section 8.1. Required Prepayments. On March 15, 2002 and on each
March 15 thereafter to and including March 15, 2009 the Company will prepay
$6,666,666 principal amount (or such lesser principal amount as shall then be
outstanding) of the Notes at par and without payment of the Make-Whole Amount or
any premium, provided that upon any partial prepayment of the Notes pursuant to
Section 8.2 or purchase of the Notes permitted by Section 8.5 the principal
amount of each required prepayment of the Notes becoming due under this Section
8.1 on and after the date of such prepayment or purchase shall be reduced in the
same proportion as the aggregate unpaid principal amount of the Notes is reduced
as a result of such prepayment or purchase.
Section 8.2. Optional Prepayments with Make-Whole Amount. The
Company may, at its option, upon notice as provided below, prepay at any time
all, or from time to time any part of, the Notes, in an amount not less than
$1,000,000 in the case of a partial prepayment, at 100% of the principal amount
so prepaid, together with interest accrued thereon to the date of such
prepayment, plus the Make-Whole Amount determined for the prepayment date with
respect to such
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principal amount. The Company will give each holder of Notes written notice of
each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Five Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer (the "Make-Whole Amount Calculation Certificate")
specifying the method of computation and the calculation of such Make-Whole
Amount in respect of such holder's Notes as of the specified prepayment date.
The method of computation of the Make-Whole Amount in respect of the Notes set
forth in the Make-Whole Amount Calculation Certificate shall be subject to the
review and approval of the holders of the Notes and, in the case of any
disagreement between the Required Holders and the Company with respect to such
method of computation, the conclusion of the Required Holders shall, in the
absence of manifest error, be deemed binding and conclusive. The calculation of
the Make-Whole Amount in respect of the Note or Notes set forth in a Make-Whole
Amount Calculation Certificate shall also be subject to the review and approval
of the holder of such Note or Notes and, in the case of any disagreement between
such holder and the Company with respect to such calculation, the conclusion of
such holder shall, in the absence of manifest error, be deemed binding and
conclusive. It is understood and agreed that the failure of any holder to
respond to the Make-Whole Amount Calculation Certificate in respect of its Notes
by the date fixed for prepayment shall be deemed to be a concurrence by such
holder to the method of computation and the calculation of the Make-Whole Amount
in respect of such Notes.
Section 8.3. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes, the principal amount of the Notes to be prepaid
shall be allocated among all of the Notes at the time outstanding in proportion,
as nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.
Section 8.4. Maturity; Surrender, Etc. In the case of each
prepayment of Notes pursuant to this Section 8, the principal amount of each
Note to be prepaid shall mature and become due and payable on the date fixed for
such prepayment, together with interest on such principal amount accrued to such
date and the applicable Make-Whole Amount, if any. From and after such date,
unless the Company shall fail to pay such principal amount when so due and
payable, together with the interest and Make-Whole Amount, if any, as aforesaid,
interest on such principal amount shall cease to accrue. Any Note paid or
prepaid in full shall be surrendered to the Company and canceled and shall not
be reissued, and no Note shall be issued in lieu of any prepaid principal amount
of any Note.
Section 8.5. Purchase of Notes. The Company will not and will not
permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes or (b) pursuant to an offer to purchase made by the Company or an
Affiliate pro rata to the holders of all Notes at the time outstanding upon the
same terms and conditions. Any such offer shall provide each holder with
sufficient information to enable it to make an informed decision with respect to
such offer, and shall remain open for at least 30 Business Days. If the holders
of more than 10% of the principal amount of the Notes then outstanding accept
such offer, the Company shall
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promptly notify the remaining holders of such fact and the expiration date for
the acceptance by holders of Notes of such offer shall be extended by the number
of days necessary to give each such remaining holder at least 30 Business Days
from its receipt of such notice to accept such offer. The Company will promptly
cancel all Notes acquired by it or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this Agreement and
no Notes may be issued in substitution or exchange for any such Notes.
Section 8.6. Make-Whole Amount. The term "Make-Whole Amount" means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal, provided that
the Make-Whole Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:
"Called Principal" shall mean, with respect to any Note,
the principal of such Note that is to be prepaid pursuant to Section
8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
"Discounted Value" shall mean, with respect to the
Called Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal
from their respective scheduled due dates to the Settlement Date
with respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable)
equal to the Reinvestment Yield with respect to such Called
Principal.
"Reinvestment Yield" shall mean, with respect to the
Called Principal of any Note, 50% over the yield to maturity implied
by (a) the yields reported, as of 10:00 a.m. (New York City time) on
the fifth Business Day preceding the Settlement Date with respect to
such Called Principal, on the applicable "PX" page of the Bloomberg
Financial Market Service's Screen (or such other page as may replace
the applicable PX page of the Bloomberg Financial Market Service's
Screen) for actively traded U.S. Treasury Securities having a
maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (b) if such yields are not
reported as of such time or the yields reported as of such time are
not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so
reported as of the fifth Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury Securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield in clauses
(a) and (b) above will be determined, if necessary, by (1)
converting U.S. Treasury bill quotations to bond-equivalent yields
in accordance with accepted financial practice and (2) interpolating
linearly between (i) the actively traded U.S. Treasury Security with
the maturity closest to and greater than the Remaining Average Life
and (2) the
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actively traded U.S. Treasury Security with the maturity closest to
and less than the Remaining Average Life.
"Remaining Average Life" shall mean, with respect to any
Called Principal, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (a) such Called Principal
into (b) the sum of the products obtained by multiplying (1) the
principal component of each Remaining Scheduled Payment with respect
to such Called Principal by (2) the number of years (calculated to
the nearest one-twelfth year) that will elapse between the
Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect
to the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due after the
Settlement Date with respect to such Called Principal if no payment
of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment
will be reduced by the amount of interest accrued to such Settlement
Date and required to be paid on such Settlement Date pursuant to
Section 8.2 or 12.1.
"Settlement Date" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to
be prepaid pursuant to Section 8.2 or has become or is declared to
be immediately due and payable pursuant to Section 12.1, as the
context requires.
SECTION 9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
Section 9.1. Compliance with Law. The Company will, and will cause
each of its Subsidiaries to, comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including, without
limitation, Environmental Laws, and will obtain and maintain in effect all
licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
Section 9.2. Insurance. The Company will, and will cause each of its
Restricted Subsidiaries to, maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in
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the case of entities of established reputations engaged in the same or a similar
business and similarly situated.
Section 9.3. Maintenance of Properties. The Company will, and will
cause each of its Restricted Subsidiaries to, maintain and keep, or cause to be
maintained and kept, their respective properties in good repair, working order
and condition (other than ordinary wear and tear), so that the business carried
on in connection therewith may be properly conducted at all times, provided that
this Section shall not prevent the Company or any Restricted Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
Section 9.4. Payment of Taxes and Claims. The Company will, and will
cause each of its Subsidiaries to, file all tax returns required to be filed in
any jurisdiction and to pay and discharge all taxes shown to be due and payable
on such returns and all other taxes, assessments, governmental charges, or
levies imposed on them or any of their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent and all claims for which sums have become due and
payable that have or might become a Lien on properties or assets of the Company
or any Subsidiary, provided that neither the Company nor any Subsidiary need pay
any such tax or assessment or claims if (a) the amount, applicability or
validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (b) the nonpayment of any such
taxes or assessments could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
Section 9.5. Corporate Existence, Etc. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Sections 10.7, 10.8 and 10.9, the Company will at all times preserve and keep in
full force and effect the corporate existence of each of its Subsidiaries
(unless merged into the Company or a Wholly-Owned Restricted Subsidiary) and all
rights and franchises of the Company and its Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise would
not, individually or in the aggregate, have a Material Adverse Effect.
Section 9.6. Additional Guarantors. (a) The Company shall promptly,
and in any event within three Business Days after (1) a Subsidiary becomes a
Material Subsidiary, (2) the formation or acquisition of a new Subsidiary that
is a Material Subsidiary or (3) the occurrence of any other event creating a new
Subsidiary that is a Material Subsidiary, cause such Material Subsidiary to
execute and deliver a supplement to the Guaranty Agreement in the form of
Exhibit A to the Guaranty Agreement.
(b) Concurrently with the execution and delivery by a Material
Subsidiary of a supplement to the Guaranty Agreement, the Company shall cause
such Material Subsidiary to
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deliver to each holder of Notes (1) such documents and evidence with respect to
such Material Subsidiary as any holder may reasonably request in order to
establish the existence and good standing of such Material Subsidiary and
evidence that the Board of Directors of such Material Subsidiary has adopted
resolutions authorizing the execution and delivery of a supplement to the
Guaranty Agreement, (2) evidence of compliance with such Material Subsidiary's
outstanding debt instruments in the form of (i) a compliance certificate from
such Material Subsidiary to the effect that such Material Subsidiary has
complied with all terms and conditions of its outstanding debt instruments, (ii)
consents or approvals of the holder or holders of any evidence of Debt or
Security, and/or (iii) amendments of agreements pursuant to which any evidence
of Debt or Security may have been issued, all as may be reasonably deemed
necessary by the holders of Notes to permit the execution and delivery of a
supplement to the Guaranty Agreement by such Material Subsidiary, (3) an opinion
of counsel to the effect that (i) such Material Subsidiary is a corporation or
other business entity, duly organized, validly existing and in good standing, if
applicable, under the laws of its jurisdiction of organization, has the power
and the authority to execute and deliver a supplement to the Guaranty Agreement
and to perform the Guaranty Agreement, (ii) the execution and delivery of a
supplement to the Guaranty Agreement and performance of the Guaranty Agreement
has been duly authorized by all necessary action on the part of such Material
Subsidiary, a supplement to the Guaranty Agreement has been duly executed and
delivered by such Material Subsidiary and the Guaranty Agreement constitutes the
legal, valid and binding contract of such Material Subsidiary enforceable
against such Material Subsidiary in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law), (iii) the execution and delivery of a supplement to the
Guaranty Agreement and the performance by such Material Subsidiary of the
Guaranty Agreement do not conflict with or result in any breach of any of the
provisions of or constitute a default under or result in the creation of a Lien
upon any of the property of such Material Subsidiary pursuant to the provisions
of its charter documents or any agreement or other instrument known to such
counsel to which such Material Subsidiary is a party to or by which such
Material Subsidiary may be bound and (iv) no approval, consent or withholding of
objection on the part of, or filing, registration or qualification with, any
governmental body, Federal or state, is necessary in connection with the lawful
execution and delivery of a supplement to the Guaranty Agreement by such
Material Subsidiary or the performance of the Guaranty Agreement by such
Material Subsidiary, which opinion may contain such assumptions and
qualifications as are reasonably acceptable to the Required Holders, and (4) all
other documents and showings reasonably requested by the holders of Notes in
connection with the execution and delivery of a supplement to the Guaranty
Agreement, which documents shall be satisfactory in form and substance to such
holders and their special counsel, and each holder of Notes shall have received
a copy (executed or certified as may be appropriate) of all of the foregoing
legal documents.
SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
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Section 10.1. Nature of Business. The Company will not, and will not
permit any Restricted Subsidiary to, engage in any business if, as a result
thereof, the general nature of the business, taken on a consolidated basis,
which would then be engaged in by the Company and its Restricted Subsidiaries
would be substantially changed from the general nature of the business engaged
in by the Company and its Restricted Subsidiaries on the date of the Closing.
Section 10.2. Consolidated Net Worth. The Company will not, at any
time, permit Consolidated Net Worth to be less than the sum of (a) $180,000,000,
plus (b) an aggregate amount equal to 50% of its Consolidated Net Income (but,
in each case, only if a positive number) for each completed fiscal quarter
beginning with the fiscal quarter ended March 31, 1998.
Section 10.3. Incurrence of Debt. The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, create, incur,
assume, guarantee, or otherwise become directly or indirectly liable with
respect to, any Debt, unless on the date the Company or such Restricted
Subsidiary becomes liable with respect to any such Debt and immediately after
giving effect thereto and the concurrent retirement of any other Debt,
(a) no Default or Event of Default exists, and
(b) Consolidated Total Debt does not exceed 55% of
Consolidated Total Capitalization.
For the purposes of this Section 10.3, any Person becoming a Restricted
Subsidiary after the date of the Closing shall be deemed, at the time it becomes
a Restricted Subsidiary, to have incurred all of its then outstanding Debt, and
any Person extending, renewing or refunding any Debt shall be deemed to have
incurred such Debt at the time of such extension, renewal or refunding.
Section 10.4. Restricted Subsidiary Debt. The Company will not at
any time permit any Restricted Subsidiary to, directly or indirectly, create,
incur, assume, guarantee, have outstanding, or otherwise become or remain
directly or indirectly liable with respect to, any Debt other than:
(a) Debt of a Restricted Subsidiary (1) outstanding on
the date of the Closing and disclosed in Schedule 5.15, provided
that such Debt may not be extended, renewed or refunded except as
otherwise permitted by this Agreement and (2) outstanding pursuant
to the Guaranty Agreement;
(b) Debt of a Restricted Subsidiary owed to the Company
or a Wholly-Owned Restricted Subsidiary;
(c) Debt of a Restricted Subsidiary outstanding at the
time such Restricted Subsidiary becomes a Restricted Subsidiary,
provided that (1) such Debt shall not have been incurred in
contemplation of such Restricted Subsidiary becoming a
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Restricted Subsidiary and (2) immediately after such Restricted
Subsidiary becomes a Restricted Subsidiary no Default or Event of
Default would exist, and provided, further, that such Debt may not
be extended, renewed or refunded except as otherwise permitted by
this Agreement; and
(d) Debt of a Restricted Subsidiary in addition to that
otherwise permitted by the foregoing provisions of this Section
10.4, provided that on the date the Restricted Subsidiary incurs or
otherwise becomes liable with respect to any such additional Debt
and immediately after giving effect thereto and the concurrent
retirement of any other Debt,
(1) no Default or Event of Default exists,
and
(2) Priority Debt does not exceed 20% of
Consolidated Net Worth determined at such time.
Section 10. 5. Liens. The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly create, incur, assume
or permit to exist (upon the happening of a contingency or otherwise) any Lien
on or with respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of the
Company or any such Restricted Subsidiary, whether now owned or held or
hereafter acquired, or any income or profits therefrom, or assign or otherwise
convey any right to receive income or profits, except:
(a) Liens for taxes, assessments or other governmental
charges which are not yet due and payable or the payment of which is
not at the time required by Section 9.4;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in
each case, incurred in the ordinary course of business for sums not
yet due and payable;
(c) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of business (1) in
connection with workers' compensation, unemployment insurance and
other types of social security or retirement benefits, or (2) to
secure (or to obtain letters of credit that secure) the performance
of tenders, statutory obligations, surety bonds, appeal bonds, bids,
leases (other than Capital Leases), performance bonds, purchase,
construction or sales contracts and other similar obligations, in
each case not incurred or made in connection with the borrowing of
money, the obtaining of advances or credit or the payment of the
deferred purchase price of property;
(d) any attachment or judgment Lien, unless the judgment
it secures shall not, within 60 days after the entry thereof, have
been discharged or execution thereof stayed pending appeal, or shall
not have been discharged within 60 days after the expiration of any
such stay;
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(e) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or
encumbrances, in each case incidental to, and not interfering with,
the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries, provided that such Liens do not, in the
aggregate, materially detract from the value of such property;
(f) Liens on property or assets of the Company or any of
its Restricted Subsidiaries securing Debt owing to the Company or to
a Wholly-Owned Restricted Subsidiary;
(g) Liens existing on the date of the Closing and
securing the Debt of the Company and its Restricted Subsidiaries
referred to on Schedule 5.15;
(h) any Lien created to secure all or any part of the
purchase price, or to secure Debt incurred or assumed to pay all or
any part of the purchase price or cost of construction, of property
acquired or constructed by the Company or a Restricted Subsidiary
after the date of the Closing, provided that
(1) any such Lien shall extend solely to the
item or items of such property so acquired or
constructed,
(2) the principal amount of the Debt secured
by any such Lien shall at no time exceed an amount equal
to the lesser of (i) the cost to the Company or such
Restricted Subsidiary of the property so acquired or
constructed and (ii) the Fair Market Value (as
determined in good faith by the Board of Directors of
the Company) of such property at the time of such
acquisition or construction,
(3) any such Lien shall be created
contemporaneously with, or within 180 days after, the
acquisition or construction of such property, and
(4) immediately after giving effect the
creation of such Lien and giving effect thereto, (i) no
Default or Event of Default would exist and (ii) the
Company would be permitted by the provisions of Section
10.3(b) to incur at least $1.00 of additional Debt;
(i) any Lien existing on property of a Person
immediately prior to its being consolidated with or merged into the
Company or a Restricted Subsidiary, or any Lien existing on any
property acquired by the Company or any Restricted Subsidiary at the
time such property is so acquired (whether or not the Debt secured
thereby shall have been assumed), provided that (1) no such Lien
shall have been created or assumed in contemplation of such
consolidation or merger or such acquisition of property, (2) each
such Lien shall extend solely to the item or items of property so
acquired and (3) immediately after giving effect to the acquisition
of the property subject to such Lien and giving effect thereto, (i)
no Default or Event of Default would exist and
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(ii) the Company would be permitted by the provisions of Section
10.3(b) to incur at least $1.00 of additional Debt;
(j) any Lien renewing, extending or refunding any Lien
permitted by paragraphs (g), (h) or (i) of this Section 10.5,
provided that (1) the principal amount of Debt secured by such Lien
immediately prior to such extension, renewal or refunding is not
increased or the maturity thereof reduced, (2) such Lien is not
extended to any other property, and (3) immediately after such
extension, renewal or refunding no Default or Event of Default would
exist; and
(k) other Liens not otherwise permitted by paragraphs
(a) through (i), provided that, after giving effect thereto and to
the application of the proceeds of any Debt secured thereby,
Priority Debt does not exceed 20% of Consolidated Net Worth
determined at such time.
For the purposes of this Section 10.5, any Person becoming a
Restricted Subsidiary after the date of the Closing shall be deemed to have
incurred all of its then outstanding Liens at the time it becomes a Restricted
Subsidiary, and any Person extending, renewing or refunding any Debt secured by
any Lien shall be deemed to have incurred such Lien at the time of such
extension, renewal or refunding.
Section 10.6. Restrictions on Dividends of Subsidiaries, Etc. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
enter into any agreement which would restrict any Restricted Subsidiary's
ability or right to pay dividends to, or make advances to or Investments in, the
Company or, if such Restricted Subsidiary is not directly owned by the Company,
the "parent" Subsidiary of such Restricted Subsidiary.
Section 10.7. Mergers, Consolidations, Etc. The Company will not,
and will not permit any Restricted Subsidiary to, consolidate with or merge with
any other corporation or convey, transfer or lease substantially all of its
assets in a single transaction or series of transactions to any Person; provided
that the foregoing restriction does not apply to:
(a) the consolidation or merger of a Restricted
Subsidiary with, or the conveyance, transfer or lease of
substantially all of the assets of a Restricted Subsidiary to, the
Company or a Wholly-Owned Restricted Subsidiary; or
(b) the consolidation or merger of a Restricted
Subsidiary with any Person other than the Company or a Wholly-Owned
Restricted Subsidiary; provided that such Restricted Subsidiary
shall be the surviving Person and immediately after giving effect to
such transaction (1) no Default or Event of the Default would exist,
(2) the Company would be permitted by the provisions of Section
10.3(b) to incur at least $1.00 of additional Debt, (3) such
Restricted Subsidiary would be permitted by the provisions of
Section 10.4(d)(2) to incur at least $1.00 of additional Priority
Debt and (4) the Company shall own the same percentage of the equity
or voting interests in such Restricted Subsidiary as the Company
owned in such Restricted Subsidiary immediately preceding such
transaction; or
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(c) the conveyance, transfer or lease of all of the
assets of a Restricted Subsidiary to a Person other than the Company
or a Wholly-Owned Restricted Subsidiary in compliance with the
provisions of Section 10.8 and Section 10.9; or
(d) the consolidation or merger of the Company with, or
the conveyance, transfer or lease of substantially all of the assets
of the Company in a single transaction or series of transactions to,
any Person so long as:
(1) the successor formed by such
consolidation or the survivor of such merger or the
Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an
entirety, as the case may be (the "Successor
Corporation"), shall be a solvent corporation organized
and existing under the laws of the United States of
America, any State thereof or the District of Columbia;
(2) if the Company is not the Successor
Corporation, (i) such corporation shall have executed
and delivered to each holder of the Notes its assumption
of the due and punctual performance and observance of
each covenant and condition of this Agreement and the
Notes (pursuant to such agreements and instruments as
shall be reasonably satisfactory to the Required
Holders), (ii) the Company shall have caused to be
delivered to each holder of the Notes an opinion of
nationally recognized independent counsel, or other
independent counsel reasonably satisfactory to the
Required Holders, to the effect that all agreements or
instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms
hereof and (iii) each Guarantor shall have delivered to
each holder of the Notes a certificate whereby such
Guarantor shall have reaffirmed its obligations under
the Guaranty Agreement; and
(3) immediately after giving effect to such
transaction (i) no Default or Event of Default would
exist and (ii) the Successor Corporation would be
permitted by the provisions of Section 10.3(b) to incur
at least $1.00 of additional Debt.
No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the Company or any
Successor Corporation from its liability under this Agreement or the Notes.
Section 10.8. Sale of Assets, Etc. Except as permitted under Section
10.7., Section 10.9 and Section 10.10, the Company will not, and will not permit
any Restricted Subsidiary to, make any Asset Disposition unless:
(a) in the good faith opinion of the Company, the Asset
Disposition is in exchange for consideration having a Fair Market
Value at least equal to that of the property exchanged and is in the
best interest of the Company or such Restricted Subsidiary;
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(b) immediately after giving effect to the Asset
Disposition, no Default or Event of Default would exist; and
(c) immediately after giving effect to the Asset
Disposition, the Disposition Value of all property that was the
subject of any Asset Disposition occurring during the immediately
preceding 12 consecutive calendar month period would not exceed 15%
of Consolidated Total Assets determined as of the end of the then
most recently ended fiscal year of the Company.
If the Net Proceeds Amount for any Transfer is applied to a Debt
Prepayment Application or a Property Reinvestment Application within 180 days
after such Transfer, then such Transfer, only for the purpose of determining
compliance with subsection (c) of this Section 10.8 as of any date on or after
the Net Proceeds Amount is so applied, shall be deemed not to be an Asset
Disposition.
Section 10.9. Disposal of Ownership of a Restricted Subsidiary. The
Company will not, and will not permit any Restricted Subsidiary to, sell or
otherwise dispose of any shares of Restricted Subsidiary Stock, nor will the
Company permit any such Restricted Subsidiary to issue, sell or otherwise
dispose of any shares of its own Restricted Subsidiary Stock, provided that the
foregoing restrictions do not apply to:
(a) the issue of directors' qualifying shares by any
such Restricted Subsidiary;
(b) any such Transfer of Restricted Subsidiary Stock
constituting a Transfer described in clause (a) of the definition of
"Asset Disposition"; and
(c) the Transfer of all of the Restricted Subsidiary
Stock of a Restricted Subsidiary owned by the Company and its other
Subsidiaries if:
(1) such Transfer satisfies the requirements
of Section 10.8 hereof,
(2) in connection with such Transfer the
entire Investment (whether represented by stock, Debt,
claims or otherwise) of the Company and its other
Subsidiaries in such Restricted Subsidiary is sold,
transferred or otherwise disposed of to a Person other
than (i) the Company, (ii) another Subsidiary not being
simultaneously disposed of, or (iii) an Affiliate, and
(3) the Restricted Subsidiary being disposed
of has no continuing Investment in any other Subsidiary
of the Company not being simultaneously disposed of or
in the Company.
Section 10.10. Sale-and-Leasebacks. The Company will not, and will
not permit any Restricted Subsidiary to, enter into any Sale-and-Leaseback
Transaction unless, (a) the lease which is the subject of such
Sale-and-Leaseback Transaction is not a Long-Term Lease or (b) immediately after
giving effect to such Sale-and-Leaseback Transaction, the aggregate
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amount of Priority Debt does not exceed 20% of Consolidated Net Worth determined
at such time.
Section 10.11. Transactions with Affiliates. The Company will not,
and will not permit any Restricted Subsidiary to, enter into directly or
indirectly any Material transaction or Material group of related transactions
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Restricted Subsidiary), except upon fair and
reasonable terms no less favorable to the Company or such Restricted Subsidiary
than would be obtainable in a comparable arm's-length transaction with a Person
not an Affiliate.
Section 10.12. Designation of Restricted and Unrestricted
Subsidiaries. The Company may designate any Subsidiary to be a Restricted
Subsidiary and may designate any Restricted Subsidiary to be an Unrestricted
Subsidiary by giving written notice to each holder of Notes that the Board of
Directors of the Company has made such designation, provided, however, that no
Subsidiary may be designated a Restricted Subsidiary and no Restricted
Subsidiary may be designated an Unrestricted Subsidiary unless, at the time of
such action and after giving effect thereto, (a) solely in the case of a
Restricted Subsidiary being designated an Unrestricted Subsidiary, such
Restricted Subsidiary being designated an Unrestricted Subsidiary shall not have
any continuing Investment in the Company or any other Restricted Subsidiary and
(b) no Default or Event of Default shall exist. Any Restricted Subsidiary which
has been designated an Unrestricted Subsidiary and which has then been
redesignated a Restricted Subsidiary, in each case in accordance with the
provisions of the first sentence of this Section 10.12, shall not at any time
thereafter be redesignated an Unrestricted Subsidiary without the prior written
consent of the Required Holders. Any Unrestricted Subsidiary which has been
designated a Restricted Subsidiary and which has then been redesignated an
Unrestricted Subsidiary, in each case in accordance with the provisions of the
first sentence of this Section 10.12, shall not at any time thereafter be
redesignated a Restricted Subsidiary without the prior written consent of the
Required Holders.
SECTION 11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal
or Make-Whole Amount, if any, on any Note when the same becomes due
and payable, whether at maturity or at a date fixed for prepayment
or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest
on any Note for more than five Business Days after the same becomes
due and payable; or
(c) the Company defaults in the performance of or
compliance with any term contained in Sections 10.1 through 10.4,
inclusive, or Sections 10.6 through 10.12, inclusive; or
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(d) the Company defaults in the performance of or
compliance with any term contained herein (other than those referred
to in paragraphs (a), (b) and (c) of this Section 11) and such
default is not remedied within 30 days after the earlier of (1) a
Responsible Officer obtaining actual knowledge of such default and
(2) the Company receiving written notice of such default from any
holder of a Note (any such written notice to be identified as a
"notice of default" and to refer specifically to this paragraph (d)
of Section 11); or
(e) any representation or warranty made in writing by or
on behalf of the Company or any Guarantor or by any officer of the
Company or any Guarantor in this Agreement or in the Guaranty
Agreement, respectively, or in any writing furnished in connection
with the transactions contemplated hereby or thereby proves to have
been false or incorrect in any material respect on the date as of
which made; or
(f) (1) the Company or any Restricted Subsidiary is in
default (as principal or as guarantor or other surety) in the
payment of any principal of or premium or make-whole amount or
interest on any Debt that is outstanding in an aggregate principal
amount of at least $10,000,000 beyond any period of grace provided
with respect thereto, or (2) the Company or any Restricted
Subsidiary is in default in the performance of or compliance with
any term of any evidence of any Debt in an aggregate outstanding
principal amount of at least $10,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Debt
has become, or has been declared due and payable before its stated
maturity or before its regularly scheduled dates of payment or (3)
as a consequence of the occurrence or continuation of any event or
condition (other than the passage of time or the right of the holder
of Debt to convert such Debt into equity interests), (i) the Company
or any Restricted Subsidiary has become obligated to purchase or
repay Debt before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal
amount of at least $10,000,000, or (ii) one or more Persons have the
right to require the Company or any Restricted Subsidiary so to
purchase or repay such Debt; or
(g) the Company or any Restricted Subsidiary (1) is
generally not paying, or admits in writing its inability to pay, its
debts as they become due, (2) files, or consents by answer or
otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy,
for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction,
(3) makes an assignment for the benefit of its creditors, (4)
consents to the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to it or with respect
to any substantial part of its property, (5) is adjudicated as
insolvent or to be liquidated, or (6) takes corporate action for the
purpose of any of the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the
Company or any of its Restricted
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Subsidiaries, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other
petition in bankruptcy or for liquidation or to take advantage of
any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Company or any of
its Restricted Subsidiaries, or any such petition shall be filed
against the Company or any of its Restricted Subsidiaries and such
petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of
money aggregating in excess of $2,000,000 are rendered against one
or more of the Company and its Restricted Subsidiaries and which
judgments are not fully covered by insurance or, within 60 days
after entry thereof, bonded, discharged or stayed pending appeal, or
are not discharged within 60 days after the expiration of such stay;
or
(j) If (1) any Plan shall fail to satisfy the minimum
funding standards of ERISA or the Code for any plan year or part
thereof or a waiver of such standards or extension of any
amortization period is sought or granted under Section 412 of the
Code, (2) a notice of intent to terminate any Plan shall have been
or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA Section 4042 to
terminate or appoint a trustee to administer any Plan or the PBGC
shall have notified the Company or any ERISA Affiliate that a Plan
may become a subject of any such proceedings, (3) the aggregate
"amount of unfunded benefit liabilities" (within the meaning of
Section 4001(a)(18) of ERISA) under all Plans, determined in
accordance with Title IV of ERISA, shall exceed $5,000,000, (4) the
Company or any ERISA Affiliate shall have incurred or is reasonably
expected to incur any liability pursuant to Title I or IV of ERISA
or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (5) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (6) the Company or any
ERISA Affiliate establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner that
would increase the liability of the Company or any ERISA Affiliate
thereunder; and any such event or events described in clauses (1)
through (6) above, either individually or together with any other
such event or events, would reasonably be expected to have a
Material Adverse Effect; or
(k) (1) default shall occur under the Guaranty Agreement
and such default shall continue beyond the period of grace, if any,
allowed with respect thereto, or (2) the Guaranty Agreement shall
cease to be in full force and effect for any reason whatsoever,
including, without limitation, a determination by any Governmental
Authority or court that such agreement is invalid, void or
unenforceable or any Guarantor shall contest or deny in writing the
validity or enforceability of any of its obligations under the
Guaranty Agreement.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
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SECTION 12. REMEDIES ON DEFAULT, ETC.
Section 12.1. Acceleration. (a) If an Event of Default with respect
to the Company described in paragraph (g) or (h) of Section 11 (other than an
Event of Default described in clause (1) of paragraph (g) or described in clause
(6) of paragraph (g) by virtue of the fact that such clause encompasses clause
(1) of paragraph (g)) exists, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any other Event of Default exists, any holder or holders of
more than 25% in principal amount of the Notes at the time outstanding may at
any time at its or their option, by notice or notices to the Company, declare
all the Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 exists, any holder or holders of Notes at the time outstanding
affected by such Event of Default may at any time, at its or their option, by
notice or notices to the Company, declare all the Notes held by it or them to be
immediately due and payable.
Upon any Note's becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus (1) all accrued and unpaid
interest thereon and (2) the Make-Whole Amount determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the pasties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
Section 12.2. Other Remedies. If any Event of Default exists, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of Section 12.1, the
holders of not less than 76% in principal amount of the Notes then outstanding,
by written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent
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permitted by applicable law) any overdue interest in respect of the Notes, at
the Default Rate, (b) all Events of Default and Defaults, other than non-payment
of amounts that have become due solely by reason of such declaration, have been
cured or have been waived pursuant to Section 17, and (c) no judgment or decree
has been entered for the payment of any monies due pursuant hereto or to the
Notes. No rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Default or impair any right consequent
thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law. in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
Section 13.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
Section 13.2. Transfer and Exchange of Notes. Upon surrender of any
Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or its Attorney duly authorized
in writing and accompanied by the address for notices of each transferee of such
Note or part thereof), the Company shall execute and deliver, at the Company's
expense (except as provided below), one or more new Notes (as requested by the
holder thereof) in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of Exhibit 1. Each such new Note shall be dated and bear interest from
the date to which interest shall have been paid on the surrendered Note or dated
the date of the surrendered Note if no interest shall have been paid thereon.
The Company may require payment of a sum sufficient to
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cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less than
$1,000,000, provided that if necessary to enable the registration of transfer by
a holder of its entire holding of Notes, one Note may be in a denomination of
less than $1,000,000. Any transferee, by its acceptance of a Note registered in
its name (or the name of its nominee), shall be deemed to have made the
representation set forth in Section 6.2, provided, however, that, such
transferee will not be deemed to have chosen the options set forth in Section
6.2(b), (c) or (e) unless such transferee shall have made the disclosures
referred to therein at least five Business Days prior to its acceptance of such
Note and shall have received prior to such acceptance of such Note the
certificate provided for in the penultimate paragraph of Section 6.2 and such
certificate shall contain the statement set forth in either Section 4.3(c)(1) or
(2), as applicable; and provided, further, that, such transferee will not be
deemed to have chosen an option set forth in Section 6.2(a), (b) or (d) unless
the applicable Class Exemption referred to therein remains in effect at that
time or another similar Class Exemption is then available. The Company shall
exercise reasonable due diligence as is necessary to respond to any such
disclosure, provided that, if the Company shall not respond within five Business
Days following receipt of any such disclosure, it shall be deemed to have made
the statement set forth in either Section 4.3(c)(l) or (2), as applicable.
Section 13.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note is, or
is a nominee for, an original Purchaser or another holder of a Note with a
minimum net worth of at least $50,000,000, such Person's own unsecured agreement
of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
SECTION 14. PAYMENTS ON NOTES.
Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in Chicago, Illinois at the principal office of Bank of
America in such jurisdiction. The Company may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place
of payment shall be either the principal office of
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the Company in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction.
Section 14.2. Home Office Payment. So long as any Purchaser or such
Purchaser's nominee shall be the holder of any Note, and notwithstanding
anything contained in Section 14.1 or in such Note to the contrary, the Company
will pay all sums becoming due on such Note for principal, Make-Whole Amount, if
any, and interest by the method and at the address specified for such purpose
below such Purchaser's signature at the foot of this Agreement, or by such other
method or at such other address as such Purchaser shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, such Purchaser shall
surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of
payment most recently designated by the Company pursuant to Section 14.1. Prior
to any sale or other disposition of any Note held by any Purchaser or such
Purchaser's nominee such Purchaser will, at its election, either endorse thereon
the amount of principal paid thereon and the last date to which interest has
been paid thereon or surrender such Note to the Company in exchange for a new
Note or Notes pursuant to Section 13.2. The Company will afford the benefits of
this Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by any Purchaser under this Agreement and that
has made the same agreement relating to such Note as such Purchaser has made in
this Section 14.2.
SECTION 15. EXPENSES, ETC.
Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys' fees of a special counsel and, if reasonably
required, local or other counsel) incurred by each Purchaser or holder of a Note
in connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement, the Guaranty
Agreement or the Notes (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement, the Guaranty Agreement or the Notes or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement, the Guaranty Agreement or the
Notes, or by reason of being a holder of any Note or a beneficiary of the
Guaranty Agreement, and (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or bankruptcy of the
Company or any Subsidiary or in connection with any work-out or restructuring of
the transactions contemplated hereby, by the Guaranty Agreement and by the
Notes. The Company will pay, and will save each Purchaser and each other holder
of a Note harmless from, all claims in respect of any fees, costs or expenses if
any, of brokers and finders (other than those retained by such Purchaser or
holder).
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Section 15.2. Survival. The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase or
transfer by any Purchaser of any Note or portion thereof or interest therein and
the payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of such
Purchaser or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement. Subject to the preceding sentence, this Agreement
and the Notes embody the entire agreement and understanding between each
Purchaser and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
SECTION 17. AMENDMENT AND WAVIER.
Section 17.1. Requirements. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
defined term (as it is used therein), will be effective as to any Purchaser
unless consented to by such Purchaser in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (1) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest or of the Make-Whole Amount on, the
Notes, (2) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or (3)
amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
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(b) Payment. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes of any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.
Section 17.3. Binding Effect, Etc. Any amendment or waiver consented
to as provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term "this Agreement" and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.
Section 17.4. Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.
SECTION 18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(1) if to a Purchaser or such Purchaser's nominee, to
such Purchaser or such Purchaser's nominee at the address specified
for such communications below such Purchaser's signature at the foot
of this Agreement, or at such other address as such Purchaser or
such Purchaser's nominee shall have specified to the Company in
writing,
(2) if to any other holder of any Note, to such holder
at such address as such other holder shall have specified to the
Company in writing, or
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(3) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of Chief Financial
Officer, or at such other address as the Company shall have
specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
SECTION 19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to each Purchaser, may be
reproduced by such Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such Purchaser
may destroy any original document so reproduced. The Company agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit the Company or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
SECTION 20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information"
means information delivered to any Purchaser by or on behalf of the Company or
any Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by such Purchaser
or any Person acting on such Purchaser' s behalf, (c) otherwise becomes known to
such Purchaser other than through disclosure by the Company or any Subsidiary or
(d) constitutes financial statements delivered to such Purchaser under Section
7.1 that are otherwise publicly available. Each Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such Purchaser in good faith to protect confidential information of
third parties delivered to such Purchaser, provided that such Purchaser may
deliver or disclose Confidential Information to (1) such Purchaser's directors,
trustees, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by such Purchaser's Notes), (2) such Purchaser's financial advisors
and other professional advisors who agree to hold confidential the Confidential
Information substantially in
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accordance with the terms of this Section 20, (3) any other holder of any Note,
(4) any Institutional Investor to which such Purchaser sells or offers to sell
such Note or any part thereof or any participation therein (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (5) any Person from which such
Purchaser offers to purchase any Security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (6) any Federal or state regulatory
authority having jurisdiction over such Purchaser, (7) the National Association
of Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about such
Purchaser' s investment portfolio, or (8) any other Person to which such
delivery or disclosure may be necessary or appropriate (i) to effect compliance
with any law, Rule, regulation or order applicable to such Purchaser, (ii) in
response to any subpoena or other legal process, (iii) in connection with any
litigation to which such Purchaser is a party or (iv) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under such
Purchaser's Notes and this Agreement. Each holder of a Note, by its acceptance
of a Note, will be deemed to have agreed to be bound by and to be entitled to
the benefits of this Section 20 as though it were a party to this Agreement. On
reasonable request by the Company in connection with the delivery to any holder
of a Note of information required to be delivered to such holder under this
Agreement or requested by such holder (other than a holder that is a party to
this Agreement or its nominee), such holder will enter into an agreement with
the Company embodying the provisions of this Section 20.
SECTION 21. SUBSTITUTION OF A PURCHASER.
Each Purchaser shall have the right to substitute any one of such
Purchaser's Affiliates as the purchaser of the Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both such Purchaser and such Purchaser's Affiliate, shall
contain such Affiliate's agreement to be bound by this Agreement and shall
contain a confirmation by such Affiliate of the accuracy with respect to it of
the representations set forth in Section 6. Upon receipt of such notice,
wherever the word "Purchaser" is used in this Agreement (other than in this
Section 21), such word shall be deemed to refer to such Affiliate in lieu of
such Purchaser. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to such Purchaser
all of the Notes then held by such Affiliate, upon receipt by the Company of
notice of such transfer, wherever the word "Purchaser" is used in this Agreement
(other than in this Section 21), such word shall no longer be deemed to refer to
such Affiliate, but shall refer to such Purchaser, and such Purchaser shall have
all the rights of an original holder of the Notes under this Agreement.
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SECTION 22. MISCELLANEOUS.
Section 22.1. Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.
Section 22.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount or interest on any Note that is due on a date other than
a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.
Section 22.3. 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 (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 22.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the requirements
of this Agreement.
Section 22.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
Section 22.6. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of Illinois excluding choice-of-law principles of the law
of such State that would require the application of the laws of a jurisdiction
other than such State.
* * * *
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The execution hereof by the Purchasers shall constitute a contract
among the Company and the Purchasers for the uses and purposes hereinabove set
forth. This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all together only one
agreement.
Very truly yours,
GRANITE CONSTRUCTION INCORPORATED
By /s/ David H. Watts
---------------------------------
Its President and
Chief Executive Officer
By /s/ William E. Barton
---------------------------------
Its Vice President and
Chief Financial Officer
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Accepted as of March 1, 1998:
ALLSTATE LIFE INSURANCE COMPANY
By /s/ Charles D. Mires
---------------------------------
Name: Charles D. Mires
By /s/ Ronald A. Mendel
---------------------------------
Name: Ronald A. Mendel
Authorized Signatories
ALLSTATE LIFE INSURANCE COMPANY
3075 Sanders Road, STE G3A
Northbrook, Illinois 60062-7127
Attention: Private Placements Department
Telecopier Number: (847) 402-3092
Telephone Number: (847) 402-4394
Payments
All payments on or in respect of the Notes to be made by Fedwire transfer of
immediately available funds (identifying each payment with name of the Issuer,
the Private Placement Number preceded by "DPP" and the payment as principal,
interest or premium) in the exact format as follows:
BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Life Insurance Company
Collection Account #168-117-0
ORG = Granite Construction Incorporated
OBI = DPP - 387328 A* 8 -
Payment Due Date (MM/DD/YY) -
P _______ (enter "P" and the amount of principal being
remitted, for example, P5000000.00) -
I _______ (enter "I" and the amount of
interest being remitted, for example, I225000.00)
Notices
All notices of scheduled payments and written confirmation of each such payment,
to be addressed:
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Allstate Insurance Company
Investment Operations-Private Placements
3075 Sanders Road, STE G4A
Northbrook, Illinois 60062-7127
Telephone: (847) 402-2769
Telecopy: (847) 326-5040
All financial reports, compliance certificates and all other written
communications, including notice of prepayments to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 36-2554642
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Accepted as of March 1, 1998:
UNITED OF OMAHA LIFE INSURANCE
COMPANY
By /s/ Edwin H. Garrison, Jr.
---------------------------------
Its First Vice President
UNITED OF OMAHA LIFE INSURANCE COMPANY
Mutual of Omaha Plaza
Omaha, Nebraska 68175-1011
Attention: Investment Division/Securities Accounting
Telecopier Number: (402) 351-2913
Telephone Number: (402) 351-2504
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Granite Construction Incorporated, 6.54% Senior Notes due March 15, 2010") to:
Chase Manhattan Bank
ABA #021000021
Private Income Processing
for credit to:
United of Omaha Life Insurance Company
Account Number 900-9000200
a/c: G07097
CUSIP/PPN: 387328 A* 8
Interest Amount:__________
Principal Amount:_________
Notices
All notices in respect of payment of principal and interest, corporate actions
and reorganization notifications to:
The Chase Manhattan Bank
4 New York Plaza - 13th Floor
New York, New York 10004
Attn: Income Processing - J. Piperatto
a/c: G07097
-43-
50
All other communications to:
4-Investment Loan Administration
Mutual of Omaha Insurance Company
Mutual of Omaha Plaza
Omaha, Nebraska 68175-1011
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-0322111
-44-
51
Accepted as of March 1, 1998:
MUTUAL OF OMAHA INSURANCE COMPANY
By /s/ Edwin H. Garrison Jr.
------------------------------------
Its First Vice President
MUTUAL OF OMAHA INSURANCE COMPANY
Mutual of Omaha Plaza
Omaha, Nebraska 68175-1011
Attention: Investment Division/Securities Accounting
Telecopier Number: (402) 351-2913
Telephone Number: (402) 351-2504
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Granite Construction Incorporated, 6.54% Senior Notes due March 15, 2010") to:
Chase Manhattan Bank
ABA #021000021
Private Income Processing
for credit to:
Mutual of Omaha Insurance Company
Account Number 900-9000200
a/c: G07096
CUSIP/PPN: 387328 A* 8
Interest Amount:_________
Principal Amount:________
Notices
All notices in respect of payment of principal and interest, corporate actions
and reorganization notifications to:
The Chase Manhattan Bank
4 New York Plaza - 13th Floor
New York, New York 10004
Attn: Income Processing - J. Piperatto
a/c: G07096
-45-
52
All other notices and communications to:
4 - Investment Loan Administration
Mutual of Omaha Insurance Company
Mutual of Omaha Plaza
Omaha, Nebraska 68175-1011
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-0246511
-46-
53
Accepted as of March 1, 1998:
COMPANION LIFE INSURANCE COMPANY
By /s/ Edwin H. Garrison Jr.
----------------------------------------
Its Assistant Treasurer
By /s/ Richard A. Witt
----------------------------------------
Its Second Vice President &
Assistant Treasurer
COMPANION LIFE INSURANCE COMPANY
Mutual of Omaha Plaza
Omaha, Nebraska 68175-1011
Attention: Investment Division/Securities Accounting
Telecopier Number: (402) 351-2913
Telephone Number: (402) 351-2504
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Granite Construction Incorporated, 6.54% Senior Notes due February 15, 2010")
to:
Companion Life Insurance Company
c/o The Bank of New York
ABA #021000018
Acct. No. 111566 Income Collection
Attention: P&I Department
For Payment on: Granite Construction Incorporated
Interest Amount:__________________
Principal Amount:_________________
Payable Date:_____________________
CLICO
Notices
All notices with respect to payments to:
Companion Life Insurance Company
Attention: Investment Securities Accounting
Mutual of Omaha Plaza
Omaha, Nebraska 68175
-47-
54
with duplicate notice to:
Companion Life Insurance Company
Attention: Financial Division
401 Theodore Fremd Avenue
Rye, New York 10580-1493
All other notices and communications to:
Companion Life Insurance Company
Attention: Investment Division
Mutual of Omaha Plaza
Omaha, Nebraska 68175
with duplicate notice to:
Companion Life Insurance Company
Attention: Financial Division
401 Theodore Fremd Avenue
Rye, New York 10580-1493
Name of Nominee in which Notes are to be issued: HARE & CO.
Taxpayer I.D. Number: 13-6062916
-48-
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Accepted as of March 1, 1998:
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By /s/ Shabnam B. Miglani
----------------------------------------
Its Counsel
By /s/ Sarah J. Pitts
----------------------------------------
Its Counsel
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Department - Securities
Telecopier Number: (515) 248-2490
Telephone Number: (515) 248-3495
Payments (in respect of the Note in the original principal amount of
$7,400,000):
All payments on or in respect of such Notes to be by bank wire transfer of
Federal or other immediately available funds to:
ABA #073000228
Norwest Bank Iowa, N.A.
7th and Walnut Streets
Des Moines, Iowa 50309
For credit to Principal Mutual Life Insurance Company
Account No. 014752
OBI PFGSE (S) B0061391 ( ) Granite Construction Incorporated, 6.54%
Senior Notes due March 15, 2010
Bond Number: l-B-61391
With sufficient information (including interest rate, maturity date,
interest amount, principal amount and premium amount, if applicable)
to identify the source and application of such funds.
Payments (in respect of the Note in the original principal amount of
$5,600,000):
All payments on or in respect of such Notes to be by bank wire transfer of
Federal or other immediately available funds to:
-49-
56
ABA #073000228
Norwest Bank Iowa, N.A.
7th and Walnut Streets
Des Moines, Iowa 50309
For credit to Principal Mutual Life Insurance Company
Account No. 032395
OBI PFGSE (S) B0061391 ( ) Granite Construction Incorporated, 6.54%
Senior Notes due March 15, 2010
Bond Number: 16-B-61391
With sufficient information (including interest rate, maturity date,
interest amount, principal amount and premium amount, if applicable) to
identify the source and application of such funds.
Notices
All notices with respect to payments to:
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Accounting-Securities
Telecopier Number: (515) 248-2643
Telephone Number: (515) 247-0689
All other notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Tax Identification No.: 42-0127290
-50-
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Accepted as of March 1, 1998:
LUTHERAN BROTHERHOOD
By /s/ Mark 0. Swenson
-------------------------------------
Its Assistant Vice President
LUTHERAN BROTHERHOOD
625 Fourth Avenue South, 10th Floor
Minneapolis, Minnesota 55415
Attention: Investment Division
Telecopier Number: (612) 340-5756
Telephone Number: (612) 340-5757
Payments
All payments of principal, interest and premium on the account of the Notes
shall be made by bank wire transfer (in immediately available funds) to:
Norwest Bank Minnesota, N.A.
ABA #091000019
For Credit to Trust Clearing Account #08-40-245
Attention: Sarah Corcoran
For credit to: Lutheran Brotherhood
Account Number 12651300
All payments must include the following information:
A/C Lutheran Brotherhood
Account No.: 12561300
Security Description
PPN Number
Reference Purpose of Payment
Interest and/or Principal Breakdown
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-0385700
-51-
58
NAMES OF PURCHASERS PRINCIPAL AMOUNT OF NOTES
TO BE PURCHASED
Allstate Life Insurance Company $10,000,000
Allstate Life Insurance Company 7,000,000
Allstate Life Insurance Company 5,000,000
United of Omaha Life Insurance Company 10,000,000
Mutual of Omaha Insurance Company 5,000,000
Companion Life Insurance Company 2,000,000
Principal Mutual Life Insurance Company 7,400,000
Principal Mutual Life Insurance Company 5,600,000
Lutheran Brotherhood 8,000,000
TOTAL $60,000,000
SCHEDULE A
(to Note Purchase Agreement)
59
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Affiliate" shall mean, at any time, and with respect to any Person,
(a) any other Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under common Control
with, such first Person, (b) any other Person beneficially owning or holding,
directly or indirectly, 10% or more of any class of voting or equity interests
of such first Person or any other Person of which such first Person beneficially
owns or holds, in the aggregate, directly or indirectly, 10% or more of any
class of voting or equity interests, and (c) any officer or director of such
first Person and any Person fulfilling an equivalent function of an officer or
director; provided that "Affiliate," in relation to the Company, shall not
include any Restricted Subsidiary. As used in this definition, "Control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting Securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.
"Asset Disposition" shall mean any Transfer except:
(a) any
(1) Transfer from a Restricted Subsidiary to the
Company or to a Wholly-Owned Restricted Subsidiary; and
(2) Transfer from the Company to a Wholly-owned
Restricted Subsidiary.
so long as immediately before and immediately after the consummation
of any such Transfer and after giving effect thereto, no Default or
Event of Default would exist;
(b) any Transfer made in the ordinary course of business
and involving only property that is either (1) inventory held for
sale or (2) equipment, fixtures, supplies or materials no longer
required in the operation of the business of the Company or any of
its Restricted Subsidiaries or that is obsolete; and
(c) any Transfer in one lot of all of the voting
Securities of TIC, directly or indirectly, owned or held by the
Company to TIC pursuant to that certain Stock Purchase Agreement
dated as of December 23, 1996 between the Company and TIC, as
amended, supplemented, restated or otherwise modified from time to
time.
"Attributable Debt" shall mean, as to any particular Long-Term Lease
relating to a Sale-and-Leaseback Transaction, the present value of all Lease
Rentals required to be paid by the Company or any Restricted Subsidiary under
such lease during the remaining term
SCHEDULE B
(To Note Purchase Agreement)
B-1
60
thereof (determined in accordance with generally accepted financial practice
using a discount factor equal to the interest rate implicit in such lease if
known or, if not known, of 12% per annum).
"Bank Credit Agreement" shall mean that certain Credit Agreement
dated as of June 30, 1997 among the Company, Bank of America National Trust and
Savings Association, as agent, and each of the financial institutions a party
thereto, as the same may be amended, supplemented, restated or otherwise
modified from time to time, and any credit agreement or other like agreement
entered into by the Company which is substantially similar to or replaces the
Credit Agreement.
"Business Day" shall mean (a) for the purposes of Section 8.6 only,
any day other than a Saturday, a Sunday or a day on which commercial banks in
New York City are required or authorized to be closed, and (b) for the purposes
of any other provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in Chicago, Illinois or San Francisco,
California are required or authorized to be closed.
"Capital Lease" shall mean, at any time, a lease with respect to
which the lessee is required concurrently to recognize the acquisition of an
asset and the incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" shall mean, with respect to any Person
and a Capital Lease, the amount of the obligation of such Person as the lessee
under such Capital Lease which would, in accordance with GAAP, appear as a
liability on a balance sheet of such Person.
"Closing" is defined in Section 3.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder from time to
time.
"Company" shall mean Granite Construction Incorporated, a Delaware
corporation, and any Person who succeeds to all, or substantially all, of the
assets and business of Granite Construction Incorporated.
"Confidential information" is defined in Section 20.
"Consolidated Net Income" for any period shall mean the gross
revenues of the Company and its Restricted Subsidiaries for such period less all
expenses and other proper charges (including taxes on income), determined on a
consolidated basis after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition
of Investments or fixed or capital assets (other than fixed or
capital assets sold or disposed of in the ordinary course of
business), and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses;
B-2
61
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Restricted Subsidiary
accrued prior to the date it became a Restricted Subsidiary:
(d) net earnings and losses of any corporation (other than
a Restricted Subsidiary), substantially all the assets of which have
been acquired in any manner by the Company or any Restricted
Subsidiary, realized by such corporation prior to the date of such
acquisition;
(e) net earnings and losses of any corporation (other than
a Restricted Subsidiary) with which the Company or a Restricted
Subsidiary shall have consolidated or which shall have merged into
or with the Company or a Restricted Subsidiary prior to the date of
such consolidation or merger;
(f) net earnings of any business entity (other than a
Restricted Subsidiary or a joint venture) in which the Company or
any Restricted Subsidiary has an ownership interest unless such net
earnings shall have actually been received by the Company or such
Restricted Subsidiary in the form of cash distributions;
(g) earnings resulting from any reappraisal, revaluation
or write-up of assets;
(h) any deferred or other credit representing any excess
of the equity in any Restricted Subsidiary at the date of
acquisition thereof over the amount invested in such Restricted
Subsidiary;
(i) any gain arising from the acquisition of any
Securities of the Company or any Restricted Subsidiary; and
(j) any other extraordinary gain or loss.
"Consolidated Net Worth" shall mean, as of the date of any
determination thereof,
(a) the sum of (1) the par value (or value stated on the
books of the corporation) of the capital stock (but excluding
treasury stock and capital stock subscribed and unissued) of the
Company and its Restricted Subsidiaries plus (2) the amount of the
paid-in capital and retained earnings of the Company and its
Restricted Subsidiaries, in each case as such amounts would be shown
on a consolidated balance sheet of the Company and its Restricted
Subsidiaries as of such time prepared in accordance with GAAP, minus
(b) unearned compensation, minus
(c) to the extent included in clause (a) above, all
amounts properly attributable to Minority Interests, if any, in the
stock and surplus of Restricted Subsidiaries, minus
B-3
62
(d) the book value of all Restricted Investments of the
Company and its Restricted Subsidiaries acquired after the date of
the Closing in excess of an amount equal to 10% of the amount
determined pursuant to clauses (a), (b) and (c) of this definition.
"Consolidated Total Assets" shall mean, as of the date of any
determination thereof, (a) the total assets of the Company and its Restricted
Subsidiaries which would be shown as assets on a consolidated balance sheet of
the Company and its Restricted Subsidiaries as of such time prepared in
accordance with GAAP, after eliminating all amounts properly attributable to
Minority Interests, if any, in the stock and surplus of Restricted Subsidiaries.
"Consolidated Total Capitalization" shall mean, as the date of any
determination thereof, the sum of (a) Consolidated Net Worth and (b)
Consolidated Total Debt.
"Consolidated Total Debt" shall mean, as of the date of any
determination thereof, the total of all Debt of the Company and its Restricted
Subsidiaries outstanding on such date, after eliminating all offsetting debits
and credits between the Company and its Restricted Subsidiaries, and all other
items required to be eliminated in the course of the preparation of consolidated
financial statements of the Company and its Restricted Subsidiaries in
accordance with GAAP.
"Debt" shall mean, with respect to any Person, without duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising
in the ordinary course of business but including, without
limitation, all liabilities created or arising under any conditional
sale or other title retention agreement with respect to any such
property);
(c) its Capitalized Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person;
(g) its recourse obligations under Receivables
Securitization Transactions;
B-4
63
(h) in respect of the Company or any Restricted
Subsidiary, its Attributable Debt; and
(i) any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a) through (h)
hereof in an amount equal to the amount guaranteed.
Debt of any Person shall include all obligations of such Person of
the character described in clauses (a) through (i) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"Debt Prepayment Application" shall mean, with respect to any
Transfer of property, the application by the Company or its Restricted
Subsidiaries of cash in an amount equal to the Net Proceeds Amount with respect
to such Transfer to pay Senior Debt (other than Senior Debt owing to the
Company, any of its Subsidiaries or any Affiliate).
"Default" shall mean an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of notice or
both, become an Event of Default.
"Default Rate" shall mean that rate of interest that is the greater
of (a) 2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes and (b) 2% over the rate of interest publicly announced
by Bank of America in San Francisco, California as its "reference" rate.
"Disposition Value" shall mean, as of any date of determination,
with respect to any property
(a) in the case of property that does not constitute
Subsidiary Stock, the Fair Market Value thereof, valued at the time
of such disposition in good faith by the Company, and
(b) in the case of property that constitutes Subsidiary
Stock, an amount equal to that percentage of book value of the
assets of the Subsidiary that issued such stock as is equal to the
percentage that the book value of such Subsidiary Stock represents
of the book value of all of the outstanding capital stock of such
Subsidiary (assuming, in making such calculations, that all
Securities convertible into such capital stock are so converted and
giving full effect to all transactions that would occur or be
required in connection with such conversion) determined at the time
of the disposition thereof in good faith by the Company.
"Environmental Laws" shall mean any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
B-5
64
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under Section 414 of the Code.
"Event of Default " is defined in Section 11.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean, as of any date of determination and
with respect to any property, the sale value of such property that would be
realized in an arm's-length sale at such time between an informed and willing
buyer and an informed and willing seller (neither being under a compulsion to
buy or sell).
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governmental Authority" shall mean
(a) the government of
(1) the United States of America or any State or other
political subdivision thereof, or
(2) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or
which asserts jurisdiction over any properties of the
Company or any Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining
to, any such government.
"Guarantors" is defined in Section 2.2.
"Guaranty Agreement" is defined in Section 2.2.
"Guaranty" shall mean, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any Debt, dividend or other obligation of any other Person in any
manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such Debt or obligation or any property
constituting security therefor;
B-6
65
(b) to advance or supply funds (1) for the purchase or
payment of such Debt or obligation, or (2) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make
available funds for the purchase or payment of such Debt or
obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of such
Debt or obligation of the ability of any other Person to make
payment of the Debt or obligation; or
(d) otherwise to assure the owner of such Debt or
obligation against loss in respect thereof.
In any computation of the Debt or other liabilities of the obligor under any
Guaranty, the Debt or other obligations that are the subject of such Guaranty
shall be assumed to be direct obligations of such obligor.
"Hazardous Material" shall mean any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"holder" shall mean, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the Company pursuant
to Section 13.1.
"Institutional Investor" shall mean (a) any original purchaser of a
Note, (b) any holder of a Note holding more than 5% of the aggregate principal
amount of the Notes then outstanding, and (c) any bank, trust company, savings
and loan association or other financial institution, any pension plan, any
investment company, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.
"Investment" shall mean any investment, made in cash or by delivery
of property, by the Company or any of its Restricted Subsidiaries (a) in any
Person, whether by acquisition of stock, Debt or other obligation or Security,
or by loan, Guaranty, advance, capital contribution or otherwise, or (b) in any
property.
"Lease Rentals" shall mean, with respect to any period, the sum of
the rental and other obligations required to be paid during such period by the
Company or any Restricted Subsidiary, as lessee, under all leases of real or
personal property (other than Capital Leases), excluding any amount required to
be paid by the lessee (whether or not therein designated as rental or additional
rental) on account of maintenance and repairs, insurance, taxes, assessments,
water rates and similar charges, provided that, if at the date of determination,
any such rental or other obligations (or portion thereof) are contingent or not
otherwise definitely determinable by the terms of the related lease, the amount
of such obligations (or such portion thereof) are contingent or not otherwise
definitely determinable by the terms of the related lease, the amount of such
B-7
66
obligations (or such portion thereof) (1) shall be assumed to be equal to the
amount of such obligations for the period of 12 consecutive calendar months
immediately preceding the date of
determination or (2) if the related lease was not in effect during such
preceding 12-month period, shall be the amount estimated by a Senior Financial
Officer of the Company on a reasonable basis and in good faith.
"Lien" shall mean, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Long-Term Lease" shall mean any lease of property having an
original term, including any period for which the lease may be renewed or
extended at the option of the lessee, of more than three years.
"Make-Whole Amount" is defined in Section 8.6.
"Make-Whole Amount Calculation Certificate" is defined in Section
8.2.
"Material" shall mean material in relation to the business,
operations, affairs, financial condition, assets, properties or prospects of the
Company and its Restricted Subsidiaries taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the business, operations, affairs, financial condition, assets, properties
or prospects of the Company and its Restricted Subsidiaries taken as a whole, or
(b) the ability of the Company to perform its obligations under this Agreement
and the Notes, or (c) the validity or enforceability of this Agreement, the
Guaranty Agreement or the Notes.
"Material Subsidiary" shall mean each Subsidiary designated on
Schedule 5.4 as a Restricted Subsidiary (other than Granite Construction
International, a California corporation) and each other Restricted Subsidiary
which meets any of the following conditions:
(a) such Subsidiary's total net revenues for the period of
the immediately preceding four fiscal quarters is equal to or
greater than 10% of the consolidated total net revenues of the
Company and its Subsidiaries for such period determined in
accordance with GAAP, in each case as reflected in the most recent
annual or quarterly financial statements of the Company and its
Subsidiaries; or
(b) such Subsidiary's total assets, as of the last day of
the immediately preceding fiscal quarter, is equal to or greater
than 10% of consolidated total assets of the Company and its
Subsidiaries as of such date determined in accordance with
B-8
67
GAAP, in each case as reflected in the most recent annual or
quarterly financial statements of the Company and its Subsidiaries; or
(c) such Subsidiary is an obligor or guarantor of any Debt
existing under the Bank Credit Agreement.
"Memorandum" is defined in Section 5.3.
"Minority Interests" shall mean any shares of stock of any class of
a Restricted Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Company and/or one or more of its Restricted
Subsidiaries. Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary liquidating value
of such preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus applicable
thereto adjusted, if necessary, to reflect any changes from the book value of
such common stock required by the foregoing method of valuing Minority Interests
in preferred stock.
"Multiemployer Plan" shall mean any Plan that is a "multiemployer
plan" (as such term is defined in Section 400l(a)(3) of ERISA).
"Net Proceeds Amount" shall mean, with respect to any Transfer of
any property by any Person, an amount equal to the difference of
(a) the aggregate amount of the consideration (valued at
the Fair Market Value of such consideration at the time of the
consummation of such Transfer) allocated to such Person in respect
of such Transfer, net of any applicable taxes incurred in connection
with such Transfer, minus
(b) all ordinary and reasonable out-of-pocket costs and
expenses actually incurred by such Person in connection with such
Transfer.
"Notes" is defined in Section 1.
"Officer's Certificate" shall mean a certificate of a Senior
Financial Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"Person" shall mean an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
B-9
68
"Plan" shall mean an "employee benefit plan" (as defined in Section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may have
any liability.
"Preferred Stock" shall mean any class of capital stock of a
corporation that is preferred over any other class of capital stock of such
corporation as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such corporation.
"Priority Debt" shall mean the sum of (a) all Debt of the Company
secured by Liens permitted by Section 10.5(k), (b) all Debt of Restricted
Subsidiaries permitted by Section 10.4(d), and (c) all Attributable Debt of the
Company and its Restricted Subsidiaries permitted by Section 10. 10(b).
property" or "properties" shall mean, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"Property Reinvestment Application" shall mean, with respect to any
Transfer of property, the application of an amount equal to the Net Proceeds
Amount with respect to such Transfer to the acquisition by the Company or any
Restricted Subsidiary of operating assets of the Company or any Restricted
Subsidiary to be used in the principal business of such Person.
"PTE" is defined in Section 6.2(a).
"QPAM Exemption" shall mean Prohibited Transaction Class Exemption
84-14 issued by the United States Department of Labor.
"Receivables Securitization Transaction" shall mean any transaction
pursuant to which (a) accounts receivables are sold or transferred and (b) the
seller either (1) retains an interest in the receivables so sold or transferred
or (2) assumes any liability in connection with such sale or transfer.
"Required Holders" shall mean, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company, any of its Subsidiaries, or any of its Affiliates).
"Responsible Officer" shall mean any Senior Financial Officer and
any other officer of the Company with responsibility for the administration of
the relevant portion of this Agreement.
"Restricted Investments" (a) shall mean all Investments except the
following:
(1) property to be used in the ordinary course of business
of the Company and its Restricted Subsidiaries;
B-10
69
(2) current assets arising from the sale of goods and
services in the ordinary course of business of the Company and its
Restricted Subsidiaries;
(3) Investments in one or more Restricted Subsidiaries or
any Person that concurrently with such Investment becomes a
Restricted Subsidiary;
(4) Investments existing on the date of the Closing and
disclosed in Schedule 5.16;
(5) Investments permitted by the Company's "Investment
Policy Guidelines" as in effect on the date hereof set forth on
Exhibit 3 attached hereto and such additional Investments as may
from time to time be permitted under the Company's investment policy
guidelines; provided that the Required Holders shall have consented
to such additional Investments; and
(6) Investments in TIC made after the date of Closing in
an aggregate amount not to exceed $30,000,000.
(b) As of any date of determination, each Restricted Investment
shall be valued at the greater of:
(1) the amount at which such Restricted Investment is
shown on the books of the Company or any of its Restricted
Subsidiaries (or zero if such Restricted Investment is not shown on
any such books); and
(2) either
(i) in the case of any Guaranty of the obligation of
any Person, the amount which the Company or any of its
Restricted Subsidiaries has paid on account of such
obligation less any recoupment by the Company or such
Restricted Subsidiary of any such payments, or
(ii) in the case of any other Restricted Investment,
the excess of (A) the greater of (I) the amount originally
entered on the books of the Company or any of its
Restricted Subsidiaries with respect thereto and (II) the
cost thereof to the Company or its Restricted Subsidiary
over (B) any return of capital (after income taxes
applicable thereto) upon such Restricted Investment
through the sale or other liquidation thereof or part
thereof or otherwise.
(c) As used in this definition of "Restricted
Investments:"
"Acceptable Bank" shall mean any bank or trust company (1) which is
organized under the laws of the United States of America or any State thereof,
(2) which has capital, surplus and undivided profits aggregating at least
$250,000,000, and (3) whose long-term unsecured debt obligations (or the
long-term unsecured debt obligations of the bank holding company owning all of
the capital stock of such bank
B-11
70
or trust company) are given one of the two highest ratings by
Moody's or S&P or another credit rating agency of recognized
national standing.
"Moody's" shall mean Moody's Investors Service, Inc.
"S&P" shall mean Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc.
"United States Governmental Security" shall mean any
direct obligation of, or obligation guaranteed by, the United States
of America, or any agency controlled or supervised by or acting as
an instrumentality of the United States of America pursuant to
authority granted by the Congress of the United States of America,
so long as such obligation or guarantee shall have the benefit of
the full faith and credit of the United States of America which
shall have been pledged pursuant to authority granted by the
Congress of the United States of America.
"Restricted Subsidiary" shall mean any Subsidiary (a) of which more
than 80% of the equity or voting interests is beneficially owned either directly
or indirectly by the Company, (b)which is organized under the laws of the United
States or any state thereof, the District of Columbia, Canada or any Province
thereof or any member country of the European Union (other than Italy), (c)
which conducts substantially all of its business and has substantially all of
its assets within the United States, Canada or a member country of the European
Union (other than Italy) and (d) which is either (1) designated as a Restricted
Subsidiary in Schedule 5.4 or (2) designated a Restricted Subsidiary by the
Board of Directors of the Company in accordance with Section 10.12.
"Restricted Subsidiary Stock" shall mean the Subsidiary Stock of any
Restricted Subsidiary.
"Sale-and-Leaseback Transaction" shall mean a transaction or series
of transactions pursuant to which the Company or any Restricted Subsidiary shall
sell or transfer to any Person (other than the Company or a Restricted
Subsidiary) any property, whether now owned or hereafter acquired, and, as part
of the same transaction or series of transactions, the Company or any Restricted
Subsidiary shall, within 180 days of such sale or transfer, rent or lease, as
lessee, (other than pursuant to a Capital Lease), or similarly acquire the right
to possession or use of, such property or one or more properties which it
intends to use for the same purpose or purposes as such property.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Security" has the meaning set forth in section 2(1) of the
Securities Act of 1933, as amended.
"Senior Debt" shall mean all Debt of the Company, other than
Subordinated Debt.
B-12
71
"Senior Financial Officer" shall mean the chief financial officer,
principal accounting officer, treasurer or controller of the Company.
"Subordinated Debt" shall mean any Debt of the Company that is in
any manner subordinated in right of payment or security in any respect to the
Debt evidenced by the Notes.
"Source" is defined in Section 6.2.
"Subsidiary" shall mean, as to any Person, any corporation,
association or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership or joint
venture if more than a 50% interest in the profits or capital thereof is owned
by such Person or one or more of its Subsidiaries or such Person and one or more
of its Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Stock" shall mean, with respect to any Person, the stock
(or any options or warrants to purchase stock or other Securities exchangeable
for or convertible into stock) of any Subsidiary of such Person.
"Successor Corporation" is defined in Section 10.7(d).
"Swaps" shall mean, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined. For purposes of this
Agreement, any such interest rate swap, currency swap, or other similar
obligation which is or will be entered into and is being or will be used by such
Person in the ordinary course of its business to hedge an existing or future
risk or exposure of such Person in respect of its liabilities or assets (and not
for speculative purposes) shall not be deemed a "Swap" for purposes of this
definition.
"TIC" shall mean TIC Holdings, Inc., a Delaware corporation.
B-13
72
"Transfer" shall mean, with respect to any Person, any transaction
in which such Person sells, conveys, transfers or leases (as lessor) any of its
property, including, without limitation, Subsidiary Stock. or purposes of
determining the application of the Net Proceeds Amount in respect of any
Transfer, the Company may designate any Transfer as one or more separate
Transfers each yielding a separate Net Proceeds Amount. n any such case, (a) the
Disposition Value of any property subject to each such separate Transfer and (b)
the amount of Consolidated Total Assets attributable to any property subject to
each such separate Transfer shall be determined by ratably allocating the
aggregate Disposition Value of, and the aggregate Consolidated Total Assets
attributable to, all property subject to all such separate Transfers to each
such separate Transfer on a proportionate basis.
"Unrestricted Subsidiary" shall mean any Subsidiary which is not a
Restricted Subsidiary.
"Wholly-Owned" when used in connection with any Subsidiary shall
mean, at any time, any Subsidiary one hundred percent (100%) of all of the
equity interests (except directors' qualifying shares) and voting interests of
which are owned by any one or more of the Company and the Company's other
Wholly-Owned Subsidiaries at such time.
B-14
73
CHANGES IN CORPORATE STRUCTURE
NONE
SCHEDULE 4.9
(to Note Purchase Agreement)
74
DISCLOSURE MATERIALS
NONE
SCHEDULE 5.3
(to Note Purchase Agreement)
75
SUBSIDIARIES OF THE COMPANY AND
OWNERSHIP OF SUBSIDIARY STOCK*
1. Subsidiaries - Organization and Capital Structure
JURISDICTION OF OWNERSHIP BY COMPANY
NAME ORGANIZATION CAPITAL STRUCTURE AND/OR SUBSIDIARIES
Granite Construction California Corporation 100% wholly owned subsidiary of GCI
Company*
Wilcott Corporation* Colorado Corporation 100% wholly owned subsidiary of GCI
Desert Aggregates California Corporation 100% wholly owned subsidiary of GCI
Incorporated*
Granite SR 91 California Corporation 100% wholly owned subsidiary of GCI
Corporation*
Granite SR 91, L.P.* California Limited Partnership 99% limited partner of GCI and 1% general
partner of Granite SR 91 Corporation
GILC Incorporated* California Corporation 100% wholly owned subsidiary of GCI
GILC, L.P.* California Limited Partnership 99% limited partner of GCC and 1% general
partner of GILC Incorporated
G.G. & R., Inc.* Utah Corporation 100% wholly owned subsidiary of GCI
Intermountain Slurry Seal, Utah Corporation 100% wholly owned subsidiary of
Inc.* G.G. & R., Inc.
Bear River Contractors* Wyoming Corporation 100% wholly owned subsidiary of
G.G. & R., Inc.
Pozzolan Products Company* Utah Corporation 100% wholly owned subsidiary of
G.G. & R., Inc.
GTC., Inc.* Texas Corporation 100% wholly owned subsidiary of GCI
Granite Construction California Corporation 100% wholly owned subsidiary of GCI
International
- -----------------
* Indicates a Restricted Subsidiary on the date of the Closing
SCHEDULE 5.4
(to Note Purchase Agreement)
76
2. Affiliates - Organization and Capital Structure
JURISDICTION OF OWNERSHIP BY COMPANY
NAME ORGANIZATION CAPITAL STRUCTURE AND/OR SUBSIDIARIES
TIC HOLDINGS, INC. DELAWARE MINORITY INTEREST 30% INTEREST OWNED BY GCI
WATERS RIDGE II TEXAS LLP 69% INTEREST OWNED BY GCI
CPTC L.P. CALIFORNIA LLP 22% INTEREST OWNED BY GCI
YONKERS/GRANITE NEW JERSEY JOINT VENTURE 40% PARTNERSHIP INTEREST BY GCC
(ATLANTIC CITY)
WESTERN SUMMIT/ GEORGIA JOINT VENTURE 15% PARTNERSHIP INTEREST BY GCC
TIC/GRANITE (UTOY)
KIEWIT/GRANITE CALIFORNIA JOINT VENTURE 30% PARTNERSHIP INTEREST BY GCC
(TCA)
KIEWIT/GRANITE UTAH JOINT VENTURE 23% PARTNERSHIP INTEREST BY GCC
(WASATCH)
KIEWIT/ GRANITE CALIFORNIA JOINT VENTURE 25% PARTNERSHIP INTEREST BY GCC
(EAST DAM)
3. The Company's Directors and Officers
DIRECTORS OFFICERS
Solari, Richard C. David H. Watts
Watts, David H. Costanzo, Patrick M.
Barclay, Joseph J. Dorey, William G.
Brooks, Richard M. Allbritton, R.C.
Kelly, Brian C. Barton, William E.
McDonald, Rebecca Boitano, Mark E.
McNear, Denmar K. Watts, David H.
Miles, Raymond E. Futch, Michael
Higdem, Garry M.
Nickerson, Arthur B.
Thomas, Michael L.
Grazian, David R.
S-5.4-2
77
4. Agreements Restricting Dividend Payments
NONE
S-5.4-3
78
FINANCIAL STATEMENTS
1. SEC Form 10-Q for the quarter ended September 30, 1997.
2. SEC Form 10-Q for the quarter ended September 30, 1996.
3. SEC Form 10-K for the fiscal year ended December 31, 1996.
4. SEC Form 10-K for the fiscal year ended December 31, 1995.
5. SEC Form 10-K for the fiscal year ended December 31, 1994.
6. SEC Form 10-K for the fiscal year ended December 31, 1993.
7. SEC Form 10-K for the fiscal year ended December 31, 1992.
SCHEDULE 5.5
(to Note Purchase Agreement)
79
CERTAIN LITIGATION
NONE
SCHEDULE 5.8
(to Note Purchase Agreement)
80
PATENTS, ETC.
NONE
SCHEDULE 5.11
(to Note Purchase Agreement)
81
USE OF PROCEEDS
The proceeds from the sale of the Notes Will be used to refinance
existing Debt and for general corporate purposes.
SCHEDULE 5.14
(to Note Purchase Agreement)
82
EXISTING DEBT
ITEM NO. LENDER'S NAME DESCRIPTION INTEREST MATURITY BALANCE
RATE 12/31/97
1 Benna Investments Aggregate property 6.50% 04/14/02 2,638,387
2 Benna Investments Aggregate property 6.50% 04/14/02 788,091
3 Benna Investments Real Estate property 6.50% 12/01/07 1,936,904
4 Michael Hughes Aggregate property 0.00% 02/04/98 1,600,000
5 Bank of America Tarmac & Gibbons Various 06/30/02 25,000,000
Term Loans Acquisition
6 Bank of America Working Capital Various 06/30/00 39,000,000
Revolving Loans
7 Bank of America Self Insured 50 bps 04/30/98 3,585,430
Letter of Credit Worker's
Compensation
8 Bank of America SR 91, L.P. 50 bps 07/14/98 2,377,786
Letter of Credit
9 Small Business Acquisition 6.20% 01/04/99 93,021
Administration
10 Raymond Aggregate property 8.00% 06/30/00 260,000
Flaschbarth ----------
$77,279,619
===========
SCHEDULE 5.15
(to Note Purchase Agreement)
83
EXISTING DEBT (LEASES)
ANNUAL
ITEM NO. LENDER'S NAME DESCRIPTION MATURITY PAYMENTS
11 Arizona State Labor Pit 01/31/00 21,318
Department
12 Associates Construction Equipment 09/30/98 145,152
13 Associates Construction Equipment 10/31/98 117,600
14 Associates Construction Equipment 12/31/98 300,348
15 Associates Construction Equipment 01/31/99 415,200
16 Associates Construction Equipment 04/30/99 234,000
17 Associates Construction Equipment 05/31/99 56,552
18 Associates Construction Equipment 06/30/99 240,000
19 Associates Construction Equipment 10/31/99 50,460
20 Associates Construction Equipment 03/31/00 341,340
21 Associates Construction Equipment 04/30/00 141,504
22 Associates Construction Equipment 06/30/00 55,264
23 Associates Construction Equipment 12/31/00 343,243
24 Associates Construction Equipment 12/31/00 203,310
25 Associates Leasing Construction Equipment 09/30/99 45,960
26 Athens Avenue-Steve Pit 06/16/99 1,170
Mehalaki
27 Centerpoint Plaza Office Building 05/30/99 60,000
28 Chemical Lime Co. Material Contract 10/31/07 433,333
of Arizona
29 CIT Construction Equipment 09/06/98 31,662
30 City of Calpatria Plant Property 06/30/98 600
31 Crawford Pit 12/31/99 40,000
32 GE Capital Modular Office Building 09/06/98 19,560
Space
33 Gibbons Realty Building 05/08/05 30,000
Company
34 Granite Rock Company Office & Yard 12/31/00 165,100
35 Hansen, Clarence Quarry Property 07/31/99 50,000
& Sinnott
36 Ingvart Christensen Pit 03/31/98 15,000
37 Jackling Aggregate Pit 12/31/05 72,000
Limited
38 Julia C. Matthews Pit 12/31/98 24,000
39 L.R. Peterson and E.W. Pit 01/02/06 70,000
McGah
40 Little Rock Sand Pit 04/30/01 173,472
& Gravel
S-5.15-2
84
ANNUAL
ITEM NO. LENDER'S NAME DESCRIPTION MATURITY PAYMENTS
41 M.L. Hillcock Pit 01/31/01 13,438
& B.C. Hillcock
42 Maria Bazzi Pit 12/31/00 62,783
43 Mariposa Ranch Pit 09/30/99 12,500
Limited Part.
44 Meredit, Parker, Key, Pit 12/31/98 271,261
Bath
45 Parc Center JV Office Building 11/30/00 271,969
46 Pebble Beach Pit 12/31/00 22,000
Corporation
47 Rae Barker Trust Associates to Pit 12/31/01 2,000
48 Raymond J. Fanchon/L. Pit 03/07/16 24,000
Muller
49 S.W. Souvall Company Office Building 03/31/99 23,484
50 Scach, Inc. Pit 03/31/02 30,900
51 Settlemeyer Ranch Pit 04/30/98 5,000
& Scarscelli
52 Standard Hill Mining Pit 02/28/98 4,500
Co.
53 State of Arizona Pit 03/01/99 13,624
54 State of Utah Office Building 08/01/38 14,504
55 State of Utah Office Building 11/01/38 16,500
56 Ted and Esther Devries Pit 01/31/99 18,900
57 Tejon Ranch Company Pit 10/31/99 24,000
58 Topo Ranch (Singleton Pit 06/30/07 22,500
Group)
59 Union Pacific Railroad Yard 12/31/07 12,000
Co.
60 Walker Development Pit 12/31/19 75,000
61 Wells Family Members Pit 12/31/01 25,000
62 Western Pacific Railroad Pit 06/01/01 50,000
Co.
63 William Barry Shannon Pit 02/29/06 7,200
64 Woodland - Reiff Pit 05/31/03 2,000
65 Woodland - Schneegas Pit 05/31/03 750
----------
$4,922,961
==========
S-5.15-3
85
EXISTING INVESTMENTS
MARKET VALUE
COMPANY DESCRIPTIONS 12/31/97
Morrison-Knudsen Common Stock $ 975
Perini Corporation Common Stock 900
Guy F. Atkinson Common Stock 138
Calmat Company Common Stock 2,788
Cascade Corporation Common Stock 1,700
TIC Holdings, Inc. Minority Interest 23,636,354
Waters Ridge II LLP 5,991,385
CPTC L.P./SR9l L.P. Joint Venture 1,370,622
Yonkers/Granite (Atlantic City) Joint Venture 158,955
Western Summit/TIC/Granite Joint Venture 215,127
WS/TIC/Granite (UTOY Leasing) Joint Venture 359,978
Kiewit/Granite (TCA) Joint Venture 3,289,218
Kiewit/Granite (KG Leasing) Joint Venture 7,596,410
Kiewit/Granite (Wasatch) Joint Venture 3,728,174
Kiewit/Granite (E. Dam) Joint Venture 3,853,112
------------
$ 50,205,835
============
SCHEDULE 5.16
(to Note Purchase Agreement)
86
ENVIRONMENTAL MATTERS
Granite Construction in the normal course of business utilizes petroleum
(hydrocarbon) products which may be considered hazardous materials when
encountered at regulatory levels established by the Federal EPA or the Regional
State EPA. The utilization of these asphalt products, diesel, and gasoline over
the years has the potential of creating exposure to environmental clean up
requirements. All underground tanks meet current requirements. There is no
pending governmental ordered clean up. However, the following represents
estimates based on construction industry housekeeping practices as encountered
during our normal course of business. Except as indicated with an "*", these
costs do not represent actual identified exposures.
LOCATIONS DESCRIPTION AMOUNT
Arvin, CA Asphalt Batch Plant $ 100,000
Arvin, CA Surface Spills 50,000
Bakersfield, CA Surface Spills 100,000
Bakersfield, CA Diesel Aboveground Storage Tanks 25,000
Bakersfield, CA Asphalt Batch Plant 100,000
Coalinga, CA Asphalt Batch Plant 50,000
Felton, CA Asphalt Batch Plant 200,000
French Camp, CA Diesel/Gasoline Underground Storage 100,000
Tanks
Gardnerville, NV Surface Spills 25,000
Gardnerville, NV Asphalt Batch Plant 50,000
Indio, CA Massey Shop/Smitty's Garage 50,000
Cleanup
Palmdale, CA Surface Spills 10,000
Palmdale, CA Asphalt Batch Plant 50,000
Patrick, NV Asphalt Batch Plant 75,000
Patrick, NV Surface Spills 50,000
Sacramento, CA Diesel/Gasoline Underground 50,000
Storage Tanks
Sacramento, CA Asphalt Batch Plant 300,000
Sacramento, CA Surface Spills 200,000
Sacramento, CA Diesel Aboveground 50,000
Storage Tanks
Sacramento, CA Shop Area Cleanup 50,000
Salinas, CA Surface Spills 250,000
SCHEDULE 5.18
(to Note Purchase Agreement)
87
LOCATIONS DESCRIPTION AMOUNT
Santa Barbara, CA Surface Spills 200,000
Santa Barbara, CA Diesel/Gasoline Underground 75,000
Storage Tanks
Santa Barbara, CA Asphalt Batch Plant 50,000
Santa Cruz, CA Santa Cruz Yard Cleanup 250,000
Sparks, NV Diesel/Gasoline Underground 100,000
Storage Tanks
Tracy, CA Asphalt Batch Plant 75,000
Tracy, CA Surface Spills 25,000
Tucson, AZ Surface Spills 25,000
Tucson, AZ Diesel/Gasoline Underground 50,000
Storage Tanks
Watsonville, CA Diesel/Gasoline Underground 150,000
Storage Tanks
Watsonville, CA Surface Spills 50,000
Webb, UT * Asphalt Batch Plant 1,400,000
Whitehall, UT * Asphalt Batch Plant 55,000
Salt Lake City, UT * Concrete Batch Plant 250,000
Salt Lake County, UT * Surface Spills 30,000
Weber County, UT * Surface Spills 100,000
(Ogden)
Salt Lake County, UT * Aggregate and smelter site 1,250,000
(CPC)
Cahoon, UT * Surface Spills 100,000
Fireclay Battery, UT * Surface Spills 25,000
----------
$6,195,000
S-5.18-2
88
FORM OF NOTE
GRANITE CONSTRUCTION INCORPORATED
6.54% Senior Note due March 15, 2010
No. , 199
-------------------- ----------------------- --
$ PPN 387328 A* 8
-------------------------
FOR VALUE RECEIVED, the undersigned, GRANITE CONSTRUCTION
INCORPORATED (herein called the "Company"), a corporation organized and existing
under the laws of the State of Delaware, hereby promises to pay to
_________________________ or registered assigns, the principal sum of
______________ DOLLARS on March 15, 2010 with interest (computed on the basis of
a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 6.54% per annum from the date hereof, payable semiannually, on the
fifteenth day of March and September in each year, commencing with the March 15
or September 15 next succeeding the date hereof, until the principal hereof
shall have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as defined
in the Note Purchase Agreement referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand), at a
rate per annum from time to time equal to the greater of (i) 8.54% or (ii) 2%
over the rate of interest publicly announced by Bank of America from time to
time in San Francisco, California as its "reference" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank of America in Chicago, Illinois or at
such other place as the Company shall have designated by written notice to the
holder of this Note as provided in the Note Purchase Agreement referred to
below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to that certain Note Purchase Agreement, dated as of
March 1, 1998 (as from time to time amended, the "Note Purchase Agreement"),
between the Company and each of the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement to the
extent provided in Section 13.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
EXHIBIT 1
(to Note Purchase Agreement)
89
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note and the holders hereof are entitled equally and ratably
with the holders of all other Notes to the rights and benefits provided pursuant
to the terms and provisions of the Guaranty Agreement (as such term is defined
in the Note Purchase Agreement). Reference is hereby made to the Guaranty
Agreement for a statement of the nature and extent of the benefits and security
for the Notes afforded thereby and the rights of the holders of the Notes and
the Company in respect thereof.
The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
exists, the principal of this Note may be declared or otherwise become due and
payable in the manner, at the price (including any applicable Make-Whole Amount)
and with the effect provided in the Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of
Illinois, excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.
GRANITE CONSTRUCTION INCORPORATED
By
--------------------------------------
Its
By
--------------------------------------
Its
E-1-2
90
EXHIBIT 2
IS INCLUDED IN ITS ENTIRETY
AT TAB NO. 2
91
FORM OF OPINION OF SPECIAL COUNSEL
TO THE COMPANY AND THE GUARANTORS
The closing opinion of Gray Cary Ware & Freidenrich, special counsel
for the Company and the Guarantors, which is called for by Section 4.5(a) of the
Agreement, shall be dated the date of the Closing and addressed to each
Purchaser, shall be satisfactory in scope and form to each Purchaser and shall
be to the effect that:
1. The Company is a corporation, duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware, has the corporate power and the corporate authority to
execute and perform the Agreement and to issue the Notes and has the
full corporate power and the corporate authority to conduct the
activities in which it is now engaged and is duly licensed or
qualified and is in good standing as a foreign corporation in each
jurisdiction in which the character of the properties owned or
leased by it or the nature of the business transacted by it makes
such licensing or qualification necessary.
2. Each Restricted Subsidiary is a corporation or other
business entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and is
duly licensed or qualified and is in good standing in each
jurisdiction in which the character of the properties owned or
leased by it or the nature of the business transacted by it makes
such licensing or qualification necessary and all of the issued and
outstanding shares of capital stock or other equity interests of
each such Restricted Subsidiary have been duly issued, are fully
paid and non-assessable and are owned by the Company, by one or more
Subsidiaries, or by the Company and one or more Subsidiaries.
3. The Agreement has been duly authorized by all
necessary corporate action on the part of the Company, has been duly
executed and delivered by the Company and constitutes the legal,
valid and binding contract of the Company enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance and similar laws affecting creditors' rights generally,
and general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in
equity or at law).
4. The Notes have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed
and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent
conveyance and similar laws affecting creditors' rights generally,
and general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in
equity or at law).
5. No approval, consent or withholding of objection on
the part of, or filing, registration or qualification with, any
governmental body, Federal or state, is
EXHIBIT 4.5(a)
(to Note Purchase Agreement)
92
necessary in connection with the execution and delivery by the
Company of the Agreement or the Notes.
6. The issuance and sale of the Notes and the execution,
delivery and performance by the Company of the Agreement do not
conflict with or result in any breach of any of the provisions of or
constitute a default under or result in the creation or imposition
of any Lien upon any of the property of the Company pursuant to the
provisions of the Certificate of Incorporation or By-laws of the
Company or any agreement or other instrument known to such counsel
to which the Company is a party or by which the Company may be
bound.
7. Each Guarantor has the power and the authority to
execute, deliver and perform the Guaranty Agreement and has the full
power and the authority to conduct the activities in which it is now
engaged.
8. The Guaranty Agreement has been duly authorized by
all necessary action on the part of each Guarantor, has been duly
executed and delivered by each Guarantor and constitutes the legal,
valid and binding contract of each Guarantor enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and similar laws affecting creditors' rights
generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in
equity or at law).
9. No approval, consent or withholding of objection on
the part of, or filing, registration or qualification with, any
governmental body, Federal or state, is necessary in connection with
the execution and delivery by any Guarantor of the Guaranty
Agreement.
10. The execution, delivery and performance by each
Guarantor of the Guaranty Agreement do not conflict with or result
in any breach of any of the provisions of or constitute a default
under or result in the creation or imposition of any Lien upon any
of the property of such Guarantor pursuant to the provisions of the
charter documents or by-laws of such Guarantor or any agreement or
other instrument known to such counsel to which such Guarantor is a
party or by which such Guarantor may be bound.
11. The issuance, sale and delivery of the Notes and the
issuance and delivery of the Guaranty Agreement under the
circumstances contemplated by the Agreement do not, under existing
law, require the registration of the Notes or the Guaranty Agreement
under the Securities Act or the qualification of an indenture under
the Trust Indenture Act of 1939, as amended.
The opinion of Gray Cary Ware & Freidenrich shall cover such other
matters relating to the sale of the Notes as any Purchaser may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company and the Guarantors.
E-4.5(a)-2
93
FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS
The closing opinion of Chapman and Cutler, special counsel to the
Purchasers, called for by Section 4.5(b) of the Agreement, shall be dated the
date of the Closing and addressed to the Purchasers, shall be satisfactory in
form and substance to the Purchasers and shall be to the effect that:
1. The Company is a corporation, validly existing and in
good standing under the laws of the State of Delaware and has the
corporate power and the corporate authority to execute and deliver
the Agreement and to issue the Notes.
2. The Agreement has been duly authorized by all
necessary corporate action on the part of the Company, has been duly
executed and delivered by the Company and constitutes the legal,
valid and binding contract of the Company enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance and similar laws affecting creditors' rights generally,
and general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in
equity or at law).
3. The Notes have been duly authorized by all necessary
corporate action on the part of the Company, and the Notes being
delivered on the date hereof have been duly executed and delivered
by the Company and constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
4. The issuance, sale and delivery of the Notes under
the circumstances contemplated by the Agreement do not, under
existing law, require the registration of the Notes under the
Securities Act or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
The opinion of Chapman and Cutler shall also state that the opinion
of Gray Cary Ware & Freidenrich is satisfactory in scope and form to Chapman and
Cutler and that, in their opinion, the Purchasers are justified in relying
thereon.
In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler may rely, as to matters referred to in paragraph 1, solely upon an
examination of the Certificate of Incorporation certified by, and a certificate
of good standing of the Company from, the Secretary of State of the State of
Delaware, the By-laws of the Company and the general business corporation law of
the State of Delaware. The opinion of Chapman and Cutler is limited to the
laws of the State of Illinois, the general business corporation law of the State
of Delaware and the Federal laws of the United States.
EXHIBIT 4.5(b)
(to Note Purchase Agreement)
94
With respect to matters of fact upon which such opinion is based,
Chapman and Cutler may rely on appropriate certificates of public officials and
officers of the Company and upon representations of the Company and the
Purchasers delivered in connection with the issuance and sale of the Notes.
E-4.5(b)-2