1
CONFORMED COPY EXHIBIT 10.12
================================================================================
SUBSIDIARY GUARANTY AGREEMENT
Dated as of March 1, 1998
Re: $60,000,000 6.54% Senior Notes
Due March 15, 2010
of
Granite Construction Incorporated
================================================================================
2
TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
Parties ..................................................................... 1
Recitals ..................................................................... 1
SECTION 1. DEFINITIONS.................................................. 2
SECTION 2. GUARANTY OF NOTES AND NOTE AGREEMENT......................... 2
SECTION 3. GUARANTY OF PAYMENT AND PERFORMANCE.......................... 2
SECTION 4. GENERAL PROVISIONS RELATING TO THE GUARANTY.................. 3
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS............. 8
SECTION 6. AMENDMENTS, WAIVERS AND CONSENTS............................. 12
SECTION 7. NOTICES...................................................... 13
Signature .................................................................... 15
ATTACHMENTS TO SUBSIDIARY GUARANTY AGREEMENT:
Exhibit A - Subsidiary Guaranty Supplement
3
SUBSIDIARY GUARANTY AGREEMENT
Re: $60,000,000 6.54% Senior Notes
Due March 15, 2010
of
Granite Construction Incorporated
-------------------------------------------
This SUBSIDIARY GUARANTY AGREEMENT dated as of March 1, 1998 (the or this
"Guaranty") is entered into on a joint and several basis by each of the
undersigned, together with any entity which may become a party hereto by
execution and delivery of a Subsidiary Guaranty Supplement in substantially the
form set forth as Exhibit A hereto (a "Guaranty Supplement") (which parties are
hereinafter referred to individually as a "Guarantor" and collectively as the
"Guarantors").
RECITALS
A. Each Guarantor is a subsidiary of Granite Construction Incorporated, a
Delaware corporation (the "Company"), and a Material Subsidiary (as defined in
the hereinafter defined Note Agreement).
B. In order to refinance existing Debt (as defined in the Note Agreement)
and for general corporate purposes, the Company has entered into that certain
Note Purchase Agreement dated as of March 1, 1998 (the "Note Agreement") between
the Company and each of the purchasers named on Schedule A attached to said Note
Agreement (the "Initial Note Purchasers," together with their successors and
assigns, the "Holders"), providing for, among other things, the issue and sale
by the Company to the Initial Note Purchasers of the Company's 6.54% Senior
Notes, due March 15, 2010 in the aggregate principal amount of $60,000,000 (the
"Notes").
C. The Initial Note Purchasers have required as a condition of their
purchase of the Notes that the Company cause each of the undersigned to enter
into this Guaranty and to cause each from time to time Material Subsidiary to
enter into a Guaranty Supplement, in each case as security for the Notes, and
the Company has agreed to cause each of the undersigned to execute this Guaranty
and to cause each from time to time Material Subsidiary to execute a Guaranty
Supplement, in each case in order to induce the Initial Note Purchasers to
purchase the Notes and thereby benefit the Company and its Subsidiaries (as
defined in the Note Agreement) by providing funds to enable the Company to
refinance existing Debt and to enable the Company and its Subsidiaries to have
funds available for general corporate purposes.
Now, THEREFORE, as required by Section 4.4 of the Note Agreement and in
consideration of the premises and other good and valuable consideration, the
receipt and sufficiency whereof are hereby acknowledged, each Guarantor does
hereby covenant and agree, jointly and severally, as follows:
4
SECTION 1. DEFINITIONS.
Capitalized terms used herein shall have the meanings set forth in the Note
Agreement unless herein defined or the context shall otherwise require.
SECTION 2. GUARANTY OF NOTES AND NOTE AGREEMENT.
(a) Each Guarantor jointly and severally does hereby irrevocably,
absolutely and unconditionally guarantee unto the Holders: (1) the full and
prompt payment of the principal of, premium, if any, and interest on the Notes
from time to time outstanding, as and when such payments shall become due and
payable whether by lapse of time, upon redemption or prepayment, by extension or
by acceleration or declaration or otherwise (including (to the extent legally
enforceable) interest due on overdue payments of principal, premium, if any, or
interest at the rate set forth in the Notes) in Federal or other immediately
available funds of the United States of America which at the time of payment or
demand therefor shall be legal tender for the payment of public and private
debts, (2) the full and prompt performance and observance by the Company of each
and all of the obligations, covenants and agreements required to be performed or
owed by the Company under the terms of the Notes and the Note Agreement and (3)
the full and prompt payment, upon demand by any Holder of all costs and
expenses, legal or otherwise (including reasonable attorneys' fees), if any, as
shall have been expended or incurred in the protection or enforcement of any
rights, privileges or liabilities in favor of the Holders under or in respect of
the Notes, the Note Agreement or under this Guaranty or in any consultation or
action in connection therewith or herewith.
(b) The liability of each Guarantor under this Guaranty shall not exceed
an amount equal to a maximum amount as will, after giving effect to such maximum
amount and all other liabilities of such Guarantor, contingent or otherwise,
result in the obligations of such Guarantor hereunder not constituting a
fraudulent transfer, obligation or conveyance.
SECTION 3. GUARANTY OF PAYMENT AND PERFORMANCE.
This is a guarantee of payment and performance and each Guarantor hereby
waives, to the fullest extent permitted by law, any right to require that any
action on or in respect of any Note or the Note Agreement be brought against the
Company or any other Person or that resort be had to any direct or indirect
security for the Notes or for this Guaranty or any other remedy. Any Holder may,
at its option, proceed hereunder against any Guarantor in the first instance to
collect monies when due, the payment of which is guaranteed hereby, without
first proceeding against the Company or any other Person and without first
resorting to any direct or indirect security for the Notes or for this Guaranty
or any other remedy. The liability of each Guarantor hereunder shall in no way
be affected or impaired by any acceptance by any Holder of any direct or
indirect security for, or other guaranties of, any Debt, liability or obligation
of the Company or any other Person to any Holder or by any failure, delay,
neglect or omission by any Holder to realize upon or protect any such
guarantees, Debt, liability or obligation or any notes or other instruments
evidencing the
-2-
5
same or any direct or indirect security therefor or by any approval, consent,
waiver, or other action taken, or omitted to be taken by any such Holder.
The covenants and agreements on the part of the Guarantors herein contained
shall take effect as joint and several covenants and agreements, and references
to the Guarantors shall take effect as references to each of them and none of
them shall be released from liability hereunder by reason of the guarantee
ceasing to be binding as a continuing security on any other of them.
SECTION 4. GENERAL PROVISIONS RELATING TO THE GUARANTY.
(a) Each Guarantor hereby consents and agrees that any Holder or Holders
from time to time, with or without any further notice to or assent from any
other Guarantor may, without in any manner affecting the liability of any
Guarantor under this Guaranty, and upon such terms and conditions as any such
Holder or Holders may deem advisable:
(1) extend in whole or in part (by renewal or otherwise), modify,
change, compromise, release or extend the duration of the time for the
performance or payment of any Debt, liability or obligation of the Company
or of any other Person secondarily or otherwise liable for any Debt,
liability or obligations of the Company on the Notes, or waive any Default
with respect thereto, or waive, modify, amend or change any provision of
any other agreement or waive this Guaranty; or
(2) sell, release, surrender, modify, impair, exchange or substitute
any and all property, of any nature and from whomsoever received, held by,
or for the benefit of, any such Holder as direct or indirect security for
the payment or performance of any Debt, liability or obligation of the
Company or of any other Person secondarily or otherwise liable for any
Debt, liability or obligation of the Company on the Notes; or
(3) settle, adjust or compromise any claim of the Company against any
other Person secondarily or otherwise liable for any Debt, liability or
obligation of the Company on the Notes.
Each Guarantor hereby ratifies and confirms any such extension, renewal,
change, sale, release, waiver, surrender, exchange, modification, amendment,
impairment, substitution, settlement, adjustment or compromise and that the same
shall be binding upon it, and hereby waives, to the fullest extent permitted by
law, any and all defenses, counterclaims or offsets which it might or could have
by reason thereof, it being understood that such Guarantor shall at all times be
bound by this Guaranty and remain liable hereunder.
(b) Each Guarantor hereby waives, to the fullest extent permitted by law:
(1) notice of acceptance of this Guaranty by the Holders or of the
creation, renewal or accrual of any liability of the Company, present or
future, or of the
-3-
6
reliance of such Holders upon this Guaranty (it being understood that every
Debt, liability and obligation described in Section 2 hereof shall
conclusively be presumed to have been created, contracted or incurred in
reliance upon the execution of this Guaranty);
(2) demand of payment by any Holder from the Company or any other
Person indebted in any manner on or for any of the Debt, liabilities or
obligations hereby guaranteed; and
(3) presentment for the payment by any Holder or any other Person of
the Notes or any other instrument, protest thereof and notice of its
dishonor to any party thereto and to such Guarantor.
The obligations of each Guarantor under this Guaranty and the rights of any
Holder to enforce such obligations by any proceedings, whether by action at law,
suit in equity or otherwise, shall not be subject to any reduction, limitation,
impairment or termination, whether by reason of any claim of any character
whatsoever or otherwise and shall not be subject to any defense, set-off,
counterclaim (other than any compulsory counterclaim), recoupment or termination
whatsoever.
(c) The obligations of the Guarantors hereunder shall be binding upon the
Guarantors and their successors and assigns, and shall remain in full force and
effect irrespective of:
(1) the genuineness, validity, regularity or enforceability of the
Notes, the Note Agreement or any other agreement or any of the terms of any
thereof, the continuance of any obligation on the part of the Company or
any other Person on or in respect of the Notes or under the Note Agreement
or any other agreement or the power or authority or the lack of power or
authority of the Company to issue the Notes or the Company to execute and
deliver the Note Agreement or any other agreement or of any Guarantor to
execute and deliver this Guaranty or to perform any of its obligations
hereunder or the existence or continuance of the Company or any other
Person as a legal entity; or
(2) any default, failure or delay, willful or otherwise, in the
performance by the Company, any Guarantor or any other Person of any
obligations of any kind or character whatsoever under the Notes, the Note
Agreement, this Guaranty or any other agreement; or
(3) any creditors' rights, bankruptcy, receivership or other
insolvency proceeding of the Company, any Guarantor or any other Person or
in respect of the property of the Company, any Guarantor or any other
Person or any merger, consolidation, reorganization, dissolution,
liquidation, the sale of all or substantially all of the assets of or
winding up of the Company, any Guarantor or any other Person; or
-4-
7
(4) impossibility or illegality of performance on the part of the
Company, any Guarantor or any other Person of its obligations under the
Notes, the Note Agreement, this Guaranty or any other agreements; or
(5) in respect of the Company or any other Person, any change of
circumstances, whether or not foreseen or foreseeable, whether or not
imputable to the Company or any other Person, or other impossibility of
performance through fire, explosion, accident, labor disturbance, floods,
droughts, embargoes, wars (whether or not declared), civil commotion, acts
of God or the public enemy, delays or failure of suppliers or carriers,
inability to obtain materials, action of any Federal or state regulatory
body or agency, change of law or any other causes affecting performance, or
any other force majeure, whether or not beyond the control of the Company
or any other Person and whether or not of the kind hereinbefore specified;
or
(6) any attachment, claim, demand, charge, Lien, order, process,
encumbrance or any other happening or event or reason, similar or
dissimilar to the foregoing, or any withholding or diminution at the
source, by reason of any taxes, assessments, expenses, Debt, obligations or
liabilities of any character, foreseen or unforeseen, and whether or not
valid, incurred by or against the Company, any Guarantor or any other
Person or any claims, demands, charges or Liens of any nature, foreseen or
unforeseen, incurred by the Company, any Guarantor or any other Person, or
against any sums payable in respect of the Notes or under the Note
Agreement or this Guaranty, so that such sums would be rendered inadequate
or would be unavailable to make the payments herein provided; or
(7) any order, judgment, decree, ruling or regulation (whether or not
valid) of any court of any nation or of any political subdivision thereof
or any body, agency, department, official or administrative or regulatory
agency of any thereof or any other action, happening, event or reason
whatsoever which shall delay, interfere with, hinder or prevent, or in any
way adversely affect, the performance by the Company, any Guarantor or any
other Person of its respective obligations under or in respect of the
Notes, the Note Agreement, this Guaranty or any other agreement; or
(8) the failure of any Guarantor to receive any benefit from or as a
result of its execution, delivery and performance of this Guaranty; or
(9) any failure or lack of diligence in collection or protection,
failure in presentment or demand for payment, protest, notice of protest,
notice of default and of nonpayment, any failure to give notice to any
Guarantor of failure of the Company, any Guarantor or any other Person to
keep and perform any obligation, covenant or agreement under the terms of
the Notes, the Note Agreement, this Guaranty or any other agreement or
failure to resort for payment to the Company, any Guarantor or to any other
Person or to any other guaranty or to any property, security, Liens or
other rights or remedies; or
-5-
8
(10) the acceptance of any additional security or other guaranty, the
advance of additional money to the Company or any other Person, the renewal
or extension of the Notes or amendments, modifications, consents or waivers
with respect to the Notes, the Note Agreement or any other agreement, or
the sale, release, substitution or exchange of any security for the Notes;
or
(11) any merger or consolidation of the Company, any Guarantor or any
other Person into or with any other Person or any sale, lease, transfer or
other disposition of any of the assets of the Company, any Guarantor or any
other Person to any other Person, or any change in the ownership of any
shares of the Company, any Guarantor or any other Person; or
(12) any defense whatsoever that: (i) the Company or any other Person
might have to the payment of the Notes (principal, premium, if any, or
interest), other than payment thereof in Federal or other immediately
available funds, or (ii) the Company or any other Person might have to the
performance or observance of any of the provisions of the Notes, the Note
Agreement or any other agreement, whether through the satisfaction or
purported satisfaction by the Company or any other Person of its debts due
to any cause such as bankruptcy, insolvency, receivership, merger,
consolidation, reorganization, dissolution, liquidation, winding-up or
otherwise; or
(13) any act or failure to act with regard to the Notes, the Note
Agreement, this Guaranty or any other agreement or anything which might
vary the risk of any Guarantor or any other Person; or
(14) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Guarantor or any other Person in
respect of the obligations of any Guarantor or other Person under this
Guaranty or any other agreement;
provided that the specific enumeration of the above-mentioned acts, failures or
omissions shall not be deemed to exclude any other acts, failures or omissions,
though not specifically mentioned above, it being the purpose and intent of this
Guaranty and the parties hereto that the obligations of each Guarantor shall be
absolute and unconditional and shall not be discharged, impaired or varied
except by the payment of the principal of, premium, if any, and interest on the
Notes in accordance with their respective terms whenever the same shall become
due and payable as in the Notes provided, at the place specified in and all in
the manner and with the effect provided in the Notes and the Note Agreement, as
each may be amended or modified from time to time. Without limiting the
foregoing, it is understood that repeated and successive demands may be made and
recoveries may be had hereunder as and when, from time to time, the Company
shall default under or in respect of the terms of the Notes or the Note
Agreement and that notwithstanding recovery hereunder for or in respect of any
given default or defaults by the Company under the Notes or the Note Agreement,
this Guaranty shall remain in full force and effect and shall apply to each and
every subsequent default.
-6-
9
(d) All rights of any Holder may be transferred or assigned at any time
and shall be considered to be transferred or assigned at any time or from time
to time upon the transfer of such Note whether with or without the consent of or
notice to the Guarantors under this Guaranty or to the Company.
(e) To the extent of any payments made under this Guaranty, the Guarantors
shall be subrogated to the rights of the Holder or Holders upon whose Notes such
payment was made, but each Guarantor covenants and agrees that such right of
subrogation shall be junior and subordinate in right of payment to the prior
indefeasible final payment in cash in full of all amounts due and owing by the
Company with respect to the Notes and the Note Agreement and by the Guarantors
under this Guaranty, and the Guarantors shall not take any action to enforce
such right of subrogation, and the Guarantors shall not accept any payment in
respect of such right of subrogation, until all amounts due and owing by the
Company under or in respect of the Notes and the Note Agreement and all amounts
due and owing by the Guarantors hereunder have indefeasibly been finally paid in
cash in full. If any amount shall be paid to any Guarantor in violation of the
preceding sentence at any time prior to the later of the indefeasible payment in
cash in full of the Notes and all other amounts payable under the Notes, the
Note Agreement and this Guaranty, such amount shall be held in trust for the
benefit of the Holders and shall forthwith be paid to the Holders to be credited
and applied to the amounts due or to become due with respect to the Notes and
all other amounts payable under the Note Agreement and this Guaranty, whether
matured or unmatured.
(f) Each Guarantor agrees that to the extent the Company or any other
Person makes any payment on any Note, which payment or any part thereof is
subsequently invalidated, voided, declared to be fraudulent or preferential, set
aside, recovered, rescinded or is required to be retained by or repaid to a
trustee, receiver, or any other Person under any bankruptcy code, common law, or
equitable cause, then and to the extent of such payment, the obligation or the
part thereof intended to be satisfied shall be revived and continued in full
force and effect with respect to the Guarantors' obligations hereunder, as if
said payment had not been made. The liability of the Guarantors hereunder shall
not be reduced or discharged, in whole or in part, by any payment to any Holder
from any source that is thereafter paid, returned or refunded in whole or in
part by reason of the assertion of a claim of any kind relating thereto,
including, but not limited to, any claim for breach of contract, breach of
warranty, preference, illegality, invalidity, or fraud asserted by any account
debtor or by any other Person.
(g) No Holder shall be under any obligation: (1) to marshall any assets in
favor of the Guarantors or in payment of any or all of the liabilities of the
Company under or in respect of the Notes or the obligations of the Guarantors
hereunder or (2) to pursue any other remedy that the Guarantors may or may not
be able to pursue themselves and that may lighten the Guarantors' burden, any
right to which each Guarantor hereby expressly waives.
-7-
10
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS.
Each Guarantor represents and warrants to each Holder that:
(a) Such Guarantor 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 on (1) the business,
operations, affairs, financial condition, assets, properties or prospects of
such Guarantor and its subsidiaries, taken as a whole, or (2) the ability of
such Guarantor to perform its obligations under this Guaranty, or (3) the
validity or enforceability of this Guaranty (herein in this Section 5, a
"Material Adverse Effect"). Such Guarantor has the 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 Guaranty and to perform the provisions hereof.
(b) Each subsidiary of such Guarantor 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
subsidiary of such Guarantor has the 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.
(c) This Guaranty has been duly authorized by all necessary action on the
part of such Guarantor, and this Guaranty constitutes a legal, valid and binding
obligation of such Guarantor enforceable against such Guarantor in accordance
with its terms, except as such enforceability may be limited by (1) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (2) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(d) This Guaranty, the documents, certificates or other writings
identified in Schedule 5.3 to the Note Agreement and the financial statements
listed in Schedule 5.5 to the Note Agreement, 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 to the Note Agreement, or in one of
the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5 to the Note Agreement, since
December 31, 1996, there has been no adverse Material change in the financial
condition, operations, business, properties or prospects of such Guarantor or
any of its subsidiaries, taken as a whole.
-8-
11
(e) The execution, delivery and performance by such Guarantor of this
Guaranty will not (1) 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 such Guarantor or any of its subsidiaries under any indenture, mortgage, deed
of trust, loan, purchase or credit agreement, lease, charter document or by-law,
or any other agreement or instrument to which such Guarantor or any of its
subsidiaries is bound or by which such Guarantor or any of its subsidiaries or
any of their respective properties may be bound or affected, (2) 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 such Guarantor or any of its subsidiaries or (3) violate
any provision of any statute or other rule or regulation of any Governmental
Authority applicable to the such Guarantor or any of its subsidiaries.
(f) 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 such Guarantor of this Guaranty.
(g) (1) Except as disclosed in Schedule 5.8 to the Note Agreement, there
are no actions, suits or proceedings pending or, to the knowledge of such
Guarantor, threatened against or affecting such Guarantor or any of its
subsidiaries or any property of such Guarantor or any of its subsidiaries 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.
(2) Neither such Guarantor nor any of its subsidiaries 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.
(h) Such Guarantor 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 (1) the amount of which is not individually or in the
aggregate material to the business, operations, affairs, financial condition,
assets, properties or prospects of such Guarantor and its subsidiaries taken as
a whole (herein in this Section 5, "Material") or (2) the amount, applicability
or validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which such Guarantor or one of its subsidiaries,
as the case may be, has established adequate reserves in accordance with GAAP.
Such Guarantor 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 such Guarantor and its subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate. The Federal
income tax liabilities of such
-9-
12
Guarantor 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, 1992.
(i) Such Guarantor and its 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 of the Note Agreement or purported to have been
acquired by such Guarantor or any of its subsidiaries 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 the Note 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.
(j) Except as disclosed in Schedule 5.11 to the Note Agreement,
(1) such Guarantor and its subsidiaries own or possess all Material
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto;
(2) to the best knowledge of such Guarantor, no product of such
Guarantor or any of its subsidiaries 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
(3) to the best knowledge of such Guarantor, there is no Material
violation by any Person of any right of such Guarantor or any of its
subsidiaries with respect to any patent, copyright, service mark, trademark,
trade name or other right with respect thereto owned or used by such Guarantor
or any of its subsidiaries.
(k) (1) Such Guarantor and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws in all material
respects. Neither such Guarantor 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 such Guarantor or any ERISA Affiliate, or in the
imposition of any Material Lien on any of the rights, properties or assets of
such Guarantor 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.
(2) 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
-10-
13
specified in Section 4001 of ERISA and the terms "current value" and "present
value" have the meanings specified in Section 3 of ERISA.
(3) Such Guarantor 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.
(4) The expected postretirement benefit obligation (determined as of
the last day of such Guarantor'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 such Guarantor and its subsidiaries is not Material.
(5) The execution and delivery of this Guaranty 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)(l)(A)-(D) of the Code. The representation by such Guarantor in the first
sentence of this Section 5(k)(5) is made in reliance upon and subject to the
accuracy of each Holder's representation in Section 6.2 of the Note Agreement as
to the source of the funds to be used to pay the purchase price of the Notes to
be purchased by such Holder.
(l) Neither such Guarantor nor any of its subsidiaries 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.
(m) Neither such Guarantor nor any of its subsidiaries 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 such Guarantor
or any of its 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 to the Note Agreement:
(1) neither such Guarantor nor any of its subsidiaries 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;
(2) neither the Company nor any of its subsidiaries (i) has stored
any Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them or (ii) 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
-11-
14
(3) all buildings on all real properties now owned, leased or
operated by such Guarantor or any of its subsidiaries are in material
compliance with applicable Environmental Laws.
(n) Such Guarantor, when viewed on a consolidated basis with the Company
and its other Subsidiaries, is solvent, has capital not unreasonably small in
relation to its business or any contemplated or undertaken transaction and has
assets having a value both at fair valuation and at present fair salable value
greater than the amount required to pay its debts as they become due and greater
than the amount that will be required to pay its probable liability on its
existing debts as they become absolute and matured. Such Guarantor does not
intend to incur, or believe or should have believed that it will incur, debts
beyond its ability to pay such debts as they become due. Such Guarantor, when
viewed on a consolidated basis with the Company and its other Subsidiaries, will
not be rendered insolvent by the execution and delivery of, and performance of
its obligations under, this Guaranty. Such Guarantor does not intend to hinder,
delay or defraud its creditors by or through the execution and delivery of, or
performance of its obligations under, this Guaranty.
SECTION 6. AMENDMENTS, WAIVERS AND CONSENTS.
(a) This Guaranty may be amended, and the observance of any term hereof
may be waived (either retroactively or prospectively), with (and only with) the
written consent of each Guarantor and the Required Holders, except that (1) no
amendment or waiver of any of the provisions of Sections 3, 4 or 5, or any
defined term (as it is used therein), will be effective as to any Holder unless
consented to by such Holder in writing, and (2) no such amendment or waiver may,
without the written consent of each Holder, (i) 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 (ii) amend Section 2 or this Section 6.
(b) The Guarantors will provide each Holder (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. The Guarantors will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 6 to each Holder promptly
following the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite Holders.
(c) The Company will not directly or indirectly pay or cause to be paid
any remuneration, whether by way of fee or otherwise, or grant any security, to
any Holder as consideration for or as an inducement to the entering into by any
Holder 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 even if such Holder did not
consent to such waiver or amendment.
(d) Any amendment or waiver consented to as provided in this Section 6
applies equally to all Holders and is binding upon them and upon each future
holder and upon the
-12-
15
Guarantors. No such amendment or waiver will extend to or affect any obligation,
covenant or agreement not expressly amended or waived or impair any right
consequent thereon. No course of dealing between the Guarantors and any Holder
nor any delay in exercising any rights hereunder shall operate as a waiver of
any rights of any Holder. As used herein, the term "this Guaranty" and
references thereto shall mean this Guaranty as it may from time to time be
amended or supplemented.
(e) 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
Guaranty, Notes directly or indirectly owned by any Guarantor, the Company or
any of their respective subsidiaries or Affiliates shall be deemed not to be
outstanding.
SECTION 7. 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 an Initial Note Purchaser or such Initial Note Purchaser's
nominee, to such Initial Note Purchaser or such Initial Note Purchaser's
nominee at the address specified for such communications below such Initial
Note Purchaser's signature at the foot of the Note Agreement, or at such
other address as such Initial Note Purchaser or such Initial Note
Purchaser's nominee shall have specified to any Guarantor or the Company in
writing,
(2) if to any other Holder, to such Holder at such address as such
Holder shall have specified to any Guarantor or the Company in writing, or
(3) if to any Guarantor, to such Guarantor c/o the Company at its
address set forth at the beginning of the Note Agreement to the attention
of Chief Financial Officer, or at such other address as such Guarantor
shall have specified to the Holders in writing.
Notices under this Section 7 will be deemed given only when actually received.
SECTION 8. MISCELLANEOUS.
(a) No remedy herein conferred upon or reserved to any Holder is intended
to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given under this Guaranty now or hereafter existing at law or in equity. No
delay or omission to exercise any right or power accruing upon any default,
omission or failure of performance hereunder shall
-13-
16
impair any such right or power or shall be construed to be a waiver thereof but
any such right or power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle any Holder to exercise any remedy
reserved to it under the Guaranty, it shall not be necessary for such Holder to
physically produce its Note in any proceedings instituted by it or to give any
notice, other than such notice as may be herein expressly required.
(b) The Guarantors will pay all sums becoming due under this Guaranty by
the method and at the address specified for such purpose below each Holder's
signature at the foot of the Note Agreement, or by such other method or at such
other address as any Holder shall have from time to time specified to the
Guarantors in writing for such purpose, without the presentation or surrender of
this Guaranty or any Note.
(c) Any provision of this Guaranty 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.
(d) If the whole or any part of this Guaranty shall be now or hereafter
become unenforceable against any one or more of the Guarantors for any reason
whatsoever or if it is not executed by any one or more of the Guarantors, this
Guaranty shall nevertheless be and remain fully binding upon and enforceable
against each other Guarantor as if it had been made and delivered only by such
other Guarantors.
(e) This Guaranty shall be binding upon each Guarantor and its successors
and assigns and shall inure to the benefit of each Holder and its successors and
assigns so long as its Notes remain outstanding and unpaid.
(f) This Guaranty 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.
(g) This Guaranty 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.
-14-
17
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed by an authorized representative as of this nineteenth day of March,
1998.
GRANITE CONSTRUCTION COMPANY
By /s/ David H. Watts
Its President
By /s/ Michael Futch
Its Vice President
WILCOTT CORPORATION
By /s/ David H. Watts
Its President
By /s/ Michael Futch
Its Vice President
DESERT AGGREGATES INCORPORATED
By /s/ Raymond E. Johnson
Its President
By /s/ Michael L. Thomas
Its Vice President
-15-
18
GRANITE SR 91 CORPORATION
By /s/ David H. Watts
Its President
By /s/ Michael Futch
Its Vice President
INTERMOUNTAIN SLURRY SEAL, INC.
By /s/ James H. Roberts
Its President
By /s/ Michael L. Thomas
Its Vice President
POZZOLAN PRODUCTS COMPANY
By /s/James H. Roberts
Its President
By /s/ Michael L. Thomas
Its Vice President
GILC INCORPORATED
By /s/ William E. Barton
Its President
By /s/ Michael Futch
Its Vice President
-16-
19
GRANITE SR 91, L.P.
By: Granite SR 91 Corporation, its sole
General Partner
By /s/ David H. Watts
Its President
By /s/ Michael Futch
Its Vice President
BEAR RIVER CONTRACTORS
By /s/ James H. Roberts
Its President
By /s/ Michael L. Thomas
Its Vice President
GILC, L.P.
By: GILC Incorporated, its sole General
Partner
By /s/ William E. Barton
Its President
By /s/ Michael Futch
Its Vice President
-17-
20
G.G.&R., INC.
By /s/ David H. Watts
Its President
By /s/ Michael Futch
Its Vice President
GTC, INC.
By /s/ William E. Barton
Its President
By /s/ Michael Futch
Its Vice President
-18-
21
SUBSIDIARY GUARANTY SUPPLEMENT
To the Holders of the 6.54% Senior Notes
due March 15, 2010
of Granite Construction Incorporated
(the "Company")
Ladies and Gentlemen:
WHEREAS, in order to refinance existing indebtedness and for general
corporate purposes, the Company issued its 6.54% Senior Notes, due March 15,
2010 in the aggregate principal amount of $60,000,000 (the "Notes") pursuant to
that certain Note Purchase Agreement dated as of March 1, 1998 (the "Note
Agreement") between the Company and each of the purchasers named on Schedule A
attached to said Note Agreement (the "Initial Note Purchasers").
WHEREAS, as a condition precedent to their purchase of the Notes, the
Initial Note Purchasers required that certain from time to time subsidiaries of
the Company enter into a Subsidiary Guaranty Agreement as security for the Notes
(the "Subsidiary Guaranty").
Pursuant to Section 9.6 of the Note Agreement, the Company has agreed to
cause the undersigned, _____________, a corporation organized under the laws of
_______________ (the "Additional Guarantor"), to join in the Subsidiary
Guaranty. In accordance with the requirements of the Subsidiary Guaranty, the
Additional Guarantor desires to amend the definition of Guarantor (as the same
may have been heretofore amended) set forth in the Subsidiary Guaranty attached
hereto so that at all times from and after the date hereof, the Additional
Guarantor shall be jointly and severally liable as set forth in the Subsidiary
Guaranty for the obligations of the Company under the Note Agreement and Notes
to the extent and in the manner set forth in the Subsidiary Guaranty.
The undersigned is the duly elected _____________ of the Additional
Guarantor, a subsidiary of the Company, and is duly authorized to execute and
deliver this Guaranty Supplement to each of you. The execution by the
undersigned of this Guaranty Supplement shall evidence its consent to and
acknowledgment and approval of the terms set forth herein and in the Subsidiary
Guaranty and by such execution the Additional Guarantor shall be deemed to have
made in favor of the Holders the representations and warranties set forth in
Section 5 of the Subsidiary Guaranty.
Upon execution of this Subsidiary Guaranty Supplement, the Subsidiary
Guaranty shall be deemed to be amended as set forth above. Except as amended
herein, the terms and provisions of the Subsidiary Guaranty are hereby ratified,
confirmed and approved in all respects.
EXHIBIT A
(to Subsidiary Guaranty Agreement)
22
Any and all notices, requests, certificates and other instruments
(including the Notes) may refer to the Subsidiary Guaranty without making
specific reference to this Subsidiary Guaranty Supplement, but nevertheless all
such references shall be deemed to include this Subsidiary Guaranty Supplement
unless the context shall otherwise require.
Dated: , 199 .
---------------------------- --
[NAME OF ADDITIONAL GUARANTOR]
By
------------------------------------
Its
A-2