Document:

Exhibit 10.1

 

	
 
    

 

 

CREDIT AGREEMENT

 

dated as of December 28, 2012

 

among

 

PRIMORIS SERVICES CORPORATION,
 as Borrower,

 

THE VARIOUS FINANCIAL INSTITUTIONS PARTY HERETO,
 as Lenders,

 

and

 

THE PRIVATEBANK AND TRUST COMPANY,
 as Administrative Agent and Co-Lead Arranger

 

and

 

THE BANK OF THE WEST

as Co-Lead Arranger

 

	
 
    

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 1
    	
DEFINITIONS
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
1.1
    	
Definitions
    	
 
    	
1
    
	
1.2
    	
Other   Interpretive Provisions
    	
 
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 2
    	
COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION   AND LETTER OF CREDIT PROCEDURES
    	
 
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
2.1
    	
Commitments
    	
 
    	
18
    
	
2.2
    	
Loan   Procedures
    	
 
    	
18
    
	
2.3
    	
Letter   of Credit Procedures
    	
 
    	
20
    
	
2.4
    	
Commitments   Several
    	
 
    	
22
    
	
2.5
    	
Certain   Conditions
    	
 
    	
22
    
	
2.6
    	
Defaulting   Lenders
    	
 
    	
22
    
	
2.7
    	
Incremental   Facility
    	
 
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 3
    	
EVIDENCING   OF LOANS
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
3.1
    	
Notes
    	
 
    	
25
    
	
3.2
    	
Recordkeeping
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 4
    	
INTEREST
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
4.1
    	
Interest   Rates
    	
 
    	
25
    
	
4.2
    	
Interest   Payment Dates
    	
 
    	
26
    
	
4.3
    	
Setting   and Notice of LIBOR Rates
    	
 
    	
26
    
	
4.4
    	
Computation   of Interest
    	
 
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 5
    	
FEES
    	
 
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
5.1
    	
Non-Use   Fee
    	
 
    	
26
    
	
5.2
    	
Letter   of Credit Fees
    	
 
    	
26
    
	
5.3
    	
Administrative   Agent’s Fees
    	
 
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 6
    	
REDUCTION   OR TERMINATION OF THE REVOLVING COMMITMENT; PREPAYMENTS
    	
 
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
6.1
    	
Reduction   or Termination of the Revolving Commitment
    	
 
    	
27
    
	
6.2
    	
Prepayments
    	
 
    	
27
    
	
6.3
    	
Manner   of Prepayments
    	
 
    	
29
    
	
6.4
    	
Repayments
    	
 
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 7
    	
MAKING   AND PRORATION OF PAYMENTS; SETOFF; TAXES
    	
 
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
7.1
    	
Making   of Payments
    	
 
    	
29
    
	
7.2
    	
Application   of Certain Payments
    	
 
    	
29
    
	
7.3
    	
Due   Date Extension
    	
 
    	
29
    
	
7.4
    	
Setoff
    	
 
    	
29
    
	
7.5
    	
Proration   of Payments
    	
 
    	
30
    
	
7.6
    	
Taxes
    	
 
    	
30
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 8
    	
INCREASED   COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS
    	
 
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
8.1
    	
Increased   Costs
    	
 
    	
31
    
	
8.2
    	
Basis   for Determining Interest Rate Inadequate or Unfair
    	
 
    	
32
    
	
8.3
    	
Changes   in Law Rendering LIBOR Loans Unlawful
    	
 
    	
32
    
	
8.4
    	
Funding   Losses
    	
 
    	
33
    
	
8.5
    	
Right   of Lenders to Fund through Other Offices
    	
 
    	
33
    
	
8.6
    	
Discretion   of Lenders as to Manner of Funding
    	
 
    	
33
    
	
8.7
    	
Mitigation   of Circumstances; Replacement of Lenders
    	
 
    	
33
    
	
8.8
    	
Conclusiveness   of Statements; Survival of Provisions
    	
 
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 9
    	
REPRESENTATIONS   AND WARRANTIES
    	
 
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
9.1
    	
Organization
    	
 
    	
34
    
	
9.2
    	
Authorization;   No Conflict
    	
 
    	
34
    
	
9.3
    	
Validity   and Binding Nature
    	
 
    	
34
    
	
9.4
    	
Financial   Condition
    	
 
    	
34
    
	
9.5
    	
No   Material Adverse Change
    	
 
    	
35
    
	
9.6
    	
Litigation   and Contingent Liabilities
    	
 
    	
35
    
	
9.7
    	
Ownership   of Properties; Liens
    	
 
    	
35
    
	
9.8
    	
Equity   Ownership; Subsidiaries
    	
 
    	
35
    
	
9.9
    	
Pension   Plans
    	
 
    	
35
    
	
9.10
    	
Investment   Company Act
    	
 
    	
36
    
	
9.11
    	
Compliance   with Laws
    	
 
    	
36
    
	
9.12
    	
Regulation   U
    	
 
    	
36
    
	
9.13
    	
Taxes
    	
 
    	
36
    
	
9.14
    	
Solvency,   etc.
    	
 
    	
36
    
	
9.15
    	
Environmental   Matters
    	
 
    	
37
    
	
9.16
    	
Insurance
    	
 
    	
37
    
	
9.17
    	
Real   Property
    	
 
    	
37
    
	
9.18
    	
Information
    	
 
    	
37
    
	
9.19
    	
Intellectual   Property
    	
 
    	
37
    
	
9.20
    	
Burdensome   Obligations
    	
 
    	
38
    
	
9.21
    	
Labor   Matters
    	
 
    	
38
    
	
9.22
    	
Anti-Terrorism   Laws
    	
 
    	
38
    
	
9.23
    	
No   Default
    	
 
    	
38
    
	
9.24
    	
RESERVED
    	
 
    	
38
    
	
9.25
    	
OFAC
    	
 
    	
38
    
	
9.26
    	
Patriot   Act
    	
 
    	
39
    
	
9.27
    	
Subordinated   Debt
    	
 
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 10
    	
AFFIRMATIVE   COVENANTS
    	
 
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
10.1
    	
Reports,   Certificates and Other Information
    	
 
    	
39
    
	
10.2
    	
Books,   Records and Inspections
    	
 
    	
42
    
	
10.3
    	
Maintenance   of Property; Insurance
    	
 
    	
42
    
	
10.4
    	
Compliance   with Laws; Payment of Taxes and Liabilities
    	
 
    	
43
    
	
10.5
    	
Maintenance   of Existence, etc.
    	
 
    	
43
    
	
10.6
    	
Use   of Proceeds
    	
 
    	
43
    

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
10.7
    	
Employee   Benefit Plans
    	
 
    	
43
    
	
10.8
    	
Environmental   Matters
    	
 
    	
44
    
	
10.9
    	
Further   Assurances
    	
 
    	
44
    
	
10.10
    	
Deposit   Accounts
    	
 
    	
44
    
	
10.11
    	
RESERVED
    	
 
    	
44
    
	
10.12
    	
Permissible   Payments
    	
 
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 11
    	
NEGATIVE   COVENANTS
    	
 
    	
45
    
	
 
    	
 
    	
 
    	
 
    
	
11.1
    	
Debt
    	
 
    	
45
    
	
11.2
    	
Liens
    	
 
    	
46
    
	
11.3
    	
RESERVED
    	
 
    	
46
    
	
11.4
    	
RESERVED
    	
 
    	
46
    
	
11.5
    	
Mergers,   Consolidations
    	
 
    	
46
    
	
11.6
    	
Modification   of Organizational Documents
    	
 
    	
47
    
	
11.7
    	
Transactions   with Affiliates
    	
 
    	
47
    
	
11.8
    	
Asset   Disposition
    	
 
    	
47
    
	
11.9
    	
Inconsistent   Agreements
    	
 
    	
47
    
	
11.10
    	
Business   Activities
    	
 
    	
48
    
	
11.11
    	
Investments
    	
 
    	
48
    
	
11.12
    	
Restriction   of Amendments to Certain Documents
    	
 
    	
48
    
	
11.13
    	
Fiscal   Year
    	
 
    	
48
    
	
11.14
    	
Financial   Covenants
    	
 
    	
48
    
	
11.15
    	
Cancellation   of Debt
    	
 
    	
49
    
	
11.16
    	
Laws,   Regulations
    	
 
    	
49
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 12
    	
EFFECTIVENESS;   CONDITIONS OF LENDING, ETC.
    	
 
    	
49
    
	
 
    	
 
    	
 
    	
 
    
	
12.1
    	
Initial   Credit Extension
    	
 
    	
49
    
	
12.2
    	
Conditions
    	
 
    	
51
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 13
    	
EVENTS   OF DEFAULT AND THEIR EFFECT
    	
 
    	
51
    
	
 
    	
 
    	
 
    	
 
    
	
13.1
    	
Events   of Default
    	
 
    	
51
    
	
13.2
    	
Effect   of Event of Default
    	
 
    	
53
    
	
13.3
    	
Credit   Bidding
    	
 
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 14
    	
THE   AGENT
    	
 
    	
54
    
	
 
    	
 
    	
 
    	
 
    
	
14.1
    	
Appointment   and Authorization
    	
 
    	
54
    
	
14.2
    	
Issuing   Lenders
    	
 
    	
54
    
	
14.3
    	
Delegation   of Duties
    	
 
    	
54
    
	
14.4
    	
Exculpation   of Administrative Agent
    	
 
    	
54
    
	
14.5
    	
Reliance   by Administrative Agent
    	
 
    	
55
    
	
14.6
    	
Notice   of Default
    	
 
    	
55
    
	
14.7
    	
Credit   Decision
    	
 
    	
55
    
	
14.8
    	
Indemnification
    	
 
    	
56
    
	
14.9
    	
Administrative   Agent in Individual Capacity
    	
 
    	
56
    
	
14.10
    	
Successor   Administrative Agent
    	
 
    	
56
    
	
14.11
    	
Collateral   Matters
    	
 
    	
57
    

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
14.12
    	
Restriction   on Actions by Lenders
    	
 
    	
57
    
	
14.13
    	
Administrative   Agent May File Proofs of Claim
    	
 
    	
57
    
	
14.14
    	
Other   Agents; Arrangers and Managers
    	
 
    	
58
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 15
    	
GENERAL
    	
 
    	
58
    
	
 
    	
 
    	
 
    	
 
    
	
15.1
    	
Waiver;   Amendments
    	
 
    	
58
    
	
15.2
    	
Confirmations
    	
 
    	
59
    
	
15.3
    	
Notices
    	
 
    	
59
    
	
15.4
    	
Computations
    	
 
    	
60
    
	
15.5
    	
Costs,   Expenses and Taxes
    	
 
    	
60
    
	
15.6
    	
Assignments;   Participations
    	
 
    	
60
    
	
15.7
    	
Register
    	
 
    	
61
    
	
15.8
    	
GOVERNING   LAW
    	
 
    	
62
    
	
15.9
    	
Confidentiality
    	
 
    	
62
    
	
15.10
    	
Severability
    	
 
    	
62
    
	
15.11
    	
Nature   of Remedies
    	
 
    	
63
    
	
15.12
    	
Entire   Agreement
    	
 
    	
63
    
	
15.13
    	
Counterparts
    	
 
    	
63
    
	
15.14
    	
Successors   and Assigns
    	
 
    	
63
    
	
15.15
    	
Captions
    	
 
    	
63
    
	
15.16
    	
Customer   Identification - USA Patriot Act Notice
    	
 
    	
63
    
	
15.17
    	
INDEMNIFICATION   BY LOAN PARTIES
    	
 
    	
63
    
	
15.18
    	
Nonliability   of Lenders
    	
 
    	
64
    
	
15.19
    	
FORUM   SELECTION AND CONSENT TO JURISDICTION
    	
 
    	
65
    
	
15.20
    	
WAIVER   OF JURY TRIAL
    	
 
    	
65
    
	
15.21
    	
WAIVER   AND RELEASE OF DAMAGES
    	
 
    	
65
    

 

iv

 

	
ANNEXES
    
	
 
    	
 
    
	
ANNEX A
    	
Lenders and Pro   Rata Shares
    
	
ANNEX B
    	
Addresses for   Notices
    
	
 
    	
 
    
	
SCHEDULES
    
	
 
    	
 
    
	
SCHEDULE 9.6
    	
Litigation and   Contingent Liabilities
    
	
SCHEDULE 9.8
    	
Subsidiaries
    
	
SCHEDULE 9.16
    	
Insurance
    
	
SCHEDULE 9.17
    	
Real Property
    
	
SCHEDULE 9.21
    	
Labor Matters
    
	
SCHEDULE 11.1
    	
Existing Debt
    
	
SCHEDULE 11.2
    	
Existing Liens
    
	
SCHEDULE 11.11
    	
Investments
    
	
 
    	
 
    
	
EXHIBITS
    
	
 
    	
 
    
	
EXHIBIT A
    	
Form of   Note (Section 3.1)
    
	
EXHIBIT B
    	
Form of   Compliance Certificate (Section 10.1.4)
    
	
EXHIBIT C
    	
Form of   Assignment Agreement (Section 15.6.1)
    
	
EXHIBIT D
    	
Form of   Notice of Borrowing (Section 2.2.2)
    
	
EXHIBIT E
    	
Form of   Notice of Conversion/Continuation (Section 2.2.3)
    
	
EXHIBIT F
    	
Form of   Subordination Agreement
    

 

v

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT dated as of December 28, 2012 (this “Agreement”) is entered into among PRIMORIS SERVICES CORPORATION (“Borrower”), the financial institutions that are or may from time to time become parties hereto listed on the attached Annex A (together with their respective successors and assigns, the “Lenders”) and THE PRIVATEBANK AND TRUST COMPANY (in its individual capacity, “PrivateBank”), as administrative agent for the Lenders.

 

The Lenders have agreed to make available to Borrower a revolving credit facility (which includes letters of credit) upon the terms and conditions set forth herein.

 

The Borrower, Prudential Investment Management, Inc. (“Prudential”)  and the initial purchasers of the hereafter defined Senior Notes (Prudential and such purchasers, together with their respective successors and permitted assigns and any other holders from time to time of the Notes described below, the “Noteholders”) are entering into a Note Purchase and Private Shelf Agreement dated as of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Note Agreement”) pursuant to which the Borrower will issue, and the initial purchasers described in the Note Agreement will purchase, the Borrower’s 3.65% Senior Secured Notes, Series A, due December 28, 2022, in the aggregate principal amount of $50,000,000 (the “Series A Notes”).  The Borrower has also authorized the issuance, pursuant to the Note Agreement, of the additional senior secured promissory notes pursuant to the Note Agreement in the amounts set forth therein (the “Shelf Notes” and, together with the Series A Notes and any other promissory notes that may from time to time be issued pursuant to the Note Agreement (including any notes issued in substitution for any of the foregoing) are herein collectively called the “Senior Notes” and individually a “Senior Note”).

 

The PrivateBank has agreed to serve as Collateral Agent for the Lenders and Prudential pursuant to an Intercreditor and Collateral Agency Agreement dated as of the date hereof (“Intercreditor Agreement”).

 

In consideration of the mutual agreements herein contained, the parties hereto agree as follows:

 

SECTION 1                                                       DEFINITIONS.

 

1.1          Definitions.  When used herein the following terms shall have the following meanings:

 

Account Debtor is defined in the Guaranty and Collateral Agreement.

 

Acquisition means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or a substantial portion of the assets of a Person, or of all or a substantial portion of any business or division of a Person, (b) the acquisition of in excess of 50% of the Capital Securities of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is already a Subsidiary).

 

Administrative Agent means PrivateBank in its capacity as administrative agent for the Lenders hereunder and any successor thereto in such capacity.

 

Affected Loan is defined in Section 8.3.

 

 

Affiliate of any Person means (a) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person, (b) any officer or director of such Person and (c) with respect to any Lender, any entity administered or managed by such Lender or an Affiliate or investment advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans.  A Person shall be deemed to be “controlled by” any other Person if such Person possesses, directly or indirectly, power to vote 5% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managers or power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.  Unless expressly stated otherwise herein, neither Administrative Agent nor any Lender shall be deemed an Affiliate of any Loan Party.

 

Agreement is defined in the preamble of this Agreement.

 

Applicable Margin means, for any day, the rate per annum set forth below opposite the level (the “Level”) then in effect, it being understood that the Applicable Margin for (i) LIBOR Loans shall be the percentage set forth under the column “LIBOR Margin”, (ii) Base Rate Loans shall be the percentage set forth under the column “Base Rate Margin”, (iii) the Non-Use Fee Rate shall be the percentage set forth under the column “Non-Use Fee Rate” and (iv) the L/C Fee shall be the percentage set forth under the column “L/C Fee Rate”:

 

	
Level
    	
 
    	
Senior Debt to
   EBITDA Ratio
    	
 
    	
LIBOR
   Margin
    	
 
    	
Base Rate
   Margin
    	
 
    	
Non-Use
   Fee Rate
    	
 
    	
L/C Fee
   (Financial)
    	
 
    	
L/C Fee
   (Performance)
    
	
I
    	
 
    	
Less than 0.5:1
    	
 
    	
100 bps
    	
 
    	
0 bps
    	
 
    	
20 bps
    	
 
    	
100 bps
    	
 
    	
75 bps
    
	
II
    	
 
    	
Greater than or   equal to 0.5:1 but less than 1.0:1
    	
 
    	
125 bps
    	
 
    	
0 bps
    	
 
    	
25 bps
    	
 
    	
125 bps
    	
 
    	
100 bps
    
	
III
    	
 
    	
Greater than or   equal to 1.0:1 but less than 1.5:1
    	
 
    	
150 bps
    	
 
    	
0 bps
    	
 
    	
25 bps
    	
 
    	
150 bps
    	
 
    	
125 bps
    
	
IV
    	
 
    	
Greater than or   equal to 1.5:1 but less than 2.0:1
    	
 
    	
175 bps
    	
 
    	
0 bps
    	
 
    	
30 bps
    	
 
    	
175 bps
    	
 
    	
150 bps
    
	
V
    	
 
    	
Greater than or   equal to 2.0:1
    	
 
    	
200 bps
    	
 
    	
0 bps
    	
 
    	
30 bps
    	
 
    	
200 bps
    	
 
    	
175 bps
    

 

The LIBOR Margin, the Base Rate Margin, the Non-Use Fee Rate and the L/C Fee Rate shall be adjusted, to the extent applicable, on the fifth (5th) Business Day after Borrower provides or is required to provide the annual and quarterly financial statements and other information pursuant to Sections 10.1.1 or 10.1.2, as applicable, and the related Compliance Certificate, pursuant to Section 10.1.4.  Notwithstanding anything contained in this paragraph to the contrary, (a) if Borrower fails to deliver the financial statements and Compliance Certificate in accordance with the provisions of Sections 10.1.1, 10.1.2 and 10.1.3, the LIBOR Margin, the Base Rate Margin, the Non-Use Fee Rate and the L/C Fee Rate shall be based upon Level V above beginning on the date such financial statements and Compliance Certificate were required to be delivered until the fifth (5th) Business Day after such financial statements and Compliance Certificate are actually delivered, whereupon the Applicable Margin shall be determined by the then current Level; (b)  no reduction to any Applicable Margin shall become effective at any time when a Default or an Event of Default has occurred and is continuing; and (c) the initial Applicable Margin on the Closing Date shall be based on Level III until the date on which the financial statements and Compliance Certificate are required to be delivered for the Fiscal Quarter ending December 31, 2012.

 

Asset Disposition means the sale, lease, transfer or disposal of assets of any of the Loan Parties.

 

Assignee is defined in Section 15.6.1.

 

2

 

Assignment Agreement is defined in Section 15.6.1.

 

Attorney Costs means, with respect to any Person, all reasonable fees and charges of any counsel to such Person and all court costs and similar legal expenses.

 

Bank Product Agreements means those certain agreements entered into from time to time between any Loan Party and a Lender or its Affiliates in connection with any of the Bank Products, including without limitation, Hedging Agreements.

 

Bank Product Obligations means all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by the Loan Parties to any Lender or its Affiliates pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all such amounts that a Loan Party is obligated to reimburse to Administrative Agent or any Lender as a result of Administrative Agent or such Lender purchasing participations or executing indemnities or reimbursement obligations with respect to the Bank Products provided to the Loan Parties pursuant to the Bank Product Agreements.

 

Bank Products means any service provided to, facility extended to, or transaction entered into with, any Loan Party by any Lender or its Affiliates consisting of, (a) deposit accounts, (b) cash management services, including, controlled disbursement, lockbox, electronic funds transfers (including, book transfers, fedwire transfers, ACH transfers), online reporting and other services relating to accounts maintained with any Lender or its Affiliates, (c) debit cards and credit cards (d) Hedging Agreements or (e) so long as prior written notice thereof is provided to Administrative Agent by Lender (or its Affiliate) providing such service, facility or transaction.

 

Base Rate means at any time the greater of (a) the Federal Funds Rate plus 0.5% and (b) the Prime Rate.

 

Base Rate Loan means any Loan which bears interest at or by reference to the Base Rate.

 

Base Rate Margin is defined in the definition of Applicable Margin.

 

Borrower is defined in the preamble of this Agreement.

 

BSA is defined in Section 10.4.

 

Business Day means any day on which PrivateBank is open for commercial banking business in Chicago, Illinois and, in the case of a Business Day which relates to a LIBOR Loan, on which dealings are carried on in the London interbank eurodollar market.

 

Capital Expenditures means all expenditures which, in accordance with GAAP, would be required to be capitalized and shown on the Consolidated balance sheet of Borrower, including expenditures in respect of Capital Leases, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (b) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

 

3

 

Capital Lease means, with respect to any Person, any lease of (or other agreement conveying the right to use) any real or personal property by such Person that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of such Person.

 

Capital Securities means, with respect to any Person, all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued or acquired after the Closing Date, including common shares, preferred shares, membership interests in a limited liability company, limited or general partnership interests in a partnership, interests in a Trust, interests in other unincorporated organizations or any other equivalent of such ownership interest.

 

Cash Collateralize means to deliver cash collateral to an Issuing Lender, to be held as cash collateral for outstanding Letters of Credit, pursuant to documentation satisfactory to such Issuing Lender and in an amount satisfactory to such Issuing Lender which amount may exceed the Stated Amount of outstanding Letters of Credit.  Derivatives of such term have corresponding meanings.

 

Cash Equivalent Investment means, at any time, (a) any evidence of Debt, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case (unless issued by a Lender or its holding company) rated at least A-l by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or P-l by Moody’s Investors Service, Inc., (c) any certificate of deposit, time deposit or banker’s acceptance, maturing not more than one year after such time, or any overnight Federal Funds transaction that is issued or sold by any Lender or its holding company (or by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000), (d) any repurchase agreement entered into with any Lender (or commercial banking institution of the nature referred to in clause (c)) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) above and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such Lender (or other commercial banking institution) thereunder and (e) money market accounts or mutual funds which invest exclusively in assets satisfying the foregoing requirements, and (f) other short term liquid investments approved in writing by Administrative Agent.

 

CFC means any Subsidiary that is a “controlled foreign corporation,” as defined in Section 957(a) of the Code.

 

Change in Control means the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Exchange Act and the rules of the SEC thereunder as in effect on the date hereof) other than Mr. Brian Pratt, of Capital Securities representing more than 35% of the ordinary voting power represented by the issued and outstanding Capital Securities of Borrower.

 

Closing Date is defined in Section 12.1.

 

Code means the Internal Revenue Code of 1986.

 

Collateral means all properties, rights, interests and privileges from time to time subject to the Liens granted to the Collateral Agent, or any security trustee therefor, by the Collateral Documents.

 

Collateral Documents means, collectively, the Guaranty and Collateral Agreement, each Perfection Certificate, each control agreement and any other agreement or instrument pursuant to which 

 

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Borrower, any Subsidiary or any other Person grants or purports to grant collateral to Collateral Agent for the benefit of the Lenders and the Noteholders or otherwise relates to such collateral.

 

Commitment means, as to any Lender, such Lender’s commitment to make Loans, and to issue or participate in Letters of Credit, under this Agreement.  The initial amount of each Lender’s Commitment is set forth on Annex A.

 

Compliance Certificate means a Compliance Certificate in substantially the form of Exhibit B.

 

Computation Period means each period of four consecutive Fiscal Quarters ending on the last day of a Fiscal Quarter.

 

Consolidated means the consolidation of the accounts of, unless otherwise noted, the Borrower and its Subsidiaries in accordance with GAAP.

 

Consolidated EBIT means for any period, (i) on a Consolidated basis, operating earnings before interest and taxes, calculated in accordance with GAAP, and, without duplication, (ii) plus income (or less loss) from Persons in which the Borrower or any of its Subsidiaries holds an ownership interest in any Capital Securities issued by such Person and which Person is not consolidated with the Borrower, calculated in accordance with GAAP, and (iii) less income (or plus loss) attributable to any non-controlling interests.

 

Consolidated Net Income means, for any Computation Period, Consolidated net income during such period, determined in accordance with GAAP.

 

Construction Partnership means any joint venture to the extent not constituting an Investment (without giving effect to the final proviso of the definition of “Investment”) with any other Person (other than the Borrower or any of its Subsidiaries) which joint venture is entered into and exists for the purpose of engagement in business activities related to teaming the performance of construction or construction/engineering related services delivered by the Borrower or any other Loan Party for one or more projects.

 

Contingent Liability means, with respect to any Person, each obligation and liability of such Person and all such obligations and liabilities of such Person incurred pursuant to any agreement, undertaking or arrangement by which such Person:  (a) guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend, obligation or other liability of any other Person in any manner (other than by endorsement of instruments in the course of collection), including any indebtedness, dividend or other obligation which may be issued or incurred at some future time; (b) guarantees the payment of dividends or other distributions upon the Capital Securities of any other Person; (c) undertakes or agrees (whether contingently or otherwise):  (i) to purchase, repurchase, or otherwise acquire any indebtedness, obligation or liability of any other Person or any property or assets constituting security therefor, (ii) to advance or provide funds for the payment or discharge of any indebtedness, obligation or liability of any other Person (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of any other Person, or (iii) to make payment to any other Person other than for value received; (d) agrees to lease property or to purchase securities, property or services from such other Person with the purpose or intent of assuring the owner of such indebtedness or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (e) to induce the issuance of, or in connection with the issuance of, any letter of credit for the benefit of such other Person; or (f) undertakes or agrees otherwise to assure a creditor against loss.  The amount of any Contingent Liability shall (subject to any limitation set forth herein) be deemed to be the outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness, obligation or other liability guaranteed or supported thereby.

 

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Controlled Group means all members of a controlled group of corporations, all members of a controlled group of trades or businesses (whether or not incorporated) under common control and all members of an affiliated service group which, together with Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.

 

Debt of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all indebtedness evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person as lessee under Capital Leases which have been or should be recorded as liabilities on a balance sheet of such Person in accordance with GAAP, (d) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable in the ordinary course of business), (e) all indebtedness secured by a Lien on the property of such Person, whether or not such indebtedness shall have been assumed by such Person; provided that if such Person has not assumed or otherwise become liable for such indebtedness, such indebtedness shall be measured at the fair market value of such property securing such indebtedness at the time of determination, (f) all obligations, contingent or otherwise, with respect to the face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of such Person (including the Letters of Credit), (g) all Hedging Obligations of such Person, (h) all Contingent Liabilities of such Person, (i) all Debt of any partnership of which such Person is a general partner, (j) all non-compete payment obligations, Earn-Outs and similar obligations and (k) any Capital Securities or other equity instrument, whether or not mandatorily redeemable, that under GAAP is characterized as debt, whether pursuant to financial accounting standards board issuance No. 150 or otherwise.

 

Default means any event that, if it continues uncured, will, with lapse of time or notice or both, constitute an Event of Default.

 

Defaulting Lender means any Lender that (a) has failed to fund any portion of the Loans, participations in Letters of Credit required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, (c) has been deemed or has a parent company that has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding, (d) has notified Borrower, Administrative Agent, any Issuing Lender or any Lender that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements in which it commits to extend credit or (e) has failed to confirm within three (3) Business Days of a request by Administrative Agent that it will comply with the terms of this Agreement relating to its obligations to fund prospective Revolving Loans and participations in then outstanding Letters of Credit.

 

Dollar and the sign “$” mean lawful money of the United States of America.

 

Domestic Subsidiary means an entity organized under the laws of one of the United States which entity is a Subsidiary of the Borrower.

 

Earn-Outs shall mean contingent earn-out liabilities as reflected on the financial statements delivered pursuant to Section 10.1.1.

 

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EBITDA means, for any Computation Period, as calculated in accordance with GAAP, Consolidated EBIT for such period plus Consolidated depreciation, amortization and other noncash charges of the Borrower and its Subsidiaries as agreed to by Administrative Agent.

 

Environmental Claims means all claims, however asserted, by any governmental, regulatory or judicial authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release into, or injury to the environment.

 

Environmental Laws means all present or future federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative or judicial orders, consent agreements, directed duties, requests, licenses, authorizations and permits of, and agreements with, any governmental authority, in each case relating to any matter arising out of or relating to public health and safety, or pollution or protection of the environment or workplace, including any of the foregoing relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, discharge, emission, release, threatened release, control or cleanup of any Hazardous Substance.

 

ERISA means the Employee Retirement Income Security Act of 1974.

 

Event of Default means any of the events described in Section 13.1.

 

Excluded Taxes means taxes based upon, or measured by, a Lender’s or Administrative Agent’s (or a branch of a Lender’s or Administrative Agent’s) overall net income, overall net receipts, or overall net profits (including franchise taxes imposed in lieu of such taxes), but only to the extent such taxes are imposed by a taxing authority (a) in a jurisdiction in which such Lender or Administrative Agent is organized, (b) in a jurisdiction which a Lender’s or Administrative Agent’s principal office is located, or (c) in a jurisdiction in which such Lender’s or Administrative Agent’s lending office (or branch) in respect of which payments under this Agreement are made is located.

 

Federal Funds Rate means, for any day, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Administrative Agent from three Federal funds brokers of recognized standing selected by Administrative Agent.  Administrative Agent’s determination of such rate shall be binding and conclusive absent manifest error.

 

Fiscal Quarter means a fiscal quarter of a Fiscal Year.

 

Fiscal Year means the fiscal year of Borrower and its Subsidiaries, which period shall be the 12-month period ending on December 31 of each year.

 

Fixed Assets means, on any date of determination and on a Consolidated (unless otherwise noted) basis determined in accordance with GAAP, equipment, real property and any other long term fixed asset of the Borrower and its Subsidiaries.

 

Fixed Charge Coverage Ratio means, on any date of determination for the Borrower and its Subsidiaries (unless otherwise noted) on a Consolidated basis determined in accordance with GAAP, the ratio of (x) EBITDA, minus Unfinanced Capital Expenditures, tax expense, dividends/distributions/share buybacks to (y) the sum for such period of Consolidated Interest Expense, plus required payments of principal in respect of Funded Debt of the Borrower and its Subsidiaries, in each case calculated on a trailing 12 month basis.

 

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FRB means the Board of Governors of the Federal Reserve System or any successor thereto.

 

Funded Debt means, as to any Person, all Debt of such Person that matures more than one year from the date of its creation (or is renewable or extendible, at the option of such Person, to a date more than one year from such date).

 

GAAP means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession) and the Securities and Exchange Commission, which are applicable to the circumstances as of the date of determination.

 

General Intangibles shall be defined in accordance with GAAP.

 

Group is defined in Section 2.2.1.

 

Guarantor means each Subsidiary which is a party to the Guaranty and Collateral Agreement.

 

Guaranty and Collateral Agreement means the Guaranty and Collateral Agreement dated as of the date hereof executed and delivered by the Loan Parties, together with any joinders thereto and any other guaranty and collateral agreement executed by a Loan Party, in each case in form and substance satisfactory to Administrative Agent.

 

Hazardous Substances means hazardous waste, hazardous substance, pollutant, contaminant, toxic substance, oil, hazardous material, chemical or other substance regulated by any Environmental Law.

 

Hedging Agreement means any bank underwritten cash and/or derivative financial instrument including, but not limited to, any interest rate, currency or commodity swap agreement, cap agreement, collar agreement, spot foreign exchange, forward foreign exchange, foreign exchange option (or series of options) and any other agreement or arrangement designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices.

 

Hedging Obligation means, with respect to any Person, any liability of such Person under any Hedging Agreement.

 

Indemnified Liabilities - see Section 15.17.

 

Intangible Assets means General Intangibles.

 

Interest Expense means, for any period, Consolidated interest expense (including all imputed interest in respect of Capital Leases), as determined in accordance with GAAP.

 

Interest Period means, as to any LIBOR Loan, the period commencing on the date such Loan is borrowed or continued as, or converted into, a LIBOR Loan and ending on the date one, two or three months thereafter as selected by Borrower pursuant to Section 2.2.2 or 2.2.3, as the case may be; provided that:

 

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(a)           if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day;

 

(b)           any Interest Period that begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period shall end on the last Business Day of the calendar month at the end of such Interest Period; and

 

(c)           Borrower may not select any Interest Period for a Revolving  Loan which would extend beyond the scheduled Termination Date.

 

Inventory is defined in the Guaranty and Collateral Agreement.

 

Investment means, with respect to any Person, any investment in another Person, whether by acquisition of any debt or Capital Security, by making any loan or advance, by becoming obligated with respect to a Contingent Liability in respect of obligations of such other Person (other than travel and similar advances to employees in the ordinary course of business) or by making an Acquisition; provided that, for purposes of clarification, a Construction Partnership shall not constitute an Investment hereunder.

 

Issuing Lender means The PrivateBank or The Bank of the West, in their respective capacities as the issuer of Letters of Credit hereunder, or any Affiliate of either that may from time to time issue Letters of Credit, or any other financial institution that either may cause to issue Letters of Credit for the account of Borrower, and their successors and assigns in such capacity.

 

Joint Venture means (i) any joint venture entity, whether a company, unincorporated firm, association, partnership or any other entity which, in each case, is not a Subsidiary of the Borrower or any of the Subsidiaries but in which the Borrower or a Subsidiary has a direct or indirect Investment in the Capital Securities issued by such joint venture entity and/or joint or shared control with one or more other Persons (other than the Borrower or any Subsidiary) and (ii) any asset or group of assets in which the Borrower or any Subsidiary thereof has a joint or shared ownership interest and/or control with one or more other Persons (other than the Borrower or any Subsidiary).

 

L/C Application means, with respect to any request for the issuance of a Letter of Credit, a letter of credit application in the form being used by an Issuing Lender at the time of such request for the type of letter of credit requested.

 

L/C Fee Rate is defined in the definition of Applicable Margin.

 

L/C Fronting Fee means the fronting fee in the amount of 25 basis points per annum, applied to the outstanding amount of any letters of credit, paid by the Borrower to any Issuing Lender quarterly in arrears.

 

L/C Sublimit means Seventy-Five Million and 00/100 Dollars ($75,000,000).

 

Lender is defined in the preamble of this Agreement.  References to the “Lenders” shall include the Issuing Lenders; for purposes of clarification only, to the extent that PrivateBank (or any successor Issuing Lender) may have any rights or obligations in addition to those of the other Lenders due to its status as Issuing Lender, its status as such will be specifically referenced.  In addition to the foregoing, for the purpose of identifying the Persons entitled to share in the Collateral and the proceeds thereof under, and in accordance with the provisions of, this Agreement and the Collateral Documents, the term “Lender” shall include Affiliates of a Lender providing a Bank Product.

 

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Lender Party is defined in Section 15.17.

 

Letter of Credit is defined in Section 2.1.3.

 

LIBOR Loan means any Loan which bears interest at a rate determined by reference to the LIBOR Rate.

 

LIBOR Margin is defined in the definition of Applicable Margin.

 

LIBOR Office means with respect to any Lender the office or offices of such Lender which shall be making or maintaining the LIBOR Loans of such Lender hereunder.  A LIBOR Office of any Lender may be, at the option of such Lender, either a domestic or foreign office.

 

LIBOR Rate means a rate of interest equal to (a) the per annum rate of interest at which United States dollar deposits for a period equal to the relevant Interest Period are offered in the London Interbank Eurodollar market at 11:00 A.M. (London time) two (2) Business Days prior to the commencement of such Interest Period (or three (3) Business Days prior to the commencement of such Interest Period if banks in London, England were not open and dealing in offshore United States dollars on such second preceding Business Day), as displayed in the Bloomberg Financial Markets system (or other authoritative source selected by Administrative Agent in its sole discretion), divided by (b) a number determined by subtracting from 1.00 the then stated maximum reserve percentage for determining reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), or as LIBOR is otherwise determined by Administrative Agent in its sole and absolute discretion.  Administrative Agent’s determination of the LIBOR Rate shall be conclusive, absent manifest error and shall remain fixed during such Interest Period.

 

Lien means, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person (including an interest in respect of a Capital Lease) which secures payment or performance of any obligation and shall include any mortgage, lien, encumbrance, title retention lien, charge or other security interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise.

 

Loan Documents means this Agreement, the Notes, the Letters of Credit, the Master Letter of Credit Agreement, the L/C Applications, the Agent Fee Letter, the Collateral Documents, the Subordination Agreements, the Intercreditor Agreement and all documents, instruments and agreements delivered in connection with the foregoing.

 

Loan Party means Borrower and each Guarantor.

 

Loan or Loans means Revolving Loans.

 

Margin Stock means any “margin stock” as defined in Regulation U.

 

Master Letter of Credit Agreement means, at any time, with respect to the issuance of Letters of Credit, a master letter of credit agreement or reimbursement agreement in the form, if any, being used by an Issuing Lender at such time.

 

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Material Adverse Effect means (a) a material adverse change in, or a material adverse effect upon, the financial condition, operations, assets, business, properties or prospects of the Loan Parties taken as a whole, (b) a material impairment of the ability of any Loan Party to perform any of the Obligations under any Loan Document or (c) a material adverse change in or impairment of any substantial portion of the Collateral under the Collateral Documents or the legality, validity, binding effect or enforceability against the Loan Parties taken as a whole.

 

Modified Ratable Portion means, with respect to any prepayment of the Loans required by Section 6.2.2 in respect of any event described in Section 6.2.2(a)(i) through (iii), 100% of Net Cash Proceeds of such event, as applicable; provided, that for so long as there are any financial obligations outstanding under the Note Documents and the Senior Note Agreement requires a prepayment of such obligations thereunder in connection with any event described in Section 6.2.2(a)(i) through (iii), and in any event subject to the terms and provisions of the Intercreditor Agreement, the Modified Ratable Portion shall be the portion of all Net Cash Proceeds, as applicable, of the applicable event, as the case may be, equal to the percentage equivalent of a fraction, (i) the numerator of which is the aggregate outstanding principal amount of all Loans then outstanding and (ii) the denominator of which is the sum of (a) the aggregate outstanding principal amount of all Senior Notes then outstanding plus (b) the aggregate principal amount of all loans, undrawn letters of credit and letter of credit reimbursement obligations under the Loan Documents then outstanding.

 

Multiemployer Pension Plan means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which Borrower or any other member of the Controlled Group may have any liability.

 

Net Cash Proceeds means:

 

(a)                                 with respect to any Asset Disposition, the aggregate cash proceeds (including cash proceeds received pursuant to policies of insurance or by way of deferred payment of principal pursuant to a note, installment receivable or otherwise, but only as and when received) received by any Loan Party pursuant to such Asset Disposition net of (i) the direct costs relating to such sale, transfer or other disposition (including sales commissions and legal, accounting and investment banking fees), (ii) taxes paid or reasonably estimated by the Borrower to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements) and (iii) amounts required to be applied to the repayment of any Debt secured by a Lien (other than Liens arising under the Collateral Documents) on the property subject to such Asset Disposition;

 

(b)                                 with respect to any issuance of Capital Securities, the aggregate cash proceeds received by any Loan Party pursuant to such issuance, net of the direct costs relating to such issuance (including sales and underwriters’ commissions); and

 

(c)                                  with respect to any issuance of Debt, the aggregate cash proceeds received by any Loan Party pursuant to such issuance, net of the direct costs of such issuance (including up-front, underwriters’ and placement fees).

 

Net Worth means, as of any date, the sum of the capital stock and additional paid-in capital plus retained earnings (or minus accumulated deficit) calculated in conformity with GAAP.

 

Non-Consenting Lender is defined in Section 15.1.

 

Non-U.S. Participant is defined in Section 7.6(d).

 

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Non-Use Fee Rate is defined in the definition of Applicable Margin.

 

Note means a promissory note substantially in the form of Exhibit A.

 

Noteholder is defined in the Intercreditor Agreement.

 

Notice of Borrowing is defined in Section 2.2.2.

 

Notice of Conversion/Continuation is defined in Section 2.2.3.

 

Obligations means all obligations (monetary (including post-petition interest, allowed or not) or otherwise) of any Loan Party under this Agreement and any other Loan Document including Attorney Costs and any reimbursement obligations of each Loan Party in respect of Letters of Credit and surety bonds, all Hedging Obligations permitted hereunder which are owed to any Lender (or its Affiliates) or Administrative Agent, and all other Bank Products Obligations, all in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due.

 

OFAC is defined in Section 10.4.

 

Participant is defined in Section 15.6.2.

 

Patriot Act is defined in Section 15.16.

 

PBGC means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.

 

Pension Plan means a “pension plan”, as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA or the minimum funding standards of ERISA (other than a Multiemployer Pension Plan), and as to which Borrower or any member of the Controlled Group may have any liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.

 

Perfection Certificate means a perfection certificate executed and delivered to Administrative Agent by a Loan Party.

 

Permitted Acquisition means any Acquisition by Borrower or any Loan Party where:

 

(A) the business or division acquired are for use, or the Person acquired is engaged, in the construction and engineering businesses engaged in by the Loan Parties on the date hereof or otherwise as required to preserve compliance with Section 11.5;

 

(B) immediately before such Acquisition, and as a consequence of such Acquisition, no Default or Event of Default shall exist;

 

(C) immediately after giving effect to such Acquisition, Borrower is in pro forma compliance with the financial covenants set forth in Section 11.14 herein;

 

(D)  immediately after giving effect to such Acquisition, Debt to EBITDA on a pro forma basis is less than 1.75x;

 

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(E) in the case of the Acquisition of any Person, the board of directors or similar governing body of such Person has approved such Acquisition;

 

(F) promptly following such Acquisition, the Administrative Agent and the Collateral Agent shall have received complete execution copies of each material document, instrument and agreement to be executed in connection with such Acquisition together with all lien search reports and lien release letters and other documents as the Administrative Agent and/or the Collateral Agent may require to evidence the termination of Liens on the assets or business to be acquired;

 

(G) not less than ten (10) Business Days prior to such Acquisition, Administrative Agent shall have received an acquisition summary with respect to the Person and/or business or division to be acquired, such summary to include a reasonably detailed description thereof (including financial information) and operating results (including financial statements for the most recent 12 month period for which they are available and as otherwise available), the terms and conditions, including economic terms, of the proposed Acquisition, and Borrower’s calculation of Pro Forma EBITDA, and a pro forma balance sheet of Borrower taking into account the effect of any proposed Acquisition on the most recent quarterly balance sheet per the Compliance Certificate of the Borrower;

 

(H) Administrative Agent shall have approved Borrower’s computation of Pro Forma EBITDA;

 

(I) consents have been obtained in favor of Collateral Agent, the Administrative Agent and the Lenders to the collateral assignment of rights and indemnities under the related acquisition documents and opinions of counsel for the Loan Parties and (if delivered to the Loan Parties) the selling party in favor of the Collateral Agent, the Administrative Agent and the Lenders have been delivered;

 

(J) the provisions of Section 10.9 have been satisfied;

 

(K) simultaneously with the closing of such Acquisition, the target company (if such Acquisition is structured as a purchase of Capital Securities) or the Loan Party (if such Acquisition is structured as a purchase of assets or a merger and a Loan Party is the surviving entity) executes and delivers to the Collateral Agent, the Administrative Agent and the Lenders such documents necessary to grant to the Collateral Agent a Lien in all of the assets (subject to any exceptions in the applicable Collateral Document) of such target company or surviving company, and their respective Subsidiaries, each in form and substance and with such perfection and priority as is satisfactory to the Collateral Agent and the Administrative Agent and, in the event of an Acquisition structured as a purchase of Capital Securities, the issuer, unless such issuer is a CFC, of such Capital Securities becomes a party to the Guaranty and Collateral Agreement as a Guarantor thereunder, in accordance with the terms thereof;

 

(L) if the Acquisition is structured as a merger involving the Borrower, the Borrower is the surviving entity, or if the Acquisition is structured as a merger involving a Guarantor, a Guarantor is the surviving entity; and

 

(M) Administrative Agent shall have received a summary of sources and uses of funds for any Acquisition at the time of the consummation of such Acquisition.

 

Permitted Lien means a Lien expressly permitted hereunder pursuant to Section 11.2.

 

Person means any natural person, corporation, partnership, trust, limited liability company, association, governmental authority or unit, or any other entity, whether acting in an individual, fiduciary or other capacity.

 

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Prime Rate means, for any day, the rate of interest in effect for such day as announced from time to time by Administrative Agent as its prime rate (whether or not such rate is actually charged by Administrative Agent), which is not intended to be Administrative Agent’s lowest or most favorable rate of interest at any one time.  Any change in the Prime Rate announced by Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change; provided that Administrative Agent shall not be obligated to give notice of any change in the Prime Rate.

 

PrivateBank is defined in the preamble of this Agreement.

 

Pro Forma EBITDA means a rolling four quarter EBITDA number when taking into account the most recent quarterly financial statements provided by the Borrower and adding to it for the same Computation Period a comparable EBITDA number from any Permitted Acquisition.

 

Pro Rata Share means:

 

                                                with respect to a Lender’s obligation to make Revolving Loans, participate in Letters of Credit, reimburse the Issuing Lenders, and receive payments of principal, interest, fees, costs, and expenses with respect thereto, (x) prior to the Revolving Commitment being terminated or reduced to zero, the percentage obtained by dividing (i) such Lender’s Revolving Commitment, by (ii) the aggregate Revolving Commitments of all Lenders and (y) from and after the time the Revolving Commitment has been terminated or reduced to zero, the percentage obtained by dividing (i) the aggregate unpaid principal amount of such Lender’s Revolving Outstandings by (ii) the aggregate unpaid principal amount of all Revolving Outstandings.

 

Regulation D means Regulation D of the FRB.

 

Regulation U means Regulation U of the FRB.

 

Reportable Event means a reportable event as defined in Section 4043 of ERISA and the regulations issued thereunder as to which the PBGC has not waived the notification requirement of Section 4043(a), or the failure of a Pension Plan to meet the minimum funding standards of Section 412 of the Code (without regard to whether the Pension Plan is a plan described in Section 4021(a)(2) of ERISA) or under Section 302 of ERISA.

 

Required Lenders means, at any time, Lenders whose Pro Rata Shares equal 662/3% as determined pursuant to clauses (x) and (y) of the definition of “Pro Rata Share”; provided that the Pro Rata Shares held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

 

Revolving Commitment means $75,000,000, as increased or reduced from time to time pursuant to Section 2.7 or Section 6.1.

 

Revolving Loan is defined in Section 2.1.1.

 

Revolving Loan Availability means the Revolving Commitment less Revolving Outstandings.

 

Revolving Outstandings means, at any time, the sum of (a) the aggregate principal amount of all outstanding Revolving Loans, plus (b) the Stated Amount of all Letters of Credit.

 

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SEC means the Securities and Exchange Commission or any other governmental authority succeeding to any of the principal functions thereof.

 

Senior Debt means, as of any date of determination and on a Consolidated basis in accordance with GAAP, all Debt of Borrower and its Subsidiaries other than Subordinated Debt.

 

Senior Debt to EBITDA Ratio means, as of the last day of any Fiscal Quarter, the ratio of (a) Senior Debt excluding, to the extent otherwise included in Senior Debt, Earn-Outs of the Borrower and its Subsidiaries to (b) EBITDA of the Borrower and its Subsidiaries for the Computation Period ending on such day.

 

Senior Note Documents means the Senior Note Agreement, the Senior Notes, the Senior Note Guaranty Agreement, the Security Documents, the Intercreditor Agreement, the Perfection Certificate, the Subordination Agreements and all other instruments, certificates and other documents now or hereafter executed and delivered by or on behalf of the Borrower or any of its Subsidiaries pursuant to or in connection with any of the foregoing or any of the transactions contemplated hereby, and any and all amendments, supplements and other modifications to any of the foregoing.

 

Senior Note Obligations means all of the monetary obligations owed by the Borrower or any Guarantor to any holder of Senior Notes under the Senior Note Agreement, the Senior Notes, the Guaranty Agreement (as defined in the Senior Note Agreement), the Collateral Documents or any other Senior Note Document, and related agreements, documents, and instruments, including, without limitation (but for certainty without duplication), (a) the outstanding principal amount of, accrued and unpaid interest on, and any unpaid Make-Whole Amount (as defined in the Senior Note Agreement) due with respect to, the Senior Notes, and (b) any other unpaid amounts (including amounts in respect of fees, expenses, indemnification and reimbursement) due from the Borrower or any of its Subsidiaries under any of the Senior Note Agreement, the Senior Notes, the Guaranty Agreement (as defined in the Senior Note Agreement), the Collateral Documents or any other Senior Note Document.

 

Senior Officer means, with respect to any Loan Party, any of the chief executive officer, the chief financial officer, the chief operating officer or the treasurer of such Loan Party.

 

Stated Amount means, with respect to any Letter of Credit at any date of determination, (a) the maximum aggregate amount available for drawing thereunder under any and all circumstances plus (b) the aggregate amount of all unreimbursed payments and disbursements under such Letter of Credit.

 

Subordinated Debt means any unsecured Debt of Borrower and its Subsidiaries which has subordination terms, covenants, pricing and other terms which have been approved in writing by the Administrative Agent and is (i) in form materially similar to Exhibit F hereto or (ii) is otherwise approved in writing by the Required Lenders.

 

Subordination Agreement (Rockford) means the agreement or agreements existing on the date hereof (and as in effect on the date hereof) and entered into for the purpose of subordinating Indebtedness owed by any of the Borrower or its Subsidiaries arising under the Rockford Note (as defined in the most recent, as of the date hereof, 10-Q of the Borrower filed with the SEC) to obligations owed by the Company and/or its Subsidiaries to The PrivateBank and Trust Company, as the lender in respect of the Loan and Security Agreement dated September 30, 2012.

 

Subordination Agreements means (i) the Subordination Agreement (Rockford) and (ii) each subordination agreement executed by a holder of Subordinated Debt in favor of the Secured Parties from time to time after the Closing Date in form and substance and on terms and conditions satisfactory to the Administrative Agent.

 

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Subsidiary means, as to any Person, any other Person in which such first Person or one or more of its Subsidiaries or such first 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 second Person, and any partnership or Joint Venture if more than a 50% interest in the profits or capital thereof is owned by such first Person or one or more of its Subsidiaries or such first 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); provided that, for purposes of clarification, no Construction Partnership shall constitute a Subsidiary hereunder.  Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a “Subsidiary” of the Borrower (excluding Onquest Heaters, Inc.).

 

Tangible Assets means all assets of the Borrower and its Subsidiaries, calculated in accordance with GAAP, excluding assets that are Intangible Assets.

 

Tangible Net Worth means, for the Borrower and its Subsidiaries, at any date, the Consolidated Net Worth, plus the aggregate amount of Subordinated Debt, less (i) patents, trademarks, copyrights, deferred charges and other Intangible Assets (including, but not limited to, unamortized discounts and expenses, organizational expenses, experimental and developmental expenses, but excluding prepaid expenses); less (ii) all obligations owed by, excluding amounts owed by the Borrower and its Subsidiaries, any Affiliate of the Borrower and its Subsidiaries to the Borrower or any of its Subsidiaries; and less (iii) all loans made by the Borrower and/or its Subsidiaries to such Person’s officers, stockholders, or employees, in each case, determined in accordance with GAAP.

 

Taxes means any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings, and any and all liabilities (including interest and penalties and other additions to taxes) with respect to the foregoing, but excluding Excluded Taxes.

 

Termination Date means the earlier to occur of (a) December 28, 2017, or (b) such other date on which the Commitments terminate pursuant to Section 5 or Section 13.

 

Termination Event means, with respect to a Pension Plan that is subject to Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of Borrower or any other member of the Controlled Group from such Pension Plan during a plan year in which Borrower or any other member of the Controlled Group was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or was deemed such under Section 4068(f) of ERISA, (c) the termination of such Pension Plan, the filing of a notice of intent to terminate the Pension Plan or the treatment of an amendment of such Pension Plan as a termination under Section 4041 of ERISA, (d) the institution by the PBGC of proceedings to terminate such Pension Plan or (e) any event or condition that might constitute grounds under Section 4042 of ERISA for the termination of, or appointment of a trustee to administer, such Pension Plan.

 

Total Plan Liability means, at any time, the present value of all vested and unvested accrued benefits under all Pension Plans, determined as of the then most recent valuation date for each Pension Plan, using PBGC actuarial assumptions for single employer plan terminations.

 

Type is defined in Section 2.2.1.

 

UCC is defined in the Guaranty and Collateral Agreement.

 

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Unfinanced Capital Expenditures means 65% of Capital Expenditures in a Computation Period minus sales of Fixed Assets during such period net of repayments of Debt of the Borrower and its Subsidiaries during such period, minus, as of the date of calculation, outstanding Debt incurred by the Borrower and/or its Subsidiaries with a final maturity exceeding 12 months from the date of issuance thereof, which Debt financed such Capital Expenditures, in each case, determined in accordance with GAAP.

 

Unfunded Liability means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Pension Plans exceeds the fair market value of all assets allocable to those benefits, all determined as of the then most recent valuation date for each Pension Plan, using PBGC actuarial assumptions for single employer plan terminations.

 

Withholding Certificate is defined in Section 7.6(d).

 

Wholly-Owned Subsidiary means, at any time, any Subsidiary one hundred percent of all of the Capital Securities (except directors’ qualifying shares) and voting interests of which are owned by any one or more of the Borrower and/or the Borrower’s other Wholly-Owned Subsidiaries at such time.

 

1.2          Other Interpretive Provisions.  (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

 

(b)           Section, Annex, Schedule and Exhibit references are to this Agreement unless otherwise specified.

 

(c)           The term “including” is not limiting and means “including without limitation.”

 

(d)           In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including.”

 

(e)           Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement and the other Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, supplements and other modifications thereto, but only to the extent such amendments, restatements, supplements and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such statute or regulation.

 

(f)            This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms.

 

(g)           This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to Administrative Agent, Borrower, the Lenders and the other parties thereto and are the products of all parties.  Accordingly, they shall not be construed against Administrative Agent or the Lenders merely because of Administrative Agent’s or Lenders’ involvement in their preparation.

 

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SECTION 2                                                       COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES.

 

2.1          Commitments.  On and subject to the terms and conditions of this Agreement, each of the Lenders, severally and for itself alone, agrees to make loans to, and to issue or participate in letters of credit for the account of, Borrower as follows:

 

2.1.1            Revolving Loan Commitment.  Each Lender with a Revolving Loan Commitment agrees to make loans on a revolving basis (“Revolving Loans”) from time to time until the Termination Date in such Lender’s Pro Rata Share of such aggregate amounts as Borrower may request from all Lenders; provided that the Revolving Outstandings will not at any time exceed Revolving Loan Availability.

 

2.1.2            RESERVED

 

2.1.3            L/C Commitment.  Subject to Section 2.3.1, each Issuing Lender agrees to issue letters of credit, in each case containing such terms and conditions as are permitted by this Agreement and are reasonably satisfactory to such Issuing Lender (each, a “Letter of Credit”), at the request of and for the account of Borrower from time to time before the scheduled Termination Date and, as more fully set forth in Section 2.3.2, each Lender agrees to purchase a participation in each such Letter of Credit; provided that (a) the aggregate Stated Amount of all Letters of Credit shall not at any time exceed the L/C Sublimit and (b) the Revolving Outstandings shall not at any time exceed Revolving Loan Availability.

 

2.2          Loan Procedures.

 

2.2.1            Various Types of Loans.  Each Revolving Loan shall be divided into tranches which are either a Base Rate Loan or a LIBOR Loan (each a “type” of Loan), as Borrower shall specify in the related notice of borrowing or conversion pursuant to Section 2.2.2 or 2.2.3.  LIBOR Loans having the same Interest Period which expire on the same day are sometimes called a “Group” or collectively “Groups”.  Base Rate Loans and LIBOR Loans may be outstanding at the same time, provided that not more than three (3) different Groups of LIBOR Loans shall be outstanding at any one time.  All borrowings, conversions and repayments of Loans shall be effected so that each Lender will have a ratable share (according to its Pro Rata Share) of all types and Groups of Loans.

 

2.2.2            Borrowing Procedures.

 

(a)           Borrower shall give written notice (each such written notice, a “Notice of Borrowing”) substantially in the form of Exhibit D or telephonic notice (followed immediately by a Notice of Borrowing) to Administrative Agent of each proposed borrowing not later than (a) in the case of a Base Rate borrowing, 10:00 A.M., Chicago time, on the proposed date of such borrowing, and (b) in the case of a LIBOR borrowing, 10:00 A.M., Chicago time, at least three (3) Business Days prior to the proposed date of such borrowing.  Each such notice shall be effective upon receipt by Administrative Agent, shall be irrevocable, and shall specify the date, amount and type of borrowing and, in the case of a LIBOR borrowing, the initial Interest Period therefor.  Promptly upon receipt of such notice, Administrative Agent shall advise each Lender thereof.  Not later than 1:00 P.M., Chicago time, on the date of a proposed borrowing, each Lender shall provide Administrative Agent at the office specified by Administrative Agent with immediately available funds covering such Lender’s Pro Rata Share of such borrowing and, so long as Administrative Agent has not received written notice that the conditions precedent set forth in Section 12 with respect to such borrowing have not been satisfied, Administrative Agent shall pay over the funds received by Administrative Agent to Borrower on the requested borrowing date.  Each borrowing shall be on a Business Day.  Each Base Rate borrowing shall be in an aggregate amount of at least $5,000,000, and an integral multiple of $1,000,000, and each LIBOR borrowing shall be in an aggregate amount of at least $5,000,000 and an integral multiple of at least $1,000,000.

 

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(b)           Unless payment is otherwise timely made by Borrower, the becoming due of any Obligations (whether principal, interest, fees or other charges) shall be deemed to be a request for a Base Rate borrowing of a Revolving Loan on the due date, in the amount of such Obligations. The proceeds of such Revolving Loans may be disbursed as direct payment of the relevant Obligation. In addition, Administrative Agent may, at its option, charge any such Obligations against any operating, investment or other account of Borrower maintained with Administrative Agent or any of its Affiliates.  In no such circumstance shall Borrower be charged more than the amount of such Obligations.

 

2.2.3            Conversion and Continuation Procedures.  (a) Subject to Section 2.2.1, Borrower may, upon irrevocable written notice to Administrative Agent in accordance with clause (b) below:

 

(B)          elect, as of any Business Day, to convert any Loans (or any part thereof in an aggregate amount not less than $5,000,000  a higher integral multiple of $1,000,000) into Loans of the other type; or

 

(C)          elect, as of the last day of the applicable Interest Period, to continue any LIBOR Loans having Interest Periods expiring on such day (or any part thereof in an aggregate amount not less than $5,000,000 or a higher integral multiple of $1,000,000) for a new Interest Period;

 

provided that after giving effect to any prepayment, conversion or continuation, the aggregate principal amount of each Group of LIBOR Loans shall be at least $5,000,000 and an integral multiple of $1,000,000.

 

(b)           Borrower shall give written notice (each such written notice, a “Notice of Conversion/Continuation”) substantially in the form of Exhibit E or telephonic notice (followed immediately by a Notice of Conversion/Continuation) to Administrative Agent of each proposed conversion or continuation not later than (i) in the case of conversion into Base Rate Loans, 10:00 A.M., Chicago time, on the proposed date of such conversion and (ii) in the case of conversion into or continuation of LIBOR Loans, 10:00 A.M., Chicago time, at least three (3) Business Days prior to the proposed date of such conversion or continuation, specifying in each case:

 

(A)          the proposed date of conversion or continuation;

 

(B)          the aggregate amount of Loans to be converted or continued;

 

(C)          the type of Loans resulting from the proposed conversion or continuation; and

 

(D)          in the case of conversion into, or continuation of, LIBOR Loans, the duration of the requested Interest Period therefor.

 

(c)           If upon the expiration of any Interest Period applicable to LIBOR Loans, Borrower has failed to select timely a new Interest Period to be applicable to such LIBOR Loans, Borrower shall be deemed to have elected to convert such LIBOR Loans into Base Rate Loans effective on the last day of such Interest Period.

 

(d)           Administrative Agent will promptly notify each Lender of its receipt of a notice of conversion or continuation pursuant to this Section 2.2.3 or, if no timely notice is provided by Borrower, of the details of any automatic conversion.

 

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(e)           Any conversion of a LIBOR Loan on a day other than the last day of an Interest Period therefor shall be subject to Section 8.4.

 

2.3          Letter of Credit Procedures.

 

2.3.1            L/C Applications.  Borrower shall execute and deliver to each Issuing Lender each Master Letter of Credit Agreement from time to time in effect with respect to such Issuing Lender.  Borrower shall give notice to Administrative Agent and the applicable Issuing Lender of the proposed issuance of each Letter of Credit on a Business Day which is at least three (3) Business Days (or such lesser number of days as Administrative Agent and such Issuing Lender shall agree in any particular instance in their sole discretion) prior to the proposed date of issuance of such Letter of Credit.  Each such notice shall be accompanied by an L/C Application, duly executed by Borrower and in all respects satisfactory to Administrative Agent and the applicable Issuing Lender, together with such other documentation as Administrative Agent or such Issuing Lender may request in support thereof, it being understood that each L/C Application shall specify, among other things, the date on which the proposed Letter of Credit is to be issued, the expiration date of such Letter of Credit which shall not be later than the scheduled Termination Date unless such Letter of Credit is Cash Collateralized, whether the Letter of Credit is for financial or performance purposes, and whether such Letter of Credit is to be transferable in whole or in part.  Any Letter of Credit outstanding after the scheduled Termination Date which is Cash Collateralized for the benefit of an Issuing Lender shall be the sole responsibility of such Issuing Lender.  So long as the applicable Issuing Lender has not received written notice that the conditions precedent set forth in Section 12 with respect to the issuance of such Letter of Credit have not been satisfied, such Issuing Lender shall issue such Letter of Credit on the requested issuance date.  Each Issuing Lender shall promptly advise Administrative Agent of the issuance of each Letter of Credit and of any amendment thereto, extension thereof or event or circumstance changing the amount available for drawing thereunder.  In the event of any inconsistency between the terms of any Master Letter of Credit Agreement, any L/C Application and the terms of this Agreement, the terms of this Agreement shall control.  Upon issuance, the Issuing Lender will determine whether each Letter of Credit is a financial or a performance Letter of Credit and will so notify the Borrower and the Administrative Agent.

 

2.3.2            Participations in Letters of Credit.  Concurrently with the issuance of each Letter of Credit, the applicable Issuing Lender shall be deemed to have sold and transferred to each Lender with a Revolving Loan Commitment, and each such Lender shall be deemed irrevocably and unconditionally to have purchased and received from such Issuing Lender, without recourse or warranty, an undivided interest and participation, to the extent of such Lender’s Pro Rata Share, in such Letter of Credit and Borrower’s reimbursement obligations with respect thereto.  If Borrower does not pay any reimbursement obligation when due, Borrower shall be deemed to have immediately requested that the Lenders make a Revolving Loan which is a Base Rate Loan in a principal amount equal to such reimbursement obligations.  Administrative Agent shall promptly notify such Lenders of such deemed request and, without the necessity of compliance with the requirements of Section 2.2.2, Section 12.2 or otherwise such Lender shall make available to Administrative Agent its Pro Rata Share of such Loan.  The proceeds of such Loan shall be paid over by Administrative Agent to the applicable Issuing Lender for the account of Borrower in satisfaction of such reimbursement obligations.  For the purposes of this Agreement, the unparticipated portion of each Letter of Credit shall be deemed to be the applicable Issuing Lender’s “participation” therein.  Each Issuing Lender hereby agrees, upon request of Administrative Agent or any Lender, to deliver to Administrative Agent or such Lender a list of all outstanding Letters of Credit issued by such Issuing Lender, together with such information related thereto as Administrative Agent or such Lender may reasonably request.

 

2.3.3            Reimbursement Obligations.  (a)  Borrower hereby unconditionally and irrevocably agrees to reimburse each Issuing Lender for each payment or disbursement made by such

 

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Issuing Lender under any Letter of Credit honoring any demand for payment made by the beneficiary thereunder, in each case on the date that such payment or disbursement is made.  Any amount not reimbursed on the date of such payment or disbursement shall bear interest from the date of such payment or disbursement to the date that the applicable Issuing Lender is reimbursed by Borrower therefor, payable on demand, at a rate per annum equal to the Base Rate from time to time in effect plus the Base Rate Margin from time to time in effect plus, beginning on the third Business Day after receipt of notice from such Issuing Lender of such payment or disbursement, 2%.  Each Issuing Lender shall notify Borrower and Administrative Agent whenever any demand for payment is made under any Letter of Credit by the beneficiary thereunder; provided that the failure of an Issuing Lender to so notify Borrower or Administrative Agent shall not affect the rights of such Issuing Lender or the Lenders in any manner whatsoever.

 

(b)           Borrower’s reimbursement obligations hereunder shall be irrevocable and unconditional under all circumstances, including (a) any lack of validity or enforceability of any Letter of Credit, this Agreement or any other Loan Document, (b) the existence of any claim, set-off, defense or other right which any Loan Party may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), Administrative Agent, the Issuing Lenders, any Lender or any other Person, whether in connection with any Letter of Credit, this Agreement, any other Loan Document, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between any Loan Party and the beneficiary named in any Letter of Credit), (c) the validity, sufficiency or genuineness of any document which an Issuing Lender has determined complies on its face with the terms of the applicable Letter of Credit, even if such document should later prove to have been forged, fraudulent, invalid or insufficient in any respect or any statement therein shall have been untrue or inaccurate in any respect, or (d) the surrender or impairment of any security for the performance or observance of any of the terms hereof.  Without limiting the foregoing, no action or omission whatsoever by Administrative Agent or any Lender (excluding any Lender in its capacity as an Issuing Lender) under or in connection with any Letter of Credit or any related matters shall result in any liability of Administrative Agent or any Lender to Borrower, or relieve Borrower of any of its obligations hereunder to any such Person.

 

2.3.4            Funding by Lenders to Issuing Lender.  If any Issuing Lender makes any payment or disbursement under any Letter of Credit and (a) Borrower has not reimbursed such Issuing Lender in full for such payment or disbursement by 10:00 A.M., Chicago time, on the date of such payment or disbursement, (b) a Revolving Loan may not be made in accordance with Section 2.3.2 or (c) any reimbursement received by such Issuing Lender from Borrower is or must be returned or rescinded upon or during any bankruptcy or reorganization of Borrower or otherwise, each other Lender with a Revolving Loan Commitment shall be obligated to pay to Administrative Agent for the account of such Issuing Lender, in full or partial payment of the purchase price of its participation in such Letter of Credit, its Pro Rata Share of such payment or disbursement (but no such payment shall diminish the obligations of Borrower under Section 2.3.3), and, upon notice from such Issuing Lender, Administrative Agent shall promptly notify each other Lender thereof.  Each other Lender irrevocably and unconditionally agrees to so pay to Administrative Agent in immediately available funds for the applicable Issuing Lender’s account the amount of such other Lender’s Pro Rata Share of such payment or disbursement.  If and to the extent any Lender shall not have made such amount available to Administrative Agent by 2:00 P.M., Chicago time, on the Business Day on which such Lender receives notice from Administrative Agent of such payment or disbursement (it being understood that any such notice received after noon, Chicago time, on any Business Day shall be deemed to have been received on the next following Business Day), such Lender agrees to pay interest on such amount to Administrative Agent for the applicable Issuing Lender’s account forthwith on demand, for each day from the date such amount was to have been delivered to Administrative Agent to the date such amount is paid, at a rate per annum equal to (a) for the first three days after demand, the Federal Funds Rate from time to time in 

 

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effect and (b) thereafter, the Base Rate from time to time in effect.  Any Lender’s failure to make available to Administrative Agent its Pro Rata Share of any such payment or disbursement shall not relieve any other Lender of its obligation hereunder to make available to Administrative Agent such other Lender’s Pro Rata Share of such payment, but no Lender shall be responsible for the failure of any other Lender to make available to Administrative Agent such other Lender’s Pro Rata Share of any such payment or disbursement.

 

2.4          Commitments Several.  The failure of any Lender to make a requested Loan on any date shall not relieve any other Lender of its obligation (if any) to make a Loan on such date, but no Lender shall be responsible for the failure of any other Lender to make any Loan to be made by such other Lender.

 

2.5          Certain Conditions.  Except as otherwise provided in Section 2.3.4 of this Agreement, no Lender shall have an obligation to make any Loan, or to permit the continuation of or any conversion into any LIBOR Loan, and no Issuing Lender shall have any obligation to issue any Letter of Credit, if an Event of Default or Default exists.

 

2.6          Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

2.6.1            Fees shall cease to accrue on the unfunded portion of the Revolving Commitment of such Defaulting Lender pursuant to Section 5.1;

 

2.6.2            If any or Letters of Credit are outstanding at the time a Lender becomes a Defaulting Lender then:

 

(a)           all or any part of the Defaulting Lender’s obligation to participate in Letters of Credit shall be reallocated among the non-Defaulting Lenders in accordance with their respective Pro Rata Shares as determined pursuant to clause (a) of the definition of “Pro Rata Share” but only to the extent (x) the sum of all non-Defaulting Lenders’ Revolving Outstandings plus such Defaulting Lender’s obligation to participate in Letters of Credit does not exceed the total of all non-Defaulting Lenders’ Commitments and (y) the conditions set forth in Section 12.2 are satisfied at such time; and

 

(b)           if the reallocation described in clause (a) above cannot, or can only partially, be effected, Borrower shall within one Business Day following notice by Administrative Agent Cash Collateralize such Defaulting Lender’s obligation to participate in Letters of Credit (after giving effect to any partial reallocation pursuant to clause (a) above) in accordance with the procedures set forth in Section 2.3.1 for so long as such obligation to participate in Letters of Credit is outstanding;

 

(c)           if Borrower Cash Collateralizes any portion of such Defaulting Lender’s obligation to participate in Letters of Credit pursuant to Section 2.6.2, Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 5.2 with respect to such Defaulting Lender’s obligation to participate in Letters of Credit during the period such Defaulting Lender’s obligation to participate in Letters of Credit is Cash Collateralized;

 

(d)           if the obligation to participate in Letters of Credit of the non-Defaulting Lenders is reallocated pursuant to Section 2.6.2, then the fees payable to the Lenders pursuant to Section 5.1 and Section 5.2 shall be adjusted in accordance with such non-Defaulting Lenders’ Pro Rata Shares (as determined pursuant to clause (a) of the definition of “Pro Rata Share”); or

 

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(e)           if any Defaulting Lender’s obligation to participate in Letters of Credit is neither Cash Collateralized nor reallocated pursuant to Section 2.6.2, then, without prejudice to any rights or remedies of any Issuing Lender or any Lender hereunder, all letter of credit fees payable under Section 5.2 with respect to such Defaulting Lender’s obligation to participate in Letters of Credit shall be payable to the applicable Issuing Lender until such obligation to participate in Letters of Credit is cash collateralized and/or reallocated; and

 

2.6.3            So long as any Lender is a Defaulting Lender, no Issuing Lender shall be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by Borrower in accordance with Section 2.6.2, and participating interests in any such newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.6.2(a) (and Defaulting Lenders shall not participate therein).

 

2.6.4            In the event that Administrative Agent, Borrower, and the applicable Issuing Lender(s) each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the obligations to participate in Letters of Credit of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders as Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Pro Rata Share (as determined pursuant to clause (a) of the definition of “Pro Rata Share”).

 

2.6.5            Any amount payable to a Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise and including any amount that would otherwise be payable to such Defaulting Lender pursuant to Section 7.5 but excluding Section 8.7(b)) shall, in lieu of being distributed to such Defaulting Lender, be retained by Administrative Agent in a segregated account and, subject to any applicable requirements of law, be applied at such time or times as may be determined by Administrative Agent (i) first, to the payment of any amounts owing by such Defaulting Lender to Administrative Agent hereunder, (ii) second, pro rata, to the payment of any amounts owing by such Defaulting Lender to the Issuer Lender(s), (iii) third, to the funding of any Revolving Loan or the funding or cash collateralization of any participating interest in any Letter of Credit in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by Administrative Agent, (iv) fourth, if so determined by Administrative Agent and Borrower, held in such account as cash collateral for future funding obligations of the Defaulting Lender under this Agreement, (v) fifth, pro rata, to the payment of any amounts owing to Borrower or the Lenders as a result of any judgment of a court of competent jurisdiction obtained by Borrower or any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, and (vi) sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided, that if such payment is (x) a prepayment of the principal amount of any Loans or reimbursement obligations in respect of draws under Letters of Credit with respect to which the Issuing Lender has funded its participation obligations and (y) made at a time when the conditions set forth in Section 12.2 are satisfied, such payment shall be applied solely to prepay the Loans of, and reimbursement obligations owed to, all Revolving Lenders that are not Defaulting Lenders pro rata prior to being applied to the prepayment of any Loans, or reimbursement obligations owed to, any Defaulting Lender.

 

2.6.6            No Defaulting Lender shall have any right to approve or disapprove any amendment, waiver, consent or any other action the Lenders or the Required Lenders have taken or may take hereunder (including any consent to any amendment or waiver pursuant to Section 15.1), provided that any waiver, amendment or modification requiring the consent of all Lenders or each directly affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender.

 

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2.7          Incremental Facility.

 

2.7.1            Incremental Revolving Commitment Increases.  Subject to the terms and conditions set forth herein, the Borrower shall have the right, at any time and from time to time prior to the Termination Date, to incur additional indebtedness under this Credit Agreement in the form of an increase to the Revolving Commitment Amount (each, a “Revolving Facility Increase”) that, (a) all Revolving Loans made pursuant to any Revolving Facility Increase shall be deemed to be Revolving Loans for all purposes hereof except as otherwise provided in this Section 2.7 and (b) for the avoidance of doubt, all Revolving Loans made pursuant to any Revolving Facility Increase will be held ratably, borrowed, repaid and otherwise treated as necessary to provide for pro rata borrowing and repayment with respect to other Revolving Loans made pursuant to the Revolving Loan Facility; provided that the aggregate principal amount of all additional Commitments that have been added pursuant to this Section 2.7 (whether or not still outstanding or in effect) shall not exceed $50,000,000 (“Incremental Increase Amount”).

 

2.7.2            Terms and Conditions.  The following terms and conditions shall apply to any Revolving Facility Increase (i) no Default or Event of Default shall exist immediately prior to or after giving effect to such Revolving Facility Increase, and, after giving effect to such Revolving Facility Increase on a pro forma basis, the Borrower shall be in compliance with the financial covenants set forth herein based on the financial information most recently delivered to the Administrative Agent, (ii) the terms and documentation in respect of any Revolving Facility Increase shall be consistent with the  Revolving Loans, (iii) any loans made pursuant to a Revolving Facility Increase shall be incurred by the Borrower and will be secured and guaranteed on a pari passu basis with the other obligations of the Borrower, (iv) any such Revolving Facility Increase shall have a maturity date on the Termination Date, (v) any Lenders providing such Revolving Facility Increase shall be entitled to the same voting rights as the existing Lenders, (vi) any such Revolving Facility Increase shall be in a minimum principal amount of (A) $5,000,000 and integral multiples of $5,000,000 in excess thereof, (vii) the proceeds of any such Revolving Facility Increase will be used for the purposes set forth in herein, (viii) the Borrower shall execute a promissory note in favor of any new Lender or any existing Lender requesting a promissory note, as applicable, who provides a Revolving Facility Increase or whose Revolving Commitment is increased, as applicable, pursuant to this Section, (ix) the conditions to Extensions of Credit herein shall have been satisfied,  (x) the Administrative Agent shall have received (A) an opinion or opinions (including, if reasonably requested by the Administrative Agent, local counsel opinions) of counsel for the Borrower, addressed to the Administrative Agent and the Lenders, in form and substance reasonably acceptable to the Administrative Agent, (B) any authorizing corporate documents as the Administrative Agent may reasonably request and (C) if applicable, a duly executed Notice of Borrowing, and (xi) the Administrative Agent shall have received from a Responsible Officer of the Borrower updated financial projections and an officer’s certificate, in each case, in form and substance reasonably satisfactory to the Administrative Agent, demonstrating that, (A) no Default or Event of Default shall exist immediately prior to or after giving effect to such Revolving Facility Increase, and (B) after giving effect to any such Revolving Facility Increase on a pro forma basis, the Borrower will be in compliance with the financial covenants set forth herein.  Revolving Facility Increases shall be available to the Borrower notwithstanding any previous election by the Borrower to reduce the Revolving Committed Amount.

 

2.7.3            Revolving Facility Increase.  In connection with the closing of any Revolving Facility Increase, the outstanding Revolving Loans and Participation Interests shall be reallocated by causing such fundings and repayments (and shall not be subject to any processing and/or recordation fees) among the Revolving Lenders (and the Borrower shall be responsible for any costs of the 

 

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Administrative Agent arising hereunder resulting from such reallocation and repayments and for any payments owing under Section 15.5 of Revolving Loans as necessary such that, after giving effect to such Revolving Facility Increase, each Revolving Lender will hold Revolving Loans and Participation Interests based on its Revolving Commitment Percentage (after giving effect to such Revolving Facility Increase).

 

2.7.4            Participation.  Existing Lenders may be offered the opportunity to provide any such Revolving Facility Increase, but each such Lender shall have no obligation to provide all or any portion of such Revolving Facility Increase.  The Borrower may invite other banks, financial institutions and investment funds reasonably acceptable to the Administrative Agent (such consent not to be unreasonably withheld or delayed) to join this Credit Agreement as Lenders hereunder for any portion of such Revolving Facility Increase; provided that such other banks, financial institutions and investment funds shall enter into such joinder agreements to give effect thereto as the Administrative Agent may reasonably request.

 

2.7.5            Amendments.  The Administrative Agent is authorized to enter into, on behalf of the Lenders, any amendment to this Credit Agreement or any other Credit Document or any joinder agreements as may be necessary or advisable to incorporate the terms of any such Revolving Facility Increase.

 

SECTION 3                                                       EVIDENCING OF LOANS.

 

3.1          Notes.  At a Lender’s request, the Loans of such Lender shall be evidenced by a Note, with appropriate insertions, payable to the order of such Lender in a face principal amount equal to such Lender’s Revolving Loan Commitment.

 

3.2          Recordkeeping.  Administrative Agent, on behalf of each Lender, shall record in its records, the date and amount of each Loan made by each Lender, each repayment or conversion thereof and, in the case of each LIBOR Loan, the dates on which each Interest Period for such Loan shall begin and end.  The aggregate unpaid principal amount so recorded shall be rebuttably presumptive evidence of the principal amount of the Loans owing and unpaid.  The failure to so record any such amount or any error in so recording any such amount shall not, however, limit or otherwise affect the Obligations of Borrower hereunder or under any Note to repay the principal amount of the Loans hereunder, together with all interest accruing thereon.

 

SECTION 4                                                       INTEREST.

 

4.1          Interest Rates.  Borrower promises to pay interest on the unpaid principal amount of each Loan for the period commencing on the date of such Loan until such Loan is paid in full as follows:

 

(a)           at all times while such Loan is a Base Rate Loan, at a rate per annum equal to the sum of the Base Rate from time to time in effect plus the Base Rate Margin from time to time in effect; and

 

(b)           at all times while such Loan is a LIBOR Loan, at a rate per annum equal to the sum of the LIBOR Rate applicable to each Interest Period for such Loan plus the LIBOR Margin from time to time in effect;

 

provided that at any time an Event of Default exists, unless the Required Lenders otherwise consent, the interest rate applicable to each Loan shall be increased by 2% (and, in the case of Obligations not bearing interest, such Obligations shall bear interest at the Base Rate applicable to Revolving Loans plus 2%), provided  further that such increase may thereafter be rescinded by the Required Lenders, notwithstanding 

 

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Section 15.1.  Notwithstanding the foregoing, upon the occurrence of an Event of Default under Sections 13.1.1 or 13.1.4, such increase shall occur automatically.  In no event shall interest payable by Borrower to any Lender hereunder exceed the maximum rate permitted under applicable law, and if any such provision of this Agreement is in contravention of any such law, such provision shall be deemed modified to limit such interest to the maximum rate permitted under such law.

 

4.2          Interest Payment Dates.  Accrued interest on each Base Rate Loan shall be payable in arrears on the last day of each calendar  quarter and at maturity.  Accrued interest on each LIBOR Loan shall be payable on the last day of each Interest Period relating to such Loan, upon a prepayment of such Loan, and at maturity.  After maturity, and at any time an Event of Default exists, accrued interest on all Loans shall be payable on demand.

 

4.3          Setting and Notice of LIBOR Rates.  The applicable LIBOR Rate for each Interest Period shall be determined by Administrative Agent, and notice thereof shall be given by Administrative Agent promptly to Borrower and each Lender.  Each determination of the applicable LIBOR Rate by Administrative Agent shall be conclusive and binding upon the parties hereto, in the absence of demonstrable error.  Administrative Agent shall, upon written request of Borrower or any Lender, deliver to Borrower or such Lender a statement showing the computations used by Administrative Agent in determining any applicable LIBOR Rate hereunder.

 

4.4          Computation of Interest.  Interest shall be computed for the actual number of days elapsed on the basis of a year of (a) 360 days for interest calculated at the LIBOR Rate and (b) 365/366 days for interest calculated at the Base Rate.  The applicable interest rate for each Base Rate Loan shall change simultaneously with each change in the Base Rate.

 

SECTION 5                                                       FEES.

 

5.1          Non-Use Fee.  Borrower agrees to pay to Administrative Agent for the account of each Lender (except as provided in Section 2.6) a non-use fee, for the period from the Closing Date to the Termination Date, at the Non-Use Fee Rate in effect from time to time of such Lender’s Pro Rata Share (as adjusted from time to time) of the unused amount of the Revolving Commitment.  For purposes of calculating usage under this Section, the Revolving Commitment shall be deemed used to the extent of Revolving Outstandings.  Such non-use fee shall be payable in arrears on the last day of each calendar quarter and on the Termination Date for any period then ending for which such non-use fee shall not have previously been paid.  The non-use fee shall be computed for the actual number of days elapsed on the basis of a year of 360 days.

 

5.2          Letter of Credit Fees.  (a)  Except as provided in Section 2.6, Borrower agrees to pay to Administrative Agent for the account of each Lender (except as provided in Section 2.6) a letter of credit fee for each Letter of Credit equal to the L/C Fee Rate in effect from time to time of such Lender’s Pro Rata Share (as adjusted from time to time) of the undrawn amount of such Letter of Credit (computed for the actual number of days elapsed on the basis of a year of 360 days); provided that, unless the Required Lenders otherwise consent, the rate applicable to each Letter of Credit shall be increased by 2% at any time that an Event of Default exists.  Such letter of credit fee shall be payable in arrears on the last  day of each calendar quarter and on the Termination Date (or such later date on which such Letter of Credit expires or is terminated) for the period from the date of the issuance of each Letter of Credit (or the last day on which the letter of credit fee was paid with respect thereto) to the date such payment is due or, if earlier, the date on which such Letter of Credit expired or was terminated.

 

(b)           In addition, with respect to each Letter of Credit, except as provided in Section 2.6, Borrower agrees to pay to any Issuing Lender, for its own account, (i) such fees and expenses as such Issuing Lender customarily requires in connection with the issuance, negotiation, processing and/or administration of letters of credit in similar situations and (ii) a letter of credit fronting fee in the amount and at the times agreed to by Borrower and such Issuing Lender.

 

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5.3          Administrative Agent’s Fees.  Borrower agrees to pay to Administrative Agent such agent’s fees as are mutually agreed to from time to time by Borrower and Administrative Agent including the fees set forth in the Agent Fee Letter.

 

SECTION 6                                                       REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT; PREPAYMENTS.

 

6.1          Reduction or Termination of the Revolving Commitment.

 

6.1.1            Voluntary Reduction or Termination of the Revolving Commitment.  Borrower may from time to time on at least five (5) Business Days’ prior written notice received by Administrative Agent (which shall promptly advise each Lender thereof) permanently reduce the Revolving Commitment to an amount not less than the Revolving Outstandings.  Any such reduction shall be in an amount not less than $5,000,000 or a higher integral multiple of $1,000,000.  Concurrently with any reduction of the Revolving Commitment to zero, Borrower shall pay all interest on the Revolving Loans, all non-use fees and all letter of credit fees and shall Cash Collateralize in full all obligations arising with respect to the Letters of Credit.

 

6.1.2            Mandatory Reductions of Revolving Commitment.  To the extent that in any Fiscal Year the Borrower and its Subsidiaries sell, lease, transfer or otherwise dispose of more than 20% of the Tangible Assets of the Borrower and its Subsidiaries as of the end of the prior Fiscal Year, then (i) the Borrower shall prepay the amount of Revolving Outstandings subject to the Intercreditor Agreement, (ii) there shall be a mandatory reduction of the Revolving Commitment to $75,000,000 to be allocated among the Lenders based on their Pro Rata Share at the time of such mandatory reduction, and (iii) the Borrower’s rights under Section 2.7 herein shall terminate.

 

6.1.3            All Reductions of the Revolving Commitment.  All reductions of the Revolving Commitment shall reduce the Commitments ratably among the Lenders according to their respective Pro Rata Shares.

 

6.2          Prepayments.

 

6.2.1            Voluntary Prepayments.  Borrower may from time to time prepay the Loans in whole or in part; provided that Borrower shall give Administrative Agent (which shall promptly advise each Lender) notice thereof not later than 10:00 A.M., Chicago time, on the day of such prepayment (which shall be a Business Day), specifying the Loans to be prepaid and the date and amount of prepayment.  Any such partial prepayment shall be in an amount equal to $5,000,000 or a higher integral multiple of $1,000,000.

 

6.2.2            Net Cash Proceeds of Asset Dispositions; Net Cash Proceeds of Issuance of Capital Securities; and Net Cash Proceeds of Incurrence of Debt.

 

(a)           The Revolving Commitment shall be reduced by the amount of any prepayments required to be made to the Administrative Agent and/or the Lenders pursuant to the following clauses (i) through (iii):

 

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(i)            Net Cash Proceeds of Asset Dispositions.  The Borrower shall prepay the Loans in an amount equal to the Modified Ratable Portion if the Borrower or any Loan Party shall at any time or from time to time make an Asset Disposition with respect to any property that, pursuant to Section 11.8, results in a requirement to prepay the Loans and that gives rise to a Modified Ratable Portion; provided that in the case of any such Asset Disposition, so long as no Default or Event of Default then exists or would result therefrom, if the Borrower states in its notice of such event that the Borrower or the relevant other Loan Party intends to reinvest, within 180 days of the applicable Asset Disposition, (i) the Net Cash Proceeds thereof, in the event that the assets subject to such Asset Disposition constituted Collateral, in property, all or substantially all (as determined by the Collateral Agent) of which property is purchased with such Net Cash Proceeds shall be made subject to the Lien of the applicable Loan Documents in favor of the Collateral Agent or (ii) the Net Cash Proceeds thereof, in the event that the assets subject to such Asset Disposition did not constitute Collateral, in assets similar to the assets which were subject to such Asset Disposition or in property which is otherwise used or useful in the business of the Borrower and the other Loan Parties and, in each case, such property is located within the United States, then the Borrower shall not be required to prepay the Loans in respect of such Net Cash Proceeds to the extent such Net Cash Proceeds are actually reinvested in such assets or property within such 180 day period or committed to be reinvested within 90 days thereafter.  Promptly after the end of such 180 day period (or such 90 day period, if applicable), the Borrower shall notify the Administrative Agent as to whether the Borrower or such other Loan Party has reinvested such Net Cash Proceeds in such similar assets or property, and, to the extent such Net Cash Proceeds have not been so reinvested, the Borrower shall prepay the Loans in an amount equal to the Modified Ratable Portion.  If the Administrative Agent or the Collateral Agent so request, all proceeds of such Asset Disposition shall be deposited with the Collateral Agent (or its agent) and held by it as Collateral.

 

(ii)           Net Cash Proceeds of Issuance of Capital Securities.  The Borrower shall the prepay Loans in an amount equal to the Modified Ratable Portion if, after the Closing Date, the Borrower or any Subsidiary shall receive Net Cash Proceeds from any issuance of Capital Securities of any Loan Party (excluding (x) any issuance of Capital Securities pursuant to any employee or director option program, benefit plan or compensation program and (y) any issuance by a Subsidiary to the Borrower or another Loan Party) that gives rise to a Modified Ratable Portion and a Default or Event of Default then exists.  The Borrower acknowledges that its performance hereunder shall not limit the rights and remedies of the Loan Parties for any breach of the terms of this Agreement or the other Loan Documents.

 

(iii)          Net Cash Proceeds of Incurrence of Debt.  The Borrower shall prepay the Loans in an amount equal to the Modified Ratable Portion, after the Closing Date, the Borrower or any Subsidiary shall issue any Debt of any Loan Party (excluding Debt permitted by Section 11.1 hereof) that gives rise to a Modified Ratable Portion and Default or Event of Default then exists or would result therefrom.  The Borrower acknowledges that its performance hereunder shall not limit the rights and remedies of the Loan Parties for any breach of Section 11.1 hereof or any other terms of the Loan Documents.

 

(b)           If on any day on which the Revolving Commitment is reduced pursuant to Section 6.2.2(a) the Revolving Outstandings exceeds the Revolving Commitment, Borrower shall immediately first prepay Revolving Loans and second Cash Collateralize the outstanding Letters of Credit, in an aggregate amount sufficient to eliminate such excess.

 

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6.3          Manner of Prepayments.

 

6.3.1            All Prepayments.  Each voluntary partial prepayment shall be in a principal amount of $5,000,000 or a higher integral multiple of $1,000,000.  Any partial prepayment of a Group of LIBOR Loans shall be subject to the proviso to Section 2.2.3(a).  Any prepayment of a LIBOR Loan on a day other than the last day of an Interest Period therefor shall include interest on the principal amount being repaid and shall be subject to Section 8.4.  Except as otherwise provided by this Agreement, all principal payments in respect of the Loans shall be applied first, to repay outstanding Base Rate Loans and then to repay outstanding LIBOR Rate Loans in direct order of Interest Period maturities.

 

6.4          Repayments.

 

The Revolving Loans of each Lender shall be paid in full and the Revolving Commitment shall terminate on the Termination Date.

 

SECTION 7                                                       MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.

 

7.1          Making of Payments.  All payments of principal or interest on the Note(s), and of all fees, shall be made by Borrower to Administrative Agent in immediately available funds at the office specified by Administrative Agent not later than noon, Chicago time, on the date due; and funds received after that hour shall be deemed to have been received by Administrative Agent on the following Business Day.  Subject to Section 2.6, Administrative Agent shall promptly remit to each Lender its share of all such payments received in collected funds by Administrative Agent for the account of such Lender.  All payments under Section 8.1 shall be made by Borrower directly to the Lender entitled thereto without setoff, counterclaim or other defense.

 

7.2          Application of Certain Payments.  So long as no Default or Event of Default has occurred and is continuing, (a) payments matching specific scheduled payments then due shall be applied to those scheduled payments and (b) prepayments shall be applied as set forth in Sections 6.2 and 6.3.  After the occurrence and during the continuance of a Default or an Event of Default, all amounts collected or received by Administrative Agent or any Lender as proceeds from the sale of, or other realization upon, all or any part of the Collateral shall be applied as Administrative Agent shall determine in its discretion.  Concurrently with each remittance to any Lender of its share of any such payment, Administrative Agent shall advise such Lender as to the application of such payment.

 

7.3          Due Date Extension.  If any payment of principal or interest with respect to any of the Loans, or of any fees, falls due on a day which is not a Business Day, then such due date shall be extended to the immediately following Business Day (unless, in the case of a LIBOR Loan, such immediately following Business Day is the first Business Day of a calendar month, in which case such due date shall be the immediately preceding Business Day) and, in the case of principal, additional interest shall accrue and be payable for the period of any such extension.

 

7.4          Setoff.  Borrower, for itself and each other Loan Party, agrees that Administrative Agent and each Lender have all rights of set-off and bankers’ lien provided by applicable law, and in addition thereto, Borrower, for itself and each other Loan Party, agrees that at any time any Event of Default exists, Administrative Agent and each Lender may apply to the payment of any Obligations of Borrower and each other Loan Party hereunder, whether or not then due, any and all balances, credits, deposits, accounts or moneys of Borrower and each other Loan Party then or thereafter with Administrative Agent or such Lender.

 

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7.5          Proration of Payments.  Except as provided in Section 2.6, if any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise), on account of (a) principal of or interest on any Loan (but excluding (i) any payment pursuant to Section 8 or 15.6 and (ii) payments of interest on any Affected Loan) or (b) its participation in any Letter of Credit in excess of its applicable Pro Rata Share of payments and other recoveries obtained by all Lenders on account of principal of and interest on the Loans (or such participation) then held by them, then such Lender shall purchase from the other Lenders such participations in the Loans (or sub-participations in Letters of Credit) held by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery.

 

7.6          Taxes.

 

(a)           All payments made by Borrower hereunder or under any Loan Documents shall be made without setoff, counterclaim, or other defense.  To the extent permitted by applicable law, all payments hereunder or under the Loan Documents (including any payment of principal, interest, or fees) to, or for the benefit, of any person shall be made by Borrower free and clear of and without deduction or withholding for, or account of, any Taxes now or hereinafter imposed by any taxing authority.

 

(b)           If Borrower makes any payment hereunder or under any Loan Document in respect of which it is required by applicable law to deduct or withhold any Taxes, Borrower shall increase the payment hereunder or under any such Loan Document such that after the reduction for the amount of Taxes withheld (and any taxes withheld or imposed with respect to the additional payments required under this Section 7.6(b)), the amount paid to the Lenders or Administrative Agent equals the amount that was payable hereunder or under any such Loan Document without regard to this Section 7.6(b).  To the extent Borrower withholds any Taxes on payments hereunder or under any Loan Document, Borrower shall pay the full amount deducted to the relevant taxing authority within the time allowed for payment under applicable law and shall deliver to Administrative Agent within 30 days after it has made payment to such authority a receipt issued by such authority (or other evidence satisfactory to Administrative Agent) evidencing the payment of all amounts so required to be deducted or withheld from such payment.

 

(c)           If any Lender or Administrative Agent is required by law to make any payments of any Taxes on or in relation to any amounts received or receivable hereunder or under any other Loan Document, or any Tax is assessed against a Lender or Administrative Agent with respect to amounts received or receivable hereunder or under any other Loan Document, Borrower will indemnify such person against (i) such Tax (and any reasonable counsel fees and expenses associated with such Tax) and (ii) any taxes imposed as a result of the receipt of the payment under this Section 7.6(c).  A certificate prepared in good faith as to the amount of such payment by such Lender or Administrative Agent shall, absent manifest error, be final, conclusive, and binding on all parties.

 

(d)           (i)            To the extent permitted by applicable law, each Lender that is not a United States person within the meaning of Code Section 7701(a)(30) (a “Non-U.S. Participant”) shall deliver to Borrower and Administrative Agent on or prior to the Closing Date (or in the case of a Lender that is an Assignee, on the date of such assignment to such Lender) two accurate and complete original signed copies of IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable form prescribed by the IRS) certifying to such Lender’s entitlement to a complete exemption from, or a reduced rate in, United States withholding tax on interest payments to be made hereunder or any Loan.  If a Lender that is a Non-U.S. Participant is claiming a complete exemption from withholding on interest pursuant to Code Sections 871(h) or 881(c), the Lender shall deliver (along with two accurate and complete original signed copies of IRS Form W-8BEN) a certificate in form and substance reasonably

 

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acceptable to Administrative Agent (any such certificate, a “Withholding Certificate”).  In addition, each Lender that is a Non-U.S. Participant agrees that from time to time after the Closing Date, (or in the case of a Lender that is an Assignee, after the date of the assignment to such Lender), when a lapse in time (or change in circumstances occurs) renders the prior certificates hereunder obsolete or inaccurate in any material respect, such Lender shall, to the extent permitted under applicable law, deliver to Borrower and Administrative Agent two new and accurate and complete original signed copies of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable forms prescribed by the IRS), and if applicable, a new Withholding Certificate, to confirm or establish the entitlement of such Lender or Administrative Agent to an exemption from, or reduction in, United States withholding tax on interest payments to be made hereunder or any Loan.

 

(ii)                                  Each Lender that is not a Non-U.S. Participant (other than any such Lender which is taxed as a corporation for U.S. federal income tax purposes) shall provide two properly completed and duly executed copies of IRS Form W-9 (or any successor or other applicable form) to Borrower and Administrative Agent certifying that such Lender is exempt from United States backup withholding tax.  To the extent that a form provided pursuant to this Section 7.6(d)(ii) is rendered obsolete or inaccurate in any material respect as result of change in circumstances with respect to the status of a Lender, such Lender shall, to the extent permitted by applicable law, deliver to Borrower and Administrative Agent revised forms necessary to confirm or establish the entitlement to such Lender’s or Administrative Agent’s exemption from United States backup withholding tax.

 

(iii)                               Borrower shall not be required to pay additional amounts to a Lender, or indemnify any Lender, under this Section 7.6 to the extent that such obligations would not have arisen but for the failure of such Lender to comply with Section 7.6(d).

 

(iv)                              Each Lender agrees to indemnify Administrative Agent and hold Administrative Agent harmless for the full amount of any and all present or future Taxes and related liabilities (including penalties, interest, additions to tax and expenses, and any Taxes imposed by any jurisdiction on amounts payable to Administrative Agent under this Section 7.6) which are imposed on or with respect to principal, interest or fees payable to such Lender hereunder and which are not paid by Borrower pursuant to this Section 7.6, whether or not such Taxes or related liabilities were correctly or legally asserted.  This indemnification shall be made within 30 days from the date Administrative Agent makes written demand therefor.

 

SECTION 8                                                       INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.

 

8.1                               Increased Costs.  (a)  If, after the date hereof, the adoption of, or any change in, any applicable law, rule or regulation, or any change in the interpretation or administration of any applicable law, rule or regulation by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:  (i) shall impose, modify or deem applicable any reserve (including any reserve imposed by the FRB, but excluding any reserve included in the determination of the LIBOR Rate pursuant to Section 4), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by any Lender; or (ii) shall impose on any Lender any other condition affecting its LIBOR Loans, its Note or its obligation to make LIBOR Loans; and the result of anything described in clauses (i) and (ii) above is to increase the cost to (or to impose a cost on) such Lender (or any LIBOR Office of such Lender) of making or maintaining any LIBOR Loan, or to reduce the amount of any sum received or receivable by such Lender (or its LIBOR Office) under this Agreement or under its Note with respect thereto, then upon demand by such Lender (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail, a copy of which shall be

 

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furnished to Administrative Agent), Borrower shall pay directly to such Lender such additional amount as will compensate such Lender for such increased cost or such reduction, so long as such amounts have accrued on or after the day which is 180 days prior to the date on which such Lender first made demand therefor.

 

(b)                                 If any Lender shall reasonably determine that any change in, or the adoption or phase-in of, any applicable law, rule or regulation regarding capital adequacy, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or the compliance by any Lender or any Person controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender’s or such controlling Person’s capital as a consequence of such Lender’s obligations hereunder or under any Letter of Credit to a level below that which such Lender or such controlling Person could have achieved but for such change, adoption, phase-in or compliance (taking into consideration such Lender’s or such controlling Person’s policies with respect to capital adequacy) by an amount deemed by such Lender or such controlling Person to be material, then from time to time, upon demand by such Lender (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail, a copy of which shall be furnished to Administrative Agent), Borrower shall pay to such Lender such additional amount as will compensate such Lender or such controlling Person for such reduction so long as such amounts have accrued on or after the day which is 180 days prior to the date on which such Lender first made demand therefor.

 

8.2                               Basis for Determining Interest Rate Inadequate or Unfair.  If:

 

(a)                                 Administrative Agent reasonably determines (which determination shall be binding and conclusive on Borrower) that by reason of circumstances affecting the interbank LIBOR market adequate and reasonable means do not exist for ascertaining the applicable LIBOR Rate; or

 

(b)                                 the Required Lenders advise Administrative Agent that the LIBOR Rate as determined by Administrative Agent will not adequately and fairly reflect the cost to such Lenders of maintaining or funding LIBOR Loans for such Interest Period (taking into account any amount to which such Lenders may be entitled under Section 8.1) or that the making or funding of LIBOR Loans has become impracticable as a result of an event occurring after the date of this Agreement which in the opinion of such Lenders materially affects such Loans;

 

then Administrative Agent shall promptly notify the other parties thereof and, so long as such circumstances shall continue, (i) no Lender shall be under any obligation to make or convert any Base Rate Loans into LIBOR Loans and (ii) on the last day of the current Interest Period for each LIBOR Loan, such Loan shall, unless then repaid in full, automatically convert to a Base Rate Loan.

 

8.3                               Changes in Law Rendering LIBOR Loans Unlawful.  If any change in, or the adoption of any new, law or regulation, or any change in the interpretation of any applicable law or regulation by any governmental or other regulatory body charged with the administration thereof, should make it (or in the good faith judgment of any Lender cause a substantial question as to whether it is) unlawful for any Lender to make, maintain or fund LIBOR Loans, then such Lender shall promptly notify each of the other parties hereto and, so long as such circumstances shall continue, (a) such Lender shall have no obligation to make or convert any Base Rate Loan into a LIBOR Loan (but shall make Base Rate Loans concurrently with the making of or conversion of Base Rate Loans into LIBOR Loans by the Lenders which are not so affected, in each case in an amount equal to the amount of LIBOR Loans which would be made or converted into by such Lender at such time in the absence of such circumstances) and (b) on the last day

 

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of the current Interest Period for each LIBOR Loan of such Lender (or, in any event, on such earlier date as may be required by the relevant law, regulation or interpretation), such LIBOR Loan shall, unless then repaid in full, automatically convert to a Base Rate Loan.  Each Base Rate Loan made by a Lender which, but for the circumstances described in the foregoing sentence, would be a LIBOR Loan (an “Affected Loan”) shall remain outstanding for the period corresponding to the Group of LIBOR Loans of which such Affected Loan would be a part absent such circumstances.

 

8.4                               Funding Losses.  Borrower hereby agrees that upon demand by any Lender (which demand shall be accompanied by a statement setting forth the basis for the amount being claimed, a copy of which shall be furnished to Administrative Agent), Borrower will indemnify such Lender against any net loss or expense which such Lender may sustain or incur (including any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund or maintain any LIBOR Loan), as reasonably determined by such Lender, as a result of (a) any payment, prepayment or conversion of any LIBOR Loan of such Lender on a date other than the last day of an Interest Period for such Loan (including any conversion pursuant to Section 8.3) or (b) any failure of Borrower to borrow, prepay, convert or continue any Loan on a date specified therefor in a notice of borrowing, prepayment, conversion or continuation pursuant to this Agreement.  For this purpose, all notices to Administrative Agent pursuant to this Agreement shall be deemed to be irrevocable.

 

8.5                               Right of Lenders to Fund through Other Offices.  Each Lender may, if it so elects, fulfill its commitment as to any LIBOR Loan by causing a foreign branch or Affiliate of such Lender to make such Loan; provided that in such event for the purposes of this Agreement such Loan shall be deemed to have been made by such Lender and the obligation of Borrower to repay such Loan shall nevertheless be to such Lender and shall be deemed held by it, to the extent of such Loan, for the account of such branch or Affiliate.

 

8.6                               Discretion of Lenders as to Manner of Funding.  Notwithstanding any provision of this Agreement to the contrary, each Lender shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Lender had actually funded and maintained each LIBOR Loan during each Interest Period for such Loan through the purchase of deposits having a maturity corresponding to such Interest Period and bearing an interest rate equal to the LIBOR Rate for such Interest Period.

 

8.7                               Mitigation of Circumstances; Replacement of Lenders.  (a)  Each Lender shall promptly notify Borrower and Administrative Agent of any event of which it has knowledge which will result in, and will use reasonable commercial efforts available to it (and not, in such Lender’s sole judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any obligation by Borrower to pay any amount pursuant to Sections 7.6 or 8.1 or (ii) the occurrence of any circumstances described in Sections 8.2 or 8.3 (and, if any Lender has given notice of any such event described in clause (i) or (ii) above and thereafter such event ceases to exist, such Lender shall promptly so notify Borrower and Administrative Agent).  Without limiting the foregoing, each Lender will designate a different funding office if such designation will avoid (or reduce the cost to Borrower of) any event described in clause (i) or (ii) above and such designation will not, in such Lender’s sole judgment, be otherwise disadvantageous to such Lender.

 

(b)                                 If Borrower becomes obligated to pay additional amounts to any Lender pursuant to Sections 7.6 or 8.1, or any Lender gives notice of the occurrence of any circumstances described in Sections 8.2 or 8.3, or any Lender becomes a Defaulting Lender, Borrower may designate another bank which is acceptable to Administrative Agent and the Issuing Lender in their reasonable discretion (such other bank being called a “Replacement Lender”) to purchase the Loans of such Lender and such

 

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Lender’s rights hereunder, without recourse to or warranty by, or expense to, such Lender, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans and all accrued but unpaid fees owed to such Lender and any other amounts payable to such Lender under this Agreement, and to assume all the obligations of such Lender hereunder, and, upon such purchase and assumption (pursuant to an Assignment Agreement), such Lender shall no longer be a party hereto or have any rights hereunder (other than rights with respect to indemnities and similar rights applicable to such Lender prior to the date of such purchase and assumption) and shall be relieved from all obligations to Borrower hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder.

 

8.8                               Conclusiveness of Statements; Survival of Provisions.  Determinations and statements of any Lender pursuant to Sections 8.1, 8.2, 8.3 or 8.4 shall be conclusive absent demonstrable error.  Lenders may use reasonable averaging and attribution methods in determining compensation under Sections 8.1 and 8.4, and the provisions of such Sections shall survive repayment of the Obligations, cancellation of any Note(s), expiration or termination of the Letters of Credit and termination of this Agreement.

 

SECTION 9                                                       REPRESENTATIONS AND WARRANTIES.

 

To induce Administrative Agent and the Lenders to enter into this Agreement and to induce the Lenders to make Loans and participate in Letters of Credit hereunder and the Issuing Lenders to issue Letters of Credit hereunder, Borrower represents and warrants to Administrative Agent and the Lenders that:

 

9.1                               Organization.  Each Loan Party is validly existing and in good standing under the laws of its jurisdiction of organization; and each Loan Party is duly qualified to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required, except for such jurisdictions where the failure to so qualify would not have a Material Adverse Effect.

 

9.2                               Authorization; No Conflict.  Each Loan Party is duly authorized to execute and deliver each Loan Document to which it is a party, Borrower is duly authorized to borrow monies hereunder and each Loan Party is duly authorized to perform its Obligations under each Loan Document to which it is a party.  The execution, delivery and performance by each Loan Party of each Loan Document to which it is a party, and the borrowings by Borrower hereunder, do not and will not (a) require any consent or approval of any governmental agency or authority (other than any consent or approval which has been obtained and is in full force and effect), (b) conflict with (i) any provision of law, (ii) the charter, by-laws or other organizational documents of any Loan Party or (iii) any agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon any Loan Party or any of their respective properties or (c) require, or result in, the creation or imposition of any Lien on any asset of any Loan Party (other than Liens in favor of Administrative Agent created pursuant to the Collateral Documents).

 

9.3                               Validity and Binding Nature.  Each of this Agreement and each other Loan Document to which any Loan Party is a party is the legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’ rights generally and to general principles of equity.

 

9.4                               Financial Condition.  The audited consolidated financial statements of Borrower and its Subsidiaries as at Borrower’s Fiscal Year End, 2011 and the unaudited consolidated financial statements of Borrower and the Subsidiaries as at  September 30, 2012, copies of each of which have been delivered to each Lender, were prepared in accordance with GAAP and present fairly the consolidated financial condition of Borrower and its Subsidiaries as at such date and the results of their operations for the period then ended.

 

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9.5                               No Material Adverse Change.  Since Borrower’s Fiscal Year End, 2011 there has been no material adverse change in the financial condition, operations, assets, business, properties or prospects of the Loan Parties taken as a whole.

 

9.6                               Litigation and Contingent Liabilities.  No litigation (including derivative actions), arbitration proceeding or governmental investigation or proceeding is pending or, to Borrower’s knowledge, threatened against any Loan Party which could reasonably be expected to have a Material Adverse Effect, except as set forth in Schedule 9.6.  Other than any liability incident to such litigation or proceedings, no Loan Party has any material contingent liabilities not listed on Schedule 9.6 or permitted by Section 11.1.

 

9.7                               Ownership of Properties; Liens.  Each Loan Party owns good and, in the case of real property, marketable title to all of its properties and assets, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights), free and clear of all Liens, charges and claims (including infringement claims with respect to patents, trademarks, service marks, copyrights and the like) except as permitted by Section 11.2.  No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except filings evidencing Permitted Liens and filings for which termination statements have been delivered to Administrative Agent.

 

9.8                               Equity Ownership; Subsidiaries.  All issued and outstanding Capital Securities of each Loan Party are duly authorized and validly issued, fully paid, non-assessable, and free and clear of all Liens other than those in favor of Administrative Agent, and such securities were issued in compliance with all applicable state and federal laws concerning the issuance of securities.  Schedule 9.8 sets forth the authorized Capital Securities of each Loan Party as of the Closing Date.  All of the issued and outstanding Capital Securities of Borrower are owned as set forth on Schedule 9.8 as of the Closing Date, and all of the issued and outstanding Capital Securities of each Wholly-Owned Subsidiary is, directly or indirectly, owned by Borrower.  As of the Closing Date, except as set forth on Schedule 9.8, there are no pre-emptive or other outstanding rights, options, warrants, conversion rights or other similar agreements or understandings for the purchase or acquisition of any Capital Securities of any Loan Party.

 

9.9                               Pension Plans.  (a)  The Unfunded Liability of all Pension Plans does not in the aggregate exceed twenty percent of the Total Plan Liability for all such Pension Plans.  Each Pension Plan complies in all material respects with all applicable requirements of law and regulations.  No contribution failure under Section 412 of the Code, Section 302 of ERISA or the terms of any Pension Plan has occurred with respect to any Pension Plan, sufficient to give rise to a Lien under Section 302(f) of ERISA, or otherwise to have a Material Adverse Effect.  There are no pending or, to the knowledge of Borrower, threatened, claims, actions, investigations or lawsuits against any Pension Plan, any fiduciary of any Pension Plan, or Borrower or any other member of the Controlled Group with respect to a Pension Plan or a Multiemployer Pension Plan which could reasonably be expected to have a Material Adverse Effect.  Neither Borrower nor any other member of the Controlled Group has engaged in any prohibited transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in connection with any Pension Plan or Multiemployer Pension Plan which would subject that Person to any material liability.  Within the past five years, neither Borrower nor any other member of the Controlled Group has engaged in a transaction which resulted in a Pension Plan with an Unfunded Liability being transferred out of the Controlled Group, which could reasonably be expected to have a Material Adverse Effect.  No Termination Event has occurred or is reasonably expected to occur with respect to any Pension Plan, which could reasonably be expected to have a Material Adverse Effect.

 

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(b)                                 Except as disclosed in the Borrower’s 10K or 10Q and as set forth on Schedule 9.9(b), all contributions (if any) have been made to any Multiemployer Pension Plan that are required to be made by Borrower or any other member of the Controlled Group under the terms of the plan or of any collective bargaining agreement or by applicable law; neither Borrower nor any other member of the Controlled Group has withdrawn or partially withdrawn from any Multiemployer Pension Plan, incurred any withdrawal liability with respect to any such plan or received notice of any claim or demand for withdrawal liability or partial withdrawal liability from any such plan, and no condition has occurred which, if continued, could result in a withdrawal or partial withdrawal from any such plan; and neither Borrower nor any other member of the Controlled Group has received any notice that any Multiemployer Pension Plan is in reorganization, that increased contributions may be required to avoid a reduction in plan benefits or the imposition of any excise tax, that any such plan is or has been funded at a rate less than that required under Section 412 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent.

 

9.10                        Investment Company Act.  No Loan Party is an “investment company” or a company “controlled” by an “investment company” or a “subsidiary” of an “investment company,” within the meaning of the Investment Company Act of 1940.

 

9.11                        Compliance with Laws.  To Borrower’s knowledge, each Loan Party and each Subsidiary thereof is in compliance in all material respects with the requirements of all laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

9.12                        Regulation U.  Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock.

 

9.13                        Taxes.  Each Loan Party has timely filed all tax returns and reports required by law to have been filed by it and has paid all taxes and governmental charges due and payable with respect to such return, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books.  The Loan Parties have made adequate reserves on their books and records in accordance with GAAP for all taxes that have accrued but which are not yet due and payable.  No Loan Party has participated in any transaction that relates to a year of the taxpayer (which is still open under the applicable statute of limitations) which is a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2) (irrespective of the date when the transaction was entered into).

 

9.14                        Solvency, etc.  On the Closing Date, and immediately prior to and after giving effect to the issuance of each Letter of Credit and each borrowing hereunder and the use of the proceeds thereof, with respect to each Loan Party, individually, (a) the fair value of its assets is greater than the amount of its liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated in accordance with GAAP, (b) the present fair saleable value of its assets is not less than the amount that will be required to pay the probable liability on its debts as they become absolute and matured, (c) it is able to realize upon its assets and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business, (d) it does not intend to, and does not believe that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature and (e) it is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which its property would constitute unreasonably small capital.

 

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9.15                        Environmental Matters.  To Borrower’s knowledge, the on-going operations of each Loan Party comply in all respects with all Environmental Laws, except such non-compliance which could not (if enforced in accordance with applicable law) reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.  Each Loan Party has obtained, and maintained in good standing, all licenses, permits, authorizations, registrations and other approvals required under any Environmental Law and required for their respective ordinary course operations, and for their reasonably anticipated future operations, and each Loan Party is in compliance with all terms and conditions thereof, except where the failure to do so could not reasonably be expected to result in material liability to any Loan Party and could not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.  No Loan Party or any of its properties or operations is subject to, or reasonably anticipates the issuance of, any written order from or agreement with any Federal, state or local governmental authority, nor subject to any judicial or docketed administrative or other proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Substance.  To Borrower’s knowledge, there are no Hazardous Substances or other conditions or circumstances existing with respect to any property, arising from operations prior to the Closing Date, or relating to any waste disposal, of any Loan Party that would reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.  No Loan Party has any underground storage tanks that are not properly registered or permitted under applicable Environmental Laws or that at any time have released, leaked, disposed of or otherwise discharged Hazardous Substances.

 

9.16                        Insurance.  Set forth on Schedule 9.16 is a complete and accurate summary of the property and casualty insurance program of the Loan Parties as of the Closing Date (including the names of all insurers, policy numbers, expiration dates, amounts and types of coverage, annual premiums, deductibles, self-insured retention, and a description in reasonable detail of any fronting arrangement or other risk assumption arrangement involving any Loan Party).  Each Loan Party and its properties are insured with financially sound and reputable insurance companies which are not Affiliates of the Loan Parties, in such amounts, with such deductibles/self-insured retentions and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where such Loan Parties operate.

 

9.17                        Real Property.  Set forth on Schedule 9.17 is a complete and accurate list, as of the Closing Date, of the address of all real property owned or leased by any Loan Party, together with, in the case of leased property, the name and mailing address of the lessor of such property.

 

9.18                        Information.  All information heretofore or contemporaneously herewith furnished in writing by any Loan Party to Administrative Agent or any Lender for purposes of or in connection with this Agreement and the transactions contemplated hereby is, and all written information hereafter furnished by or on behalf of any Loan Party to Administrative Agent or any Lender pursuant hereto or in connection herewith will be, true and accurate in every material respect on the date as of which such information is dated or certified, and none of such information is or will be incomplete by omitting to state any material fact necessary to make such information not misleading in light of the circumstances under which made (it being recognized by Administrative Agent and the Lenders that any projections and forecasts provided by Borrower are based on good faith estimates and assumptions believed by Borrower to be reasonable as of the date of the applicable projections or assumptions and that actual results during the period or periods covered by any such projections and forecasts may differ from projected or forecasted results).

 

9.19                        Intellectual Property.  Each Loan Party owns and possesses or has a license or other right to use all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights and copyrights as are necessary for the conduct of the businesses of the Loan Parties, without any infringement upon rights of others which could reasonably be expected to have a Material Adverse Effect.

 

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9.20                        Burdensome Obligations.  No Loan Party is a party to any agreement or contract or subject to any restriction contained in its organizational documents which could reasonably be expected to have a Material Adverse Effect.

 

9.21                        Labor Matters.  Except as set forth on Schedule 9.21, no Loan Party is subject to any labor or collective bargaining agreement.  There are no existing or threatened strikes, lockouts or other labor disputes involving any Loan Party that singly or in the aggregate could reasonably be expected to have a Material Adverse Effect.  Hours worked by and payment made to employees of the Loan Parties are in substantial compliance with the Fair Labor Standards Act or any other applicable law, rule or regulation dealing with such matters.

 

9.22                        Anti-Terrorism Laws.  (a)  No Loan Party (and, to the knowledge of each Loan Party, no joint venture or subsidiary thereof) is in violation in any material respects of any United States Requirements of Law relating to terrorism, sanctions or money laundering (the “Anti-Terrorism Laws”), including the United States Executive Order No. 13224 on Terrorist Financing (the “Anti-Terrorism Order”) and the Patriot Act.

 

(b)                                 No Loan Party (and, to the knowledge of each Loan Party, no joint venture or subsidiary thereof) (i) is listed in the annex to, or is otherwise subject to the provisions of, the Anti-Terrorism Order, (ii) is owned or controlled by, or acting for or on behalf of, any person listed in the annex to, or is otherwise subject to the provisions of, the Anti-Terrorism Order, (iii) commits, threatens or conspires to commit or supports “terrorism” as defined in the Anti-Terrorism Order or (iv) is named as a “specially designated national and blocked person” in the most current list published by OFAC.

 

(c)                                  No Loan Party (and, to the knowledge of each Loan Party, no joint venture or Affiliate thereof) (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person described in clauses (b)(i) through (b)(iv) above, (ii) deals in, or otherwise engages in any transactions relating to, any property or interests in property blocked pursuant to the Anti-Terrorism Order or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

 

9.23                        No Default.  No Default or Event of Default exists or would result from the incurrence by any Loan Party of any Debt hereunder or under any other Loan Document.

 

9.24                        RESERVED.

 

9.25                        OFAC.  Borrower and each Subsidiary of Borrower is and will remain in compliance in all material respects with all U.S. economic sanctions laws, Executive Orders and implementing regulations as promulgated by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), and all applicable anti-money laundering and counter-terrorism financing provisions of the Bank Secrecy Act and all regulations issued pursuant to it.  Neither Borrower nor any Subsidiary or Affiliate of Borrower (i) is a Person designated by the U.S. government on the list of the Specially Designated Nationals and Blocked Persons (the “SDN List”) with which a U.S. Person cannot deal with or otherwise engage in business transactions, (ii) is a Person who is otherwise the target of U.S. economic sanctions laws such that a U.S. Person cannot deal or otherwise engage in business transactions with such Person or (iii) is controlled by (including without limitation by virtue of such person being a director or owning voting shares or interests), or acts, directly or indirectly, for or on behalf of, any person or entity on the SDN List or a foreign government that is the target of U.S. economic sanctions prohibitions such that the entry into, or performance under, this Agreement or any other Loan Document would be prohibited under U.S. law.

 

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9.26                        Patriot Act.  Borrower, each of its Subsidiaries and each of their Affiliates are in compliance with (a) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B Chapter V, as amended) and any other enabling legislation or executive order relating thereto, (b) the Patriot Act and (c) other federal or state laws relating to “know your customer” and anti-money laundering rules and regulations.  No part of the proceeds of any Loan will be used directly or indirectly for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977.

 

9.27                        Subordinated Debt.  Other than in respect of Debt subject to the Subordination Agreement (Rockford), the subordination provisions of the Subordinated Debt are enforceable against the holders of the Subordinated Debt by Administrative Agent and the Lenders.  All Obligations constitute Senior Debt entitled to the benefits of the subordination provisions contained in the Subordinated Debt other than with respect to Debt subject to the Subordination Agreement than in respect of Debt subject to the Subordination Agreement (Rockford).  Borrower acknowledges that Administrative Agent and each Lender are entering into this Agreement and are extending the Commitments and making the Loans in reliance upon this Section 9.27.  Any payment made on existing Subordinated Debt or future Subordinated Debt shall be distributed by the Collateral Agent among the Lenders and Prudential according to their Pro Rata Shares.

 

SECTION 10                                                AFFIRMATIVE COVENANTS.

 

Until the expiration or termination of the Commitments and thereafter until all Obligations hereunder and under the other Loan Documents are paid in full and all Letters of Credit have been terminated, Borrower agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, it will:

 

10.1                        Reports, Certificates and Other Information.  The Borrower shall at all times maintain a standard and modern system of accounting, on the accrual basis of accounting and in all respects in accordance with GAAP, and shall furnish to the Administrative Bank and each Lender such information regarding the business affairs, operations and financial condition of the Borrower, including:

 

10.1.1                             Financial Statements.

 

(a)                                 promptly when available, and in any event, (i) within ninety (90) days after the close of each of its fiscal years, a copy of the annual audited consolidated financial statements of the Borrower and its Subsidiaries, including balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal year then ended, work in process reports, accounts receivable agings, accounts payable agings (if available), summary of litigation and claims, as the Administrative Agent may request, in reasonable detail, prepared and certified without adverse reference to going concern value and without qualification by an independent auditor of recognized standing, selected by the Borrower and reasonably acceptable to the Administrative Agent; and (ii) within sixty (60) days after the close of each of its fiscal years, financial forecasts, budgets and updates thereto and such other information (including nonfinancial information) as the Administrative Agent may request, in reasonable detail.

 

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(b)                                 promptly when available, and in any event, within forty-five (45) days following the end of each fiscal quarter, a copy of the management prepared consolidated financial statements of the Borrower and its Subsidiaries regarding such fiscal quarter, including balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal quarter then ended, work in process reports, accounts receivable aging reports, summary of litigation and claims and such other information (including nonfinancial information) as the Bank may request, in reasonable detail, prepared and certified as true and correct by the Borrower’s treasurer or chief financial officer.

 

The Borrower represents and warrants to the Administrative Agent and each Lender that the financial statements delivered to the Administrative Agent and each Lender at or prior to the execution and delivery of this Agreement and to be delivered at all times thereafter accurately reflect and will accurately reflect the financial condition of the Borrower.  The Administrative Agent shall have the right at all times during business hours to inspect the books and records of the Borrower and make extracts therefrom.

 

10.1.2                             Guarantor Financial Information.  The Borrower shall furnish, or cause to be furnished, to the Administrative Agent and each Lender such information regarding the business affairs, operations and financial condition of each Guarantor. The Borrower represents and warrants to the Administrative Agent and each Lender that (i) each Guarantor shall at all times maintain a standard and modern system of accounting, on the accrual basis of accounting and in all respects in accordance with GAAP, and (ii) the Administrative Agent shall have the right at all times during business hours to inspect the books and records of each Guarantor and make extracts therefrom. If the Borrower ceases to be publicly traded, then the Borrower agrees to advise the Administrative Agent immediately of any development, condition or event that may have a Material Adverse Effect on each Guarantor.

 

10.1.3                             Supplemental Financial Statements.  The Borrower shall immediately upon receipt thereof, provide to the Administrative Agent and each Lender copies of interim and supplemental reports if any, submitted to the Borrower by independent accountants in connection with any interim audit or review of the books of the Borrower.

 

10.1.4                             Compliance Certificates.  Contemporaneously with the furnishing of a copy of each annual audit report pursuant to Section 10.1.1(a) and each set of quarterly statements pursuant to Section 10.1.1(b), a duly completed compliance certificate in the form of Exhibit B, with appropriate insertions, dated the date of such annual report or such quarterly statements and signed by a Senior Officer of Borrower, containing (i) a computation of each of the financial ratios and restrictions set forth in Section 11.14 and to the effect that such officer has not become aware of any Default or Event of Default that has occurred and is continuing or, if there is any such event, describing it and the steps, if any, being taken to cure it and (ii) a written statement of Borrower’s management setting forth a discussion of Borrower’s financial condition, changes in financial condition and results of operations.

 

10.1.5                             Reports to the SEC and to Shareholders.  Unless available on-line to the public, promptly upon the filing or sending thereof, copies of all regular, periodic or special reports of any Loan Party filed with the SEC; copies of all registration statements of any Loan Party filed with the SEC (other than on Form S-8); and copies of all proxy statements or other communications made to security holders generally.

 

10.1.6                             Notice of Default, Litigation and ERISA Matters.  Within five (5) Business Days of becoming aware of any of the following, written notice describing the same and the steps being taken by Borrower or the Subsidiary affected thereby with respect thereto:

 

(a)                                 the occurrence of a Default or an Event of Default;

 

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(b)                                 if reasonably expected to have a Material Adverse Effect, any litigation, arbitration or governmental investigation or proceeding not previously disclosed by Borrower to the Lenders which has been instituted or, to the knowledge of Borrower, is threatened against any Loan Party or to which any of the properties of any thereof is subject;

 

(c)                                  the institution of any steps by any member of the Controlled Group or any other Person to terminate any Pension Plan, or the failure of any member of the Controlled Group to make a required contribution to any Pension Plan (if such failure is sufficient to give rise to a Lien under Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the taking of any action with respect to a Pension Plan which could result in the requirement that Borrower furnish a bond or other security to the PBGC or such Pension Plan, or the occurrence of any event with respect to any Pension Plan or Multiemployer Pension Plan which could result in the incurrence by any member of the Controlled Group of any material liability, fine or penalty (including any claim or demand for withdrawal liability or partial withdrawal from any Multiemployer Pension Plan), or any material increase in the contingent liability of Borrower with respect to any post-retirement welfare benefit plan or other employee benefit plan of Borrower or another member of the Controlled Group, or any notice that any Multiemployer Pension Plan is in reorganization, that increased contributions may be required to avoid a reduction in plan benefits or the imposition of an excise tax, that any such plan is or has been funded at a rate less than that required under Section 412 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent;

 

(d)                                 any non-renewal cancellation or material change in any insurance maintained by any Loan Party; or

 

(e)                                  if reasonably expected to have a Material Adverse Effect, any other event (including (i) any violation of any Environmental Law or the assertion of any Environmental Claim or (ii) the enactment or effectiveness of any law, rule or regulation).

 

10.1.7                             Management Reports.  Promptly upon receipt thereof, copies of all detailed financial and management reports submitted to Borrower by independent auditors in connection with each annual or interim audit made by such auditors of the books of Borrower.

 

10.1.8                             Projections.  As soon as practicable, and in any event not later than 60 days after the commencement of each Fiscal Year, financial projections for Borrower and its Subsidiaries for such Fiscal Year prepared in a manner consistent with the projections delivered by Borrower to the Lenders prior to the Closing Date or otherwise in a manner reasonably satisfactory to Administrative Agent, accompanied by a certificate of a Senior Officer of Borrower on behalf of Borrower to the effect that (a) such projections were prepared by Borrower in good faith, (b) Borrower has a reasonable basis for the assumptions contained in such projections and (c) such projections have been prepared in accordance with such assumptions.

 

10.1.9                             Subordinated Debt Notices.  Promptly following receipt, copies of any notices (including notices of default or acceleration) received from any holder or trustee of, under or with respect to any Subordinated Debt.

 

10.1.10                      Updated Schedule.  Contemporaneously with the furnishing of each annual audit report pursuant to Section 10.1.1, an updated version of Schedule 9.17 showing information as of the date of such audit report (it being agreed and understood that this requirement shall be in addition to the other notice and delivery requirements set forth herein).

 

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10.1.11                      Other Information.  Promptly from time to time, such other information (including, without limitation, business or financial data, reports, appraisals and projections) concerning the Loan Parties, their properties or business, as any Lender or Administrative Agent may reasonably request.

 

10.2                        Books, Records and Inspections.  Keep, and cause each other Loan Party to keep, its books and records in accordance with sound business practices sufficient to allow the preparation of financial statements in accordance with GAAP; permit, and cause each other Loan Party to permit, any Lender or Administrative Agent or any representative thereof to inspect the properties and operations of the Loan Parties; and permit, and cause each other Loan Party to permit, at any reasonable time and with reasonable notice (or at any time without notice if an Event of Default exists), any Lender or Administrative Agent or any representative thereof to visit any or all of its offices, to discuss its financial matters with its officers and its independent auditors and to examine (and, at the expense of the Loan Parties, photocopy extracts from) any of its books or other records; and permit, and cause each other Loan Party to permit, Administrative Agent and its representatives to inspect the Inventory and other tangible assets of the Loan Parties, to perform appraisals of the equipment of the Loan Parties, and to inspect, audit, check and make copies of and extracts from the books, records, computer data, computer programs, journals, orders, receipts, correspondence and other data relating to Inventory, Accounts and any other collateral.  All such inspections or audits by Administrative Agent shall be at Borrower’s expense.

 

10.3                        Maintenance of Property; Insurance.  (a)  Keep, and cause each other Loan Party to keep, all property useful and necessary in the business of the Loan Parties in good working order and condition, ordinary wear and tear excepted.

 

(b)                                 Maintain, and cause each other Loan Party to maintain self insurance or insurance with responsible insurance companies, with such insurance coverage as may be required by any law or governmental regulation or court decree or order applicable to it and such other insurance, to such extent and against such hazards and liabilities, as is customarily maintained by companies similarly situated, but which shall insure against all risks and liabilities of the type identified on Schedule 9.16 and shall have insured amounts no less than, and deductibles or self-insured retentions no higher than, as are customarily maintained by companies similarly situated; and, upon request of Administrative Agent or any Lender, furnish to Administrative Agent or such Lender original or electronic copies of policies evidencing such insurance if then available, or if not then available, within three (3) Business Days of the date such policies become available to Borrower, and a certificate setting forth in reasonable detail the nature and extent of all insurance maintained by the Loan Parties.  Borrower shall cause each issuer of an insurance policy to provide Administrative Agent with an endorsement (i) showing Administrative Agent as loss payee with respect to each policy of property or casualty insurance and naming Collateral Agent as an additional insured, where permissible, with respect to each policy of liability insurance, (ii) providing that 30 days’ notice will be given to Collateral Agent prior to any cancellation of, material reduction or change in coverage provided by or other material modification to such policy and (iii) reasonably acceptable in all other respects to Administrative Agent.  Borrower shall execute and deliver to Administrative Agent a collateral assignment, in form and substance satisfactory to Administrative Agent, of each business interruption insurance policy maintained by Borrower.

 

(c)                                  UNLESS BORROWER PROVIDES ADMINISTRATIVE AGENT WITH EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY THIS AGREEMENT, AND IN THE EVENT BORROWER FAILS TO PURCHASE FURTHER OR OTHER INSURANCE AS REASONABLY REQUIRED BY ADMINISTRATIVE AGENT TO BE IN COMPLIANCE WITH THE INSURANCE COVERAGE REQUIREMENTS OF THIS AGREEMENT, ADMINISTRATIVE AGENT MAY PURCHASE INSURANCE AT BORROWER’S EXPENSE TO PROTECT ADMINISTRATIVE AGENT’S AND THE LENDERS’ INTERESTS IN THE COLLATERAL.  THIS INSURANCE MAY, BUT NEED NOT, PROTECT ANY LOAN PARTY’S

 

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INTERESTS.  THE COVERAGE THAT ADMINISTRATIVE AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT IS MADE AGAINST ANY LOAN PARTY IN CONNECTION WITH THE COLLATERAL.  BORROWER MAY LATER CANCEL ANY INSURANCE PURCHASED BY ADMINISTRATIVE AGENT, BUT ONLY AFTER PROVIDING ADMINISTRATIVE AGENT WITH EVIDENCE THAT BORROWER HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT.  IF ADMINISTRATIVE AGENT PURCHASES INSURANCE FOR THE COLLATERAL, BORROWER WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT MAY BE IMPOSED WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE.  THE COSTS OF THE INSURANCE MAY BE ADDED TO THE PRINCIPAL AMOUNT OF THE LOANS OWING HEREUNDER.  THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF THE INSURANCE THE LOAN PARTIES MAY BE ABLE TO OBTAIN ON THEIR OWN.

 

10.4                        Compliance with Laws; Payment of Taxes and Liabilities.  (a)  Comply, and cause each other Loan Party to comply, in all material respects with all applicable laws, rules, regulations, decrees, orders, judgments, licenses and permits, except where failure to comply could not reasonably be expected to have a Material Adverse Effect; (b) without limiting clause (a) above, ensure, and cause each other Loan Party to ensure, that no person who owns a controlling interest in or otherwise controls a Loan Party is or shall be (i) listed on the Specially Designated Nationals and Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”), Department of the Treasury, and/or any other similar lists maintained by OFAC pursuant to any authorizing statute, Executive Order or regulation or (ii) a person designated under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related enabling legislation or any other similar Executive Orders, (c) without limiting clause (a) above, comply, and cause each other Loan Party to comply, with all applicable Bank Secrecy Act (“BSA”) and anti-money laundering laws and regulations and (d) pay, and cause each other Loan Party to pay, prior to delinquency, all taxes and other governmental charges against it or any of its property, as well as claims of any kind which, if unpaid, could become a Lien on any of its property; provided that the foregoing shall not require any Loan Party to pay any such tax or charge so long as it shall contest the validity thereof in good faith by appropriate proceedings and shall set aside on its books adequate reserves with respect thereto in accordance with GAAP and, in the case of a claim which could become a Lien on any collateral, such contest proceedings shall stay the foreclosure of such Lien or the sale of any portion of the collateral to satisfy such claim.

 

10.5                        Maintenance of Existence, etc.  Maintain and preserve, and (subject to Section 11.5) cause each other Loan Party to maintain and preserve, (a) its existence and good standing in the jurisdiction of its organization and (b) its qualification to do business and good standing in each jurisdiction where the nature of its business makes such qualification necessary (other than such jurisdictions in which the failure to be qualified or in good standing could not reasonably be expected to have a Material Adverse Effect).

 

10.6                        Use of Proceeds.  Use the proceeds of the Loans, and the Letters of Credit, solely for working capital purposes for Capital Expenditures and for other general business purposes; and not use or permit any proceeds of any Loan to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of “purchasing or carrying” any Margin Stock.

 

10.7                        Employee Benefit Plans.

 

(a)                                 Maintain, and cause each other member of the Controlled Group to maintain, each Pension Plan in substantial compliance with all applicable requirements of law and regulations.

 

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(b)                                 Make, and cause each other member of the Controlled Group to make, on a timely basis, all required contributions to any Multiemployer Pension Plan.

 

(c)                                  Not, and not permit any other member of the Controlled Group to (i) seek a waiver of the minimum funding standards of ERISA, (ii) terminate or withdraw from any Pension Plan or Multiemployer Pension Plan or (iii) take any other action with respect to any Pension Plan that would reasonably be expected to entitle the PBGC to terminate, impose liability in respect of, or cause a trustee to be appointed to administer, any Pension Plan, unless the actions or events described in clauses (i), (ii) and (iii) individually or in the aggregate would not have a Material Adverse Effect.

 

10.8                        Environmental Matters.  If any release or threatened release or other disposal of Hazardous Substances shall occur or shall have occurred on any real property or any other assets of any Loan Party, Borrower shall, or shall cause the applicable Loan Party to, cause the prompt containment and removal of such Hazardous Substances and the remediation of such real property or other assets as necessary to comply with all Environmental Laws and to preserve the value of such real property or other assets.  Without limiting the generality of the foregoing, Borrower shall, and shall cause each other Loan Party to, comply with any Federal or state judicial or administrative order requiring the performance at any real property of any Loan Party of activities in response to the release or threatened release of a Hazardous Substance.  To the extent that the transportation of Hazardous Substances is permitted by this Agreement, Borrower shall, and shall cause its Subsidiaries to, dispose of such Hazardous Substances, or of any other wastes, only at licensed disposal facilities operating in compliance with Environmental Laws.

 

10.9                        Further Assurances.  Take, and cause each other Loan Party to take, such actions as are necessary or as Administrative Agent or the Required Lenders may reasonably request from time to time to ensure that the Obligations of each Loan Party under the Loan Documents are secured by a first priority perfected Lien in favor of Collateral Agent (subject to Permitted Liens) on certain of the assets of Borrower and each Loan Party and guaranteed by each Loan Party (including, within 30 days of the acquisition or creation thereof, any Subsidiary acquired or created after the Closing Date), in each case as Administrative Agent may determine. Furthermore, within 30 days of the date hereof, the Borrower shall provide to the Administrative Agent evidence satisfactory to the Administrative Agent that Onquest Heaters, Inc. has been dissolved and neither the Borrower nor any of its Subsidiaries owns any of the Capital Securities issued by Onquest Heaters, Inc.

 

10.10                 Deposit Accounts.  Unless Administrative Agent otherwise consents in writing, in order to facilitate Administrative Agent’s and the Lenders’ maintenance and monitoring of their security interests in the collateral, maintain all of their principal deposit accounts with Lenders.

 

10.11                 RESERVED.

 

10.12                 Permissible Payments.  So long as there is pro forma compliance with the financial covenants contained in Section 11.14 hereof, the Borrower may (a) make any distribution to any holders of its Capital Securities, (b) purchase or redeem any of its Capital Securities, (c) pay any management fees or similar fees to any of its equity holders or any Affiliate thereof, (d) make any redemption, prepayment (whether mandatory or optional), defeasance, repurchase or any other payment in respect of any Subordinated Debt, (e) set aside funds for any of the foregoing, (f) may make regularly scheduled payments of interest and principal in respect of Subordinated Debt to the extent permitted under the subordination provisions thereof and, (g) pay any Earn-Outs; provided that, for purposes of clarification, Subsidiaries of the Borrower shall at all times be permitted to make dividends or distributions to any of the Loan Parties.

 

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10.13                 Other Agreements.   In the event that the Borrower shall, directly or indirectly, enter into, or otherwise consent to any agreement or instrument which includes financial covenants not included in this Agreement or any other more favorable terms (including without limitation events of default), or covenants that are more restrictive as to the Borrower than those contained in this Agreement, this Agreement shall be deemed to be amended to include such additional or more restrictive covenants or terms so long as such additional or more restrictive covenants or terms remain in effect under the other agreement or instrument.

 

SECTION 11                                                NEGATIVE COVENANTS

 

Until the expiration or termination of the Commitments and thereafter until all Obligations hereunder and under the other Loan Documents are paid in full and all Letters of Credit have been terminated or Cash Collateralized, Borrower agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, it will:

 

11.1                        Debt.  Not, and not permit any other Loan Party to, create, incur, assume or suffer to exist any Debt, except:

 

(a)                                 Obligations under this Agreement, the other Loan Documents, the Note Agreement and the Senior Note Documents;

 

(b)                                 Debt secured by Liens permitted by Section 11.2(d) (including the Debt set forth in Schedule 10.1(c)), and extensions, renewals and refinancings thereof subject to pro forma compliance with the financial covenants set forth in Section 11.14 herein;

 

(c)                                  Debt of Borrower to any Guarantor or Debt of any Guarantor to Borrower or another Guarantor;

 

(d)                                 Subordinated Debt provided that (i) Borrower is in pro forma compliance with the financial covenants set forth in Section 11.14 herein including pro forma compliance with the Fixed Charge Coverage Ratio such that the denominator also includes the greater of $7,500,000 or the actual maximum amount of annual principal amortization under any Senior Notes, whether or not such amortization has occurred in the past 12 months; (ii) the aggregate amount of Subordinated Debt shall not exceed 0.5x Pro Forma EBITDA when such Subordinated Debt is, or is to be, issued; and (iii) Borrower uses a Subordination Agreement substantially in the form attached hereto as Exhibit F;

 

(e)                                  Hedging Obligations approved by Administrative Agent and incurred in favor of a Lender or an Affiliate thereof for bona fide hedging purposes and not for speculation;

 

(f)                                   Debt described on Schedule 11.1 and any extension, renewal or refinancing thereof so long as the principal amount thereof is not increased;

 

(g)                                  Contingent Liabilities arising with respect to customary indemnification obligations in favor of sellers in connection with Permitted Acquisitions and purchasers in connection with dispositions permitted under Section 11.8; and

 

(h)                                 Other unsecured Debt subject to pro forma compliance with the financial covenants set forth in Section 11.14 herein.

 

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11.2                        Liens.  Subject to Section 11.14.4, not, and not permit any other Loan Party to, create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except:

 

(a)                                 Liens for taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves in accordance with GAAP and the execution or other enforcement of which is effectively stayed;

 

(b)                                 Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by law and (ii) Liens in the form of deposits or pledges incurred in connection with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being diligently contested in good faith by appropriate proceedings and not involving any advances or borrowed money or the deferred purchase price of property or services and, in each case, for which it maintains adequate reserves in accordance with GAAP and the execution or other enforcement of which is effectively stayed;

 

(c)                                  Liens described on Schedule 11.2 as of the Closing Date and the replacement, extension or renewal thereof;

 

(d)                                 subject to the limitation set forth in Section 11.1(b), (i) Liens arising in connection with Capital Leases (and attaching only to the property being leased), (ii) Liens existing on property at the time of the acquisition thereof by any Loan Party (and not created in contemplation of such acquisition) and (iii) Liens on equipment or real property;

 

(e)                                  attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding $3,000,000 arising in connection with court proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings;

 

(f)                                   easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of any Loan Party; and

 

(g)                                  Liens arising under the Loan Documents.

 

11.3                        RESERVED.

 

11.4                        RESERVED.

 

11.5                        Mergers, Consolidations.  Not, and not permit any other Loan Party to be a party to any merger or consolidation except (a)(x) any Subsidiary may merge or consolidate with or into, or transfer its assets to, any Guarantor; provided that in any such merger or consolidation, the continuing or surviving Person is such Guarantor and (y) any Subsidiary may merge or consolidate with or into, or transfer its assets to, the Borrower; provided that in any such merger or consolidation, the continuing or surviving Person is the Borrower; and

 

(b)                              other than as set forth in clause (a), the Borrower may merge or consolidate with or into any Person (other than any of its Subsidiaries); provided that in any such merger or consolidation, the continuing or surviving Person is the Borrower and such merger or consolidation is otherwise in compliance with 11.11 and the requirements of a Permitted Acquisition.

 

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11.6                        Modification of Organizational Documents.  Not permit the charter, by-laws or other organizational documents of any Loan Party to be amended or modified in any way which could reasonably be expected to materially adversely affect the interests of the Lenders; not change, or allow any Loan Party to change, its state of formation or its organizational form in any way which could reasonably be expected to have a material adverse affect on the interests of the Lenders.

 

11.7                        Transactions with Affiliates.  Not, and not permit any other Loan Party to, enter into, or cause, suffer or permit to exist any transaction, arrangement or contract with any of its other Affiliates (other than the Loan Parties) which is on terms which are less favorable than are obtainable from any Person which is not one of its Affiliates.

 

11.8                        Asset Disposition.  Not, and not permit any other Loan Party to sell, lease, transfer, or otherwise dispose of any assets of the Borrower or any other Loan Party except (a) transfers of assets to any of the Loan Parties, (b) Asset Dispositions of Inventory of any of the Loan Parties and Fixed Assets of any of the Loan Parties (in each case subject to clause (d) of this Section 11.8 and the latter also subject to Section 11.14.4) sold in the ordinary course of business, (c) obsolete or worn out equipment and (d) subject to the following sentence, Asset Dispositions to the extent the aggregate Net Cash Proceeds of such Asset Dispositions does not exceed, in any such Fiscal Year, 20% of the Tangible Assets of the Borrower and the other Loan Parties, as of the end of the immediately preceding Fiscal Year, and to the extent 100% of the consideration for such Asset Dispositions is in cash; provided that, to the extent otherwise meeting the requirements of this clause (d): (1) Net Cash Proceeds from Asset Dispositions which in the event that the assets subject to such Asset Disposition constituted Collateral, such Net Cash Proceeds are reinvested in property, all or substantially all (as determined by the Collateral Agent) of which such property shall be made subject to the Lien of the applicable Collateral Documents in favor of the Collateral Agent or (2) in the event that the assets subject to such Asset Disposition did not constitute Collateral, such Net Cash Proceeds are reinvested in assets similar to the assets which were subject to such Asset Disposition or in property which is otherwise used or useful in the business of the Borrower and the other Loan Parties, and in each case, such property is located within the United States; provided further that, to the extent actually reinvested in such assets or property within the 180-day period after the applicable Asset Disposition or committed to be reinvested within 90 days after the end of such period, such Net Cash Proceeds will be excluded from the calculation of aggregate Net Cash Proceeds in such Fiscal Year.  If the net sales proceeds of any asset sales, including the sale of any business, Subsidiary or investment, for any Fiscal Year are greater than 20% of Consolidated Tangible Assets of the Borrower and the Loan Parties, the Borrower shall be required to make prepayments in accordance with Section 6.2.2(i) and the Revolving Commitment shall be reduced as set forth in Section 6.2.2(a).

 

11.9                        Inconsistent Agreements.  Not, and not permit any other Loan Party to, enter into any agreement containing any provision which would (a) be violated or breached by any borrowing by Borrower hereunder or by the performance by any Loan Party of any of its Obligations hereunder or under any other Loan Document, (b) prohibit any Loan Party from granting to Administrative Agent and the Lenders, a Lien on any of its assets or (c) create or permit to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends or make other distributions to Borrower or any other Subsidiary, or pay any Debt owed to Borrower or any other Subsidiary, (ii) make loans or advances to any Loan Party or (iii) transfer any of its assets or properties to any Loan Party, other than (A) customary restrictions and conditions contained in agreements relating to the sale of all or a substantial part of the assets of any Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary to be sold and such sale is permitted hereunder (B) restrictions or conditions imposed by any agreement relating to purchase money Debt, Capital Leases

 

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and other secured Debt permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Debt, (C) customary provisions in leases and other contracts restricting the assignment thereof, and (D) provisions contained in the Senior Note Documents for so long as the obligations arising thereunder are subject to the Intercreditor Agreement.

 

11.10                 Business Activities.  Not, and not permit any other Loan Party to, engage in any line of business other than the businesses engaged in on the date hereof and businesses reasonably related thereto.

 

11.11                 Investments.  Not, and not permit any other Loan Party to, make or permit to exist any Investment in any other Person, except the following:

 

(a)                                 Investments in the form of contributions by any Loan Party in respect of the Capital Securities of any Guarantor, or as set forth on Schedule 11.1(a), Investments in existence on the date hereof in the form of contributions by any Loan Party in respect of the Capital Securities of any other Subsidiary of the Borrower; Investments constituting Debt permitted by Section 11.1;

 

(b)                                 Contingent Liabilities constituting Debt permitted by Section 11.1;

 

(c)                                  Cash Equivalent Investments;

 

(d)                                 Investments in securities of Account Debtors received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such Account Debtors;

 

(e)                                  to the extent not otherwise permitted hereunder, Investments listed on Schedule 11.11 as of the Closing Date;

 

(g)                                  to the extent not otherwise permitted hereunder, Investments in Joint Ventures (other than Construction Partnerships) not exceeding $50,000,000 in aggregate; and

 

(h)                                 Investments in the form of Permitted Acquisitions; provided that all such Investments, in Foreign Subsidiaries shall at no time exceed $20,000,000.

 

provided that any Investment which when made complies with the requirements of the definition of the term “Cash Equivalent Investment” may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements.

 

11.12                 Restriction of Amendments to Certain Documents.  Not, and not permit any other Loan Party to, amend or otherwise modify, or waive any rights under any provisions of any Subordinated Debt.

 

11.13                 Fiscal Year.  Not, and not permit any other Loan Party to, change its Fiscal Year.

 

11.14                 Financial Covenants.

 

11.14.1                      Tangible Net Worth.  The Borrower will not permit Tangible Net Worth, calculated as of the last day of each Fiscal Quarter (commencing December 31, 2012), to be less than $100,000,000, which required minimum amount will increase (i) on December 31, 2012, by twenty-five percent (25%) of Consolidated Net Income, as reported on the Borrower’s annual audited financial statements delivered pursuant to Section 10.1.1 for the fourth Fiscal Quarter of 2012 (but without reduction for any net loss) and (ii) thereafter, annually, commencing December 31, 2013, and each anniversary of such date by an amount equal to twenty-five percent (25%) of Consolidated Net Income reported on the Borrower’s annual audited financial statements delivered pursuant to Section 10.1.1 for the preceding Fiscal Year (but without reduction for any net loss).

 

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11.14.2                      Fixed Charge Coverage Ratio.  Not permit the Fixed Charge Coverage Ratio for the Borrower and the Subsidiaries for any Computation Period, calculated at the end of each Fiscal Quarter, commencing with the Computation Period ending December 31, 2012 to be less than 1.25x.

 

 11.14.3                   Senior Debt to EBITDA Ratio.  Not permit the Senior Debt to EBITDA Ratio for the Borrower and the Subsidiaries as of the last day of any Computation Period, calculated at the end of each Fiscal Quarter, to exceed 2.25x.

 

11.14.4                      Unencumbered Assets.  The Borrower will not permit, at any time, Unencumbered Fixed Assets owned by any of the Borrower and the other Loan Parties, to be valued at less than $45,000,000, calculated at the greatest of (a) net book value, (b) most recent insurance valuation, (c) market value (such as, for example, in the case of equipment, the value therefore as published by Ritchie Bros. Auctioneers), or (d) the estimated value provided by an independent third party acceptable to the Administrative Agent (in the case of Fixed Assets to which the foregoing clause (c) or (d) applies, with estimates of equipment value to be updated annually and estimates of real property value to be in accordance with most recent appraisals provided to the Administrative Agent prior to the date hereof) provided that, in the case of real property to which any of clauses (b), (c) or (d) shall apply, such calculation shall deduct from such insurance value, market value or estimated value, as applicable, the amount of any Debt secured by a Lien on such real property.  These Fixed Assets may be substituted for from time to time with consent of the Administrative Agent.

 

11.15                 Cancellation of Debt.  Not, and not permit any other Loan Party to, cancel any claim or debt owing to it, except for reasonable consideration or in the ordinary course of business, and except for the cancellation of debts or claims not to exceed $3,000,000  in any Fiscal Year.

 

11.16                 Laws, Regulations.  Borrower shall not, and shall not permit any other Loan Party to fail to comply with the laws, regulations and executive orders referred to in Sections 9.25 and 9.26.

 

SECTION 12                                                EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

 

The obligation of each Lender to make its Loans and of the Issuing Lenders to issue Letters of Credit is subject to the following conditions precedent:

 

12.1                        Initial Credit Extension.  The obligation of the Lenders to make the initial Loans and the obligation of the Issuing Lenders to issue their initial Letters of Credit (whichever first occurs) is, in addition to the conditions precedent specified in Section 12.2, subject to the condition precedent that the Administrative Agent shall have received all of the following, each duly executed and dated the Closing Date (or such earlier date as shall be satisfactory to Administrative Agent), in form and substance satisfactory to Administrative Agent (and the date on which all such conditions precedent have been satisfied or waived in writing by Administrative Agent and the Lenders is called the “Closing Date”):

 

12.1.1                             Agreement and Notes.  This Agreement and, to the extent requested by any Lender, a Note made payable to such Lender.

 

12.1.2                             Authorization Documents.  For each Loan Party, such Person’s (a) charter (or similar formation document), certified by the appropriate governmental authority; (b) good standing certificates in its state of incorporation (or formation) and in each other state requested by Administrative Agent; (c) bylaws (or similar governing document); (d) resolutions of its board of directors (or similar

 

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governing body) approving and authorizing such Person’s execution, delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby; and (e) signature and incumbency certificates of its officers executing any of the Loan Documents (it being understood that Administrative Agent and each Lender may conclusively rely on each such certificate until formally advised by a like certificate of any changes therein), all certified by its secretary or an assistant secretary (or similar officer) as being in full force and effect without modification.

 

12.1.3                             Consents, etc.  Certified copies of all documents evidencing any necessary corporate or partnership action, consents and governmental approvals (if any) required for the execution, delivery and performance by the Loan Parties of the documents referred to in this Section 12.

 

12.1.4                             Letter of Direction.  A letter of direction containing funds flow information with respect to the proceeds of the Loans on the Closing Date.

 

12.1.5                             Guaranty and Collateral Agreement.  A counterpart of the Guaranty and Collateral Agreement executed by each Loan Party, together with all instruments, transfer powers and other items required to be delivered in connection therewith.

 

12.1.6                             Perfection Certificate.  A Perfection Certificate completed and executed by each Loan Party.

 

12.1.7                             Subordination Agreements.  Subordination Agreements with respect to all Subordinated Debt.

 

12.1.8                             Opinions of Counsel.  Opinions of counsel for each Loan Party, including local counsel reasonably requested by Administrative Agent.

 

12.1.9                             Insurance.  Evidence of the existence of insurance required to be maintained pursuant to Section 10.3(b), together with evidence that Administrative Agent and, in the case of property and casualty, that the Collateral Agent has been named as a lender’s loss payee and an additional insured on all related insurance policies.

 

12.1.10                      Copies of Documents.  Copies of the Prudential Agreement and related documents certified by the secretary or assistant secretary (or similar officer) of Borrower as being true, accurate and complete.

 

12.1.11                      Payment of Fees.  Evidence of payment by Borrower of all accrued and unpaid fees, costs and expenses to the extent then due and payable on the Closing Date, together with all Attorney Costs of Administrative Agent to the extent invoiced prior to the Closing Date, plus such additional amounts of Attorney Costs as shall constitute Administrative Agent’s reasonable estimate of Attorney Costs incurred or to be incurred by Administrative Agent through the closing proceedings (provided that such estimate shall not thereafter preclude final settling of accounts between Borrower and Administrative Agent).

 

12.1.12                      Intercreditor Agreement.  The Intercreditor Agreement executed by Prudential.

 

12.1.13                      Search Results; Lien Terminations.  Certified copies of Uniform Commercial Code search reports dated a date reasonably near to the Closing Date, listing all effective financing statements which name any Loan Party (under their present names and any previous names) as debtors, together with (a) copies of such financing statements, and (b) such other Uniform Commercial Code termination statements as Administrative Agent may reasonably request.

 

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12.1.14                      Filings, Registrations and Recordings.  Administrative Agent shall have received each document (including Uniform Commercial Code financing statements) required by the Collateral Documents or under law or reasonably requested by Administrative Agent to be filed, registered or recorded in order to create in favor of Collateral Agent, for the benefit of the Lenders, a perfected Lien on the collateral described therein, prior to any other Liens (subject only to Liens permitted pursuant to Section 11.2), in proper form for filing, registration or recording.

 

12.1.15                      RESERVED.

 

12.1.16                      RESERVED.

 

12.1.17                      Other.  Such other documents as Administrative Agent or any Lender may reasonably request.

 

12.2                        Conditions.  The obligation (a) of each Lender to make each Loan and (b) of the Issuing Lenders to issue each Letter of Credit is subject to the following further conditions precedent that:

 

12.2.1                             Compliance with Warranties, No Default, etc.  Both before and after giving effect to any borrowing and the issuance of any Letter of Credit, the following statements shall be true and correct:

 

(a)                                 the representations and warranties of each Loan Party set forth in this Agreement and the other Loan Documents shall be true and correct in all respects with the same effect as if then made (except to the extent stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); and

 

(b)                                 no Default or Event of Default shall have then occurred and be continuing.

 

12.2.2                             Confirmatory Certificate.  If requested by Administrative Agent or any Lender, Administrative Agent shall have received (in sufficient counterparts to provide one to each Lender) a certificate dated the date of such requested Loan or Letter of Credit and signed by a duly authorized representative of Borrower as to the matters set out in Section 12.2.1 (it being understood that each request by Borrower for the making of a Loan or the issuance of a Letter of Credit shall be deemed to constitute a representation and warranty by Borrower that the conditions precedent set forth in Section 12.2.1 will be satisfied at the time of the making of such Loan or the issuance of such Letter of Credit), together with such other documents as Administrative Agent or any Lender may reasonably request in support thereof.

 

SECTION 13                                                EVENTS OF DEFAULT AND THEIR EFFECT.

 

13.1                        Events of Default.  Each of the following shall constitute an Event of Default under this Agreement:

 

13.1.1                             Non-Payment of the Loans, etc.  Default in the payment when due of the principal of any Loan; or default, and continuance thereof for five (5) Business Days, in the payment when due of any interest, fee, reimbursement obligation with respect to any Letter of Credit or other amount payable by Borrower hereunder or under any other Loan Document.

 

13.1.2                             Non-Payment of Other Debt.  Any default shall occur under the terms applicable to any Debt of any Loan Party in an aggregate amount (for all such Debt so affected and including undrawn committed or available amounts and amounts owing to all creditors under any combined or

 

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syndicated credit arrangement) exceeding $3,000,000 and such default shall (a) consist of the failure to pay such Debt when due, whether by acceleration or otherwise, or (b) accelerate the maturity of such Debt or permit the holder or holders thereof, or any trustee or agent for such holder or holders, to cause such Debt to become due and payable (or require any Loan Party to purchase or redeem such Debt or post cash collateral in respect thereof) prior to its expressed maturity.

 

13.1.3                             Other Material Obligations.  Default in the payment when due, or in the performance or observance of, any material obligation of, or condition agreed to by, any Loan Party with respect to any material purchase or lease of goods or services where such default, singly or in the aggregate with all other such defaults, might reasonably be expected to have a Material Adverse Effect.

 

13.1.4                             Bankruptcy, Insolvency, etc.  Any Loan Party becomes insolvent or generally fails to pay, or admits in writing its inability or refusal to pay, debts as they become due; or any Loan Party applies for, consents to, or acquiesces in the appointment of a trustee, receiver or other custodian for such Loan Party or any property thereof, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for any Loan Party or for a substantial part of the property of any thereof and is not discharged within 60 days; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is commenced in respect of any Loan Party, and if such case or proceeding is not commenced by such Loan Party, it is consented to or acquiesced in by such Loan Party, or remains for 60 days undismissed; or any Loan Party takes any action to authorize, or in furtherance of, any of the foregoing.

 

13.1.5                             Non-Compliance with Loan Documents.  (a) Failure by any Loan Party to comply with or to perform any covenant set forth in Sections 10.1.1, 10.1.2, 10.1.3, 10.1.4, 10.1.5(a), 10.1.6, 10.1.8, 10.3(b), 10.5, 10.6 or Section 11; or (b) failure by any Loan Party to comply with or to perform any other provision of this Agreement or any other Loan Document (and not constituting an Event of Default under any other provision of this Section 13) and continuance of such failure described in this clause (b) for 30 days after written notice thereof by Administrative Agent.

 

13.1.6                             Representations; Warranties.  Any representation or warranty made by any Loan Party herein or any other Loan Document is breached or is false or misleading in any material respect, or any schedule, certificate, financial statement, report, notice or other writing furnished by any Loan Party to Administrative Agent or any Lender in connection herewith is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified.

 

13.1.7                             Pension Plans.  (a) Any Person institutes steps to terminate a Pension Plan if as a result of such termination Borrower or any member of the Controlled Group could be required to make a contribution to such Pension Plan, or could incur a liability or obligation to such Pension Plan, in excess of $10,000,000; (b) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA; (c) the Unfunded Liability exceeds twenty percent of the Total Plan Liability, or (d) there shall occur any withdrawal or partial withdrawal from a Multiemployer Pension Plan and the withdrawal liability (without unaccrued interest) to Multiemployer Pension Plans as a result of such withdrawal (including any outstanding withdrawal liability that Borrower or any member of the Controlled Group have incurred on the date of such withdrawal) exceeds $10,000,000.

 

13.1.8                             Judgments.  Final judgments which exceed an aggregate of $3,000,000 shall be rendered against any Loan Party and shall not have been paid, discharged or vacated or had execution thereof stayed pending appeal within 30 days after entry or filing of such judgments.

 

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13.1.9                             Invalidity of Collateral Documents, etc.  Any Collateral Document shall cease to be in full force and effect; or any Loan Party (or any Person by, through or on behalf of any Loan Party) shall contest in any manner the validity, binding nature or enforceability of any Collateral Document.

 

13.1.10                      Invalidity of Subordination Provisions, etc.  Any subordination provision in any document or instrument governing Subordinated Debt, or any subordination provision in any subordination agreement that relates to any Subordinated Debt, or any subordination provision in any guaranty by any Loan Party of any Subordinated Debt, shall cease to be in full force and effect, or any Loan Party or any other Person (including the holder of any applicable Subordinated Debt) shall contest in any manner the validity, binding nature or enforceability of any such provision.

 

13.1.11                      Change in Control.  A Change in Control shall occur.

 

13.2                        Effect of Event of Default.  If any Event of Default described in Section 13.1.4 shall occur in respect of Borrower, the Commitments shall immediately terminate and the Loans and all other Obligations hereunder shall become immediately due and payable and Borrower shall become immediately obligated to Cash Collateralize all Letters of Credit, all without presentment, demand, protest or notice of any kind; and, if any other Event of Default shall occur and be continuing, Administrative Agent may (and, upon the written request of the Required Lenders shall) declare the Commitments to be terminated in whole or in part and/or declare all or any part of the Loans and all other Obligations hereunder to be due and payable and/or demand that Borrower immediately Cash Collateralize all or any Letters of Credit, whereupon the Commitments shall immediately terminate (or be reduced, as applicable) and/or the Loans and other Obligations hereunder shall become immediately due and payable (in whole or in part, as applicable) and/or Borrower shall immediately become obligated to Cash Collateralize the Letters of Credit (all or any, as applicable), all without presentment, demand, protest or notice of any kind.  Administrative Agent shall promptly advise Borrower of any such declaration, but failure to do so shall not impair the effect of such declaration.  Subject to the terms of the Intercreditor Agreement, any cash collateral delivered hereunder shall be held by Administrative Agent (without liability for interest thereon) and applied to the Obligations arising in connection with any drawing under a Letter of Credit.  After the expiration or termination of all Letters of Credit, such cash collateral shall be applied by Administrative Agent to any remaining Obligations hereunder and any excess shall be delivered to Borrower or as a court of competent jurisdiction may elect.

 

13.3                        Credit Bidding.  The Loan Parties and the Lenders hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product provider shall be deemed to authorize) Administrative Agent, based upon the instruction of the Required Lenders, to Credit Bid and purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (and the Loan Parties shall approve Administrative Agent as a qualified bidder and such Credit Bid as qualified bid) at any sale thereof conducted by Administrative Agent, based upon the instruction of the Required Lenders, under any provisions of the Uniform Commercial Code, as part of any sale or investor solicitation process conducted by any Loan Party, any interim receiver, receiver, receiver and manager, administrative receiver, trustee, agent or other Person pursuant or under any insolvency laws; provided, however, that (i) the Required Lenders may not direct Administrative Agent in any manner that does not treat each of the Lenders equally, without preference or discrimination, in respect of consideration received as a result of the Credit Bid, (ii) the acquisition documents shall be commercially reasonable and contain customary protections for minority holders, such as, among other things, anti-dilution and tag-along rights, (iii) the exchanged debt or equity securities must be freely transferable, without restriction (subject to applicable securities laws) and (iv) reasonable efforts shall be made to structure the acquisition in a manner that causes the governance documents pertaining thereto to not impose any obligations or liabilities upon the Lenders individually (such as indemnification obligations).

 

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For purposes of the preceding sentence, the term “Credit Bid” shall mean, an offer submitted by Administrative Agent (on behalf of the Lender group), based upon the instruction of the Required Lenders, to acquire the property of any Loan Party or any portion thereof in exchange for and in full and final satisfaction of all or a portion (as determined by Administrative Agent, based upon the instruction of the Required Lenders) of the claims and Obligations under this Agreement and other Loan Documents.

 

SECTION 14                                                THE AGENT.

 

14.1                        Appointment and Authorization.  Each Lender hereby irrevocably (subject to Section 14.10) appoints, designates and authorizes Administrative Agent (including in its capacity as Collateral Agent for all purposes of this Section 14) to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, Administrative Agent shall not have any duty or responsibility except those expressly set forth herein, nor shall Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Administrative Agent.  Without limiting the generality of the foregoing sentence, the use of the term “agent” herein and in other Loan Documents with reference to Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

 

14.2                        Issuing Lenders.  The Issuing Lenders shall act on behalf of the Lenders (according to their Pro Rata Shares) with respect to any Letters of Credit issued by them and the documents associated therewith.  The Issuing Lenders shall have all of the benefits and immunities (a) provided to Administrative Agent in this Section 14 with respect to any acts taken or omissions suffered by the Issuing Lenders in connection with Letters of Credit issued by them or proposed to be issued by them and the applications and agreements for letters of credit pertaining to such Letters of Credit as fully as if the term “Administrative Agent”, as used in this Section 14, included the Issuing Lenders with respect to such acts or omissions and (b) as additionally provided in this Agreement with respect to the Issuing Lenders.

 

14.3                        Delegation of Duties.  Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties.  Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects in the absence of gross negligence or willful misconduct.

 

14.4                        Exculpation of Administrative Agent.  None of Administrative Agent nor any of its directors, officers, employees or agents shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except to the extent resulting from its own gross negligence or willful misconduct in connection with its duties expressly set forth herein as determined by a final, nonappealable judgment by a court of competent jurisdiction), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by any Loan Party or Affiliate of Borrower, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness,

 

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genuineness, enforceability or sufficiency of this Agreement or any other Loan Document (or the creation, perfection or priority of any Lien or security interest therein), or for any failure of Borrower or any other party to any Loan Document to perform its Obligations hereunder or thereunder.  Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of Borrower or any of Borrower’s Subsidiaries or Affiliates.

 

14.5                        Reliance by Administrative Agent.  Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, electronic mail message, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrower), independent accountants and other experts selected by Administrative Agent.  Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, confirmation from the Lenders of their obligation to indemnify Administrative Agent against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon each Lender.  For purposes of determining compliance with the conditions specified in Section 12, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless Administrative Agent shall have received written notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

 

14.6                        Notice of Default.  Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default or Default except with respect to defaults in the payment of principal, interest and fees required to be paid to Administrative Agent for the account of the Lenders, unless Administrative Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Event of Default or Default and stating that such notice is a “notice of default”.  Administrative Agent will notify the Lenders of its receipt of any such notice.  Administrative Agent shall take such action with respect to such Event of Default or Default as may be requested by the Required Lenders in accordance with Section 13; provided that unless and until Administrative Agent has received any such request, Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default or Default as it shall deem advisable or in the best interest of the Lenders.

 

14.7                        Credit Decision.  Each Lender acknowledges that Administrative Agent has not made any representation or warranty to it, and that no act by Administrative Agent hereafter taken, including any consent and acceptance of any assignment or review of the affairs of the Loan Parties, shall be deemed to constitute any representation or warranty by Administrative Agent to any Lender as to any matter, including whether Administrative Agent has disclosed material information in its possession.  Each Lender represents to Administrative Agent that it has, independently and without reliance upon Administrative Agent and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties, and made its own decision to enter into this Agreement and to extend credit to Borrower hereunder.  Each Lender also represents that it will, independently and without reliance upon Administrative Agent and based on such documents and

 

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information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower.  Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by Administrative Agent, Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial or other condition or creditworthiness of Borrower which may come into the possession of Administrative Agent.

 

14.8                        Indemnification.  Whether or not the transactions contemplated hereby are consummated, each Lender shall indemnify upon demand Administrative Agent and its directors, officers, employees and agents (to the extent not reimbursed by or on behalf of Borrower and without limiting the obligation of Borrower to do so), according to its applicable Pro Rata Share, from and against any and all Indemnified Liabilities (as hereinafter defined); provided that no Lender shall be liable for any payment to any such Person of any portion of the Indemnified Liabilities to the extent determined by a final, nonappealable judgment by a court of competent jurisdiction to have resulted from the applicable Person’s own gross negligence or willful misconduct.  No action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section.  Without limitation of the foregoing, each Lender shall reimburse Administrative Agent upon demand for its ratable share of any costs or out of pocket expenses (including Attorney Costs and Taxes) incurred by Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Administrative Agent is not reimbursed for such expenses by or on behalf of Borrower.  The undertaking in this Section shall survive repayment of the Loans, cancellation of the Notes, expiration or termination of the Letters of Credit, any foreclosure under, or modification, release or discharge of, any or all of the Collateral Documents, termination of this Agreement and the resignation or replacement of Administrative Agent.

 

14.9                        Administrative Agent in Individual Capacity.  PrivateBank and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Loan Parties and Affiliates as though PrivateBank were not Administrative Agent hereunder and without notice to or consent of any Lender.  Each Lender acknowledges that, pursuant to such activities, PrivateBank or its Affiliates may receive information regarding Borrower or its Affiliates (including information that may be subject to confidentiality obligations in favor of Borrower or such Affiliate) and acknowledge that Administrative Agent shall be under no obligation to provide such information to them.  With respect to their Loans (if any),  PrivateBank and its Affiliates shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though PrivateBank were not Administrative Agent, and the terms “Lender” and “Lenders” include PrivateBank and its Affiliates, to the extent applicable, in their individual capacities.

 

14.10                 Successor Administrative Agent.  Administrative Agent may resign as Administrative Agent upon 30 days’ notice to the Lenders.  If Administrative Agent resigns under this Agreement, the Required Lenders shall, with (so long as no Event of Default exists) the consent of Borrower (which shall not be unreasonably withheld or delayed), appoint from among the Lenders a successor agent for the Lenders.  If no successor agent is appointed prior to the effective date of the resignation of Administrative Agent, Administrative Agent may appoint, after consulting with the Lenders and Borrower, a successor agent from among the Lenders.  Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Administrative

 

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Agent and the term “Administrative Agent” shall mean such successor agent, and the retiring Administrative Agent’s appointment, powers and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 14 and Sections 15.5 and 15.16 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.  If no successor agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

 

14.11                 Collateral Matters.  Each Lender authorizes and directs Administrative Agent to enter into the other Loan Documents for the benefit of Lenders.  Each Lender hereby agrees that, except as otherwise set forth herein, any action taken by Required Lenders in accordance with the provisions of this Agreement or the other Loan Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all Lenders.  Administrative Agent is hereby authorized on behalf of all Lenders, without the necessity of any notice to or further consent from any Lender to take any action with respect to any Collateral or Loan Documents which may be necessary to perfect and maintain perfected the Liens upon the Collateral granted pursuant to this Agreement and the other Loan Documents.  The Lenders irrevocably authorize Administrative Agent, at its option and in its discretion, (a) to release any Lien granted to or held by Collateral Agent under any Collateral Document (i) upon termination of the Commitments and payment in full of all Loans and all other obligations of Borrower hereunder and the expiration or termination of all Letters of Credit; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any disposition permitted hereunder (including the release of any Guarantor); or (iii) subject to Section 15.1, if approved, authorized or ratified in writing by the Required Lenders; or (b) to subordinate its interest in any Collateral to any holder of a Lien on such Collateral which is permitted by Section 11.2(d)(i) or (d)(iii) (it being understood that Administrative Agent may conclusively rely on a certificate from Borrower in determining whether the Debt secured by any such Lien is permitted by Section 11.1(b)).  Upon request by Administrative Agent at any time, the Lenders will confirm in writing Collateral Agent’s authority to release, or subordinate its interest in, particular types or items of Collateral pursuant to this Section 14.11.  Each Lender hereby authorizes Administrative Agent to give blockage notices in connection with any Subordinated Debt at the direction of Required Lenders and agrees that it will not act unilaterally to deliver such notices.

 

14.12                 Restriction on Actions by Lenders.   Each Lender agrees that it shall not, without the express written consent of Administrative Agent, and shall, upon the written request of Administrative Agent (to the extent it is lawfully entitled to do so), set off against the Obligations, any amounts owing by such Lender to a Loan Party or any deposit accounts of any Loan Party now or hereafter maintained with such Lender.  Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Administrative Agent, take or cause to be taken, any action, including the a commencement of any legal or equitable proceedings to foreclose any loan or otherwise enforce any security interest in any of the Collateral or to enforce all or any part of this Agreement or the other Loan Documents.  All enforcement actions under this Agreement and the other Loan Documents against the Loan Parties or any third party with respect to the Obligations or the Collateral may only be taken by Administrative Agent (at the direction of the Required Lenders or as otherwise permitted in this Agreement) or by its agents, including the Collateral Agent, at the direction of Administrative Agent.

 

14.13                 Administrative Agent May File Proofs of Claim.  In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Administrative Agent shall have made any demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

 

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(a)                                 to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and Administrative Agent under Sections 5, 15.5 and 15.17) allowed in such judicial proceedings; and

 

(b)                                 to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to Administrative Agent and, in the event that Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Administrative Agent and its agents and counsel, and any other amounts due Administrative Agent under Sections 5, 15.5 and 15.17.

 

Nothing contained herein shall be deemed to authorize Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

 

14.14                 Other Agents; Arrangers and Managers.  None of the Lenders or other Persons identified on the facing page or signature pages of this Agreement as a “syndication agent,” “documentation agent,” “co-agent,” “book manager,” “lead manager,” “arranger,” “lead arranger” or “co-arranger”, if any, shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than, in the case of such Lenders, those applicable to all Lenders as such.  Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender.  Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

 

SECTION 15                                                GENERAL.

 

15.1                        Waiver; Amendments.  No delay on the part of Administrative Agent or any Lender in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy.  No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the other Loan Documents shall in any event be effective unless the same shall be in writing and acknowledged by Lenders having an aggregate Pro Rata Shares of not less than the aggregate Pro Rata Shares expressly designated herein with respect thereto or, in the absence of such designation as to any provision of this Agreement, by the Required Lenders, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  No amendment, modification, waiver or consent shall (a) extend or increase the Commitment of any Lender without the written consent of such Lender, (b) extend the date scheduled for payment of any principal (excluding required prepayments of the Loans) of or interest on the Loans or any fees payable hereunder without the written consent of each Lender directly affected

 

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thereby, (c) reduce the principal amount of any Loan, the rate of interest thereon or any fees payable hereunder, without the consent of each Lender directly affected thereby (except for periodic adjustments of interest rates and fees resulting from a change in the Applicable Margin as provided for in this Agreement); or (d) release any Guarantor from its obligations under the Guaranty and Collateral Agreement, other than as part of or in connection with any disposition permitted hereunder, or all or any substantial part of the Collateral granted under the Collateral Documents (except as permitted by Section 14.11), change the definition of Required Lenders, any provision of this Section 15.1, any provision of Section 13.3 or reduce the aggregate Pro Rata Share required to effect an amendment, modification, waiver or consent, without, in each case set forth in this clause (d), the written consent of all Lenders.  No provision of Section 14 or other provision of this Agreement affecting Administrative Agent in its capacity as such shall be amended, modified or waived without the consent of Administrative Agent.  No provision of this Agreement relating to the rights or duties of the Issuing Lenders in their capacities as such shall be amended, modified or waived without the consent of the Issuing Lenders.

 

Notwithstanding the foregoing, this agreement may be amended (or amended and restated) with the written consent of the Required Lenders, Administrative Agent and Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Revolving Loans, the Revolving Commitments and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders.

 

If, in connection with any proposed amendment, modification, waiver or termination requiring the consent of all Lenders, the consent of the Required Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained being referred to as a “Non-Consenting Lender”), then, so long as Administrative Agent is not a Non-Consenting Lender, Administrative Agent and/or a Person or Persons reasonably acceptable to Administrative Agent shall have the right to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon Administrative Agent’s request, sell and assign to Administrative Agent and/or such Person or Persons, all of the Loans and Revolving Commitments of such Non-Consenting Lenders for an amount equal to the principal balance of all such Loans and Revolving Commitments held by such Non-Consenting Lenders and all accrued interest, fees, expenses and other amounts then due with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment Agreement.

 

15.2                        Confirmations.  Borrower and each holder of a Note agree from time to time, upon written request received by it from the other, to confirm to the other in writing (with a copy of each such confirmation to Administrative Agent) the aggregate unpaid principal amount of the Loans then outstanding under such Note.

 

15.3                        Notices.  Except as otherwise provided in Sections 2.2.2 and 2.2.3, all notices hereunder shall be in writing (including facsimile transmission) and shall be sent to the applicable party at its address shown on Annex B or at such other address as such party may, by written notice received by the other parties, have designated as its address for such purpose.  Notices sent by facsimile transmission shall be deemed to have been given when sent; notices sent by mail shall be deemed to have been given three (3) Business Days after the date when sent by registered or certified mail, postage prepaid; and notices sent by hand delivery or overnight courier service shall be deemed to have been given when received.  For purposes of Sections 2.2.2 and 2.2.3, Administrative Agent shall be entitled to rely on telephonic instructions from any person that Administrative Agent in good faith believes is an authorized officer or employee of Borrower, and Borrower shall hold Administrative Agent and each other Lender harmless from any loss, cost or expense resulting from any such reliance.

 

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15.4                        Computations.  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 purpose of this Agreement, such determination or calculation shall, to the extent applicable and except as otherwise specified in this Agreement, be made in accordance with GAAP, consistently applied; provided that if Borrower notifies Administrative Agent that Borrower wishes to amend any covenant in Sections 10 or 11.14 (or any related definition) to eliminate or to take into account the effect of any change in GAAP on the operation of such covenant (or if Administrative Agent notifies Borrower that the Required Lenders wish to amend Sections 10 or 11.14 (or any related definition) for such purpose), then Borrower’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant (or related definition) is amended in a manner satisfactory to Borrower and the Required Lenders.  Notwithstanding the foregoing, upon a change in GAAP concerning the treatment of leases (ASC Topic 840, “Leases”) Borrower shall continue to calculate relevant covenants on the basis of GAAP in effect immediately prior to such change and shall provide a reconciliation of the calculations to GAAP.

 

15.5                        Costs, Expenses and Taxes.  Each Loan Party, jointly and severally agrees to pay on demand all reasonable out-of-pocket costs and expenses of Administrative Agent (including Attorney Costs and any Taxes) in connection with the preparation, execution, syndication, delivery and administration (including perfection and protection of any Collateral and the costs of Intralinks (or other similar service), if applicable) of this Agreement, the other Loan Documents and all other documents provided for herein or delivered or to be delivered hereunder or in connection herewith (including any amendment, supplement or waiver to any Loan Document), whether or not the transactions contemplated hereby or thereby shall be consummated, and all reasonable out-of-pocket costs and expenses (including Attorney Costs and any Taxes) incurred by Administrative Agent and each Lender after an Event of Default in connection with the collection of the Obligations or the enforcement of this Agreement the other Loan Documents or any such other documents or during any workout, restructuring or negotiations in respect thereof.  In addition, each Loan Party agrees to pay, and to save Administrative Agent and the Lenders harmless from all liability for, any fees of Borrower’s auditors in connection with any reasonable exercise by Administrative Agent and the Lenders of their rights pursuant to Section 10.2.  All Obligations provided for in this Section 15.5 shall survive repayment of the Loans, cancellation of the Notes, expiration or termination of the Letters of Credit and termination of this Agreement.

 

15.6                        Assignments; Participations.

 

15.6.1                             Assignments.  (a) Any Lender may at any time assign to one or more Persons (any such Person, an “Assignee”) all or any portion of such Lender’s Loans and Commitments, with the prior written consent of Administrative Agent, the Issuing Lenders (for an assignment of the Revolving Loans and the Revolving Commitment) and, so long as no Event of Default exists, Borrower (which consents shall not be unreasonably withheld or delayed and shall not be required for an assignment by a Lender to a Lender or an Affiliate of a Lender).  Except as Administrative Agent may otherwise agree, any such assignment shall be in a minimum aggregate amount equal to $5,000,000 or, if less, the remaining Commitment and Loans held by the assigning Lender.  Borrower and Administrative Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned to an Assignee until Administrative Agent shall have received and accepted an effective assignment agreement in substantially the form of Exhibit C hereto (an “Assignment Agreement”) executed, delivered and fully completed by the applicable parties thereto and a processing fee of $3,500.  No assignment may be made to any Person if at the time of such assignment Borrower would be obligated to pay any greater amount under Sections 7.6 or 8 to the Assignee than Borrower is then obligated to pay to the assigning Lender under such Sections (and if any assignment is made in violation of the foregoing, Borrower will not be required to pay such greater amounts).  Any attempted assignment

 

60

 

not made in accordance with this Section 15.6.1 shall be treated as the sale of a participation under Section 15.6.2.  Borrower shall be deemed to have granted its consent to any assignment requiring its consent hereunder unless Borrower has expressly objected to such assignment within three (3) Business Days after notice thereof.

 

(b)           From and after the date on which the conditions described above have been met, (i) such Assignee shall be deemed automatically to have become a party hereto and, to the extent that rights and obligations hereunder have been assigned to such Assignee pursuant to such Assignment Agreement, shall have the rights and obligations of a Lender hereunder and (ii) the assigning Lender, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment Agreement, shall be released from its rights (other than its indemnification rights) and obligations hereunder.  Upon the request of the Assignee (and, as applicable, the assigning Lender) pursuant to an effective Assignment Agreement, Borrower shall execute and deliver to Administrative Agent for delivery to the Assignee (and, as applicable, the assigning Lender) a Note in the principal amount of the Assignee’s Pro Rata Share of the Revolving Commitment (and, as applicable, a Note in the principal amount of the Pro Rata Share of the Revolving Commitment retained by the assigning Lender).  Each such Note shall be dated the effective date of such assignment.  Upon receipt by Administrative Agent of such Note(s), the assigning Lender shall return to Borrower any prior Note held by it.

 

(c)           Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

15.6.2            Participations.  Any Lender may at any time sell to one or more Persons participating interests in its Loans, Commitments or other interests hereunder (any such Person, a “Participant”).  In the event of a sale by a Lender of a participating interest to a Participant, (a) such Lender’s obligations hereunder shall remain unchanged for all purposes, (b) Borrower and Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations hereunder and (c) all amounts payable by Borrower shall be determined as if such Lender had not sold such participation and shall be paid directly to such Lender.  No Participant shall have any direct or indirect voting rights hereunder except with respect to any event described in Section 15.1 expressly requiring the unanimous vote of all Lenders or, as applicable, all affected Lenders.  Each Lender agrees to incorporate the requirements of the preceding sentence into each participation agreement which such Lender enters into with any Participant.  Borrower agrees that if amounts outstanding under this Agreement are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement and with respect to any Letter of Credit to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement; provided that such right of set-off shall be subject to the obligation of each Participant to share with the Lenders pursuant to the terms of the Intercreditor Agreement, and the Lenders agree to share with each Participant, as provided in Section 7.5.  Borrower also agrees that each Participant shall be entitled to the benefits of Section 7.6 or 8 as if it were a Lender (provided that on the date of the participation no Participant shall be entitled to any greater compensation pursuant to Section 7.6 or 8 than would have been paid to the participating Lender on such date if no participation had been sold and that each Participant complies with Section 7.6(d) as if it were an Assignee).

 

15.7                Register.  Administrative Agent shall maintain a copy of each Assignment Agreement delivered and accepted by it and register (the “Register”) for the recordation of names and

 

61

 

addresses of the Lenders and the Commitment of each Lender from time to time and whether such Lender is the original Lender or the Assignee.  No assignment shall be effective unless and until the Assignment Agreement is accepted and registered in the Register. All records of transfer of a Lender’s interest in the Register shall be conclusive, absent manifest error, as to the ownership of the interests in the Loans. Administrative Agent shall not incur any liability of any kind with respect to any Lender with respect to the maintenance of the Register.

 

15.8                GOVERNING LAW.  THIS AGREEMENT AND EACH NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

 

15.9                Confidentiality.  As required by federal law and Administrative Agent’s policies and practices, Administrative Agent may need to obtain, verify, and record certain customer identification information and documentation in connection with opening or maintaining accounts, or establishing or continuing to provide services.  Administrative Agent and each Lender agree to use commercially reasonable efforts (equivalent to the efforts Administrative Agent or such Lender applies to maintain the confidentiality of its own confidential information) to maintain as confidential all information provided to them by any Loan Party and designated as confidential, except that Administrative Agent and each Lender may disclose such information (a) to Persons employed or engaged by Administrative Agent or such Lender in evaluating, approving, structuring or administering the Loans and the Commitments; (b) to any assignee or participant or potential assignee or participant that has agreed to comply with the covenant contained in this Section 15.9 (and any such assignee or participant or potential assignee or participant may disclose such information to Persons employed or engaged by them as described in clause (a) above); (c) as required or requested by any federal or state regulatory authority or examiner, or any insurance industry association, or as reasonably believed by Administrative Agent or such Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (d) as, on the advice of Administrative Agent’s or such Lender’s counsel, is required by law; (e) in connection with the exercise of any right or remedy under the Loan Documents or in connection with any litigation to which Administrative Agent or such Lender is a party; (f) to any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender; (g) to any Affiliate of Administrative Agent, the Issuing Lenders or any Lender who may provide Bank Products to the Loan Parties; (h) to Lender’s independent auditors and other professional advisors as to which such information has been identified as confidential; or (i) that ceases to be confidential through no fault of Administrative Agent or any Lender.  Notwithstanding the foregoing, Borrower consents to the publication by Administrative Agent or any Lender of a tombstone or similar advertising material relating to the financing transactions contemplated by this Agreement, and Administrative Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.  If any provision of any confidentiality agreement, non-disclosure agreement or other similar agreement between Borrower and Lender conflicts with or contradicts this Section 14.7 with respect to the treatment of confidential information, this section shall supersede all such prior or contemporaneous agreements and understandings between the parties.

 

15.10             Severability.  Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.  All obligations of the Loan Parties and rights of Administrative Agent and the Lenders expressed herein or in any other Loan Document shall be in addition to and not in limitation of those provided by applicable law.

 

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15.11             Nature of Remedies.  All Obligations of the Loan Parties and rights of Administrative Agent and the Lenders expressed herein or in any other Loan Document shall be in addition to and not in limitation of those provided by applicable law.  No failure to exercise and no delay in exercising, on the part of Administrative Agent or any Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

15.12             Entire Agreement.  This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the parties hereto and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof (except as relates to the fees described in Section 5.3) and any prior arrangements made with respect to the payment by the Loan Parties of (or any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf of Administrative Agent or the Lenders.

 

15.13             Counterparts.  This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement.  Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission shall constitute effective delivery thereof.  Electronic records of executed Loan Documents maintained by the Lenders shall deemed to be originals.

 

15.14             Successors and Assigns.  This Agreement shall be binding upon Borrower, the Lenders and Administrative Agent and their respective successors and assigns, and shall inure to the benefit of Borrower, the Lenders and Administrative Agent and the successors and assigns of the Lenders and Administrative Agent.  No other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents.  No Loan Party may assign or transfer any of its rights or Obligations under this Agreement without the prior written consent of Administrative Agent and each Lender.

 

15.15             Captions.  Section captions used in this Agreement are for convenience only and shall not affect the construction of this Agreement.

 

15.16             Customer Identification - USA Patriot Act Notice.  Each Lender and PrivateBank (for itself and not on behalf of any other party) hereby notifies the Loan Parties that, pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001 (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow such Lender or PrivateBank, as applicable, to identify the Loan Parties in accordance with the Act.

 

15.17             INDEMNIFICATION BY LOAN PARTIES.  IN CONSIDERATION OF THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY ADMINISTRATIVE AGENT AND THE LENDERS AND THE AGREEMENT TO EXTEND THE COMMITMENTS PROVIDED HEREUNDER, EACH LOAN PARTY HEREBY AGREES TO INDEMNIFY, EXONERATE AND HOLD ADMINISTRATIVE AGENT, EACH LENDER AND EACH OF THE OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES AND AGENTS, INCLUDING, WITHOUT LIMITATION, THE COLLATERAL AGENT,OF ADMINISTRATIVE AGENT AND EACH LENDER (EACH A “LENDER PARTY”) FREE AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, LOSSES, LIABILITIES, DAMAGES AND EXPENSES, INCLUDING ATTORNEY COSTS (COLLECTIVELY, THE “INDEMNIFIED

 

63

 

LIABILITIES”), INCURRED BY THE LENDER PARTIES OR ANY OF THEM AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANY TENDER OFFER, MERGER, PURCHASE OF CAPITAL SECURITIES, PURCHASE OF ASSETS (INCLUDING THE RELATED TRANSACTIONS) OR OTHER SIMILAR TRANSACTION FINANCED OR PROPOSED TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF ANY OF THE LOANS, (B) THE USE, HANDLING, RELEASE, EMISSION, DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN PARTY, (C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN PARTY OR THE OPERATIONS CONDUCTED THEREON, (D) THE INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH ANY LOAN PARTY OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THE EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY ANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED LIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION.  IF AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, EACH LOAN PARTY HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW.  ALL OBLIGATIONS PROVIDED FOR IN THIS SECTION 15.17 SHALL SURVIVE REPAYMENT OF THE LOANS, CANCELLATION OF THE NOTES, EXPIRATION OR TERMINATION OF THE LETTERS OF CREDIT, ANY FORECLOSURE UNDER, OR ANY MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE COLLATERAL DOCUMENTS AND TERMINATION OF THIS AGREEMENT.

 

15.18      Nonliability of Lenders.  The relationship between Borrower on the one hand and the Lenders and Administrative Agent on the other hand shall be solely that of borrower and lender.  Neither Administrative Agent nor any Lender has any fiduciary relationship with or duty to any Loan Party arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Loan Parties, on the one hand, and Administrative Agent and the Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor.  Neither Administrative Agent nor any Lender undertakes any responsibility to any Loan Party to review or inform any Loan Party of any matter in connection with any phase of any Loan Party’s business or operations.  Borrower agrees, on behalf of itself and each other Loan Party, that neither Administrative Agent nor any Lender shall have liability to any Loan Party (whether sounding in tort, contract or otherwise) for losses suffered by any Loan Party in connection with, arising out of, or in any way related to the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought.  NO LENDER PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT.  Each Loan Party acknowledges that it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party.  No joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Loan Parties and the Lenders

 

64

 

15.19     FORUM SELECTION AND CONSENT TO JURISDICTION.  ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.  EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  EACH LOAN PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.  EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

15.20     WAIVER OF JURY TRIAL.  EACH LOAN PARTY, ADMINISTRATIVE AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

15.21     WAIVER AND RELEASE OF DAMAGES.  BORROWER, ON BEHALF OF ITSELF AND EACH OTHER LOAN PARTY, ALL LENDERS, AND ADMINISTRATIVE AGENT SHALL HAVE NO LIABILITY WITH RESPECT TO, AND HEREBY WAIVE, RELEASE AND AGREE NOT TO SUE FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING DATE).

 

[signature pages follow]

 

65

 

The parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date first set forth above.

 

	
 
    	
PRIMORIS SERVICES   CORPORATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Peter J.   Moerbeek
    
	
 
    	
 
    	
Peter J. Moerbeek
    
	
 
    	
Title:
    	
CFO
    

 

 

Signature Page to Credit
 Agreement

 

 

	
 
    	
THE PRIVATEBANK AND TRUST   COMPANY,
    
	
 
    	
as   Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steve   Trepiccione
    
	
 
    	
 
    	
Steve Trepiccione
    
	
 
    	
 
    	
Managing Director
    

 

Signature Page to Credit
 Agreement

 

 

	
 
    	
THE PRIVATEBANK AND TRUST   COMPANY,
    
	
 
    	
as Collateral   Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steve   Trepiccione
    
	
 
    	
 
    	
Steve Trepiccione
    
	
 
    	
 
    	
Managing Director
    

 

Signature Page to Credit
 Agreement

 

 

	
 
    	
THE PRIVATEBANK AND TRUST   COMPANY,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steve   Trepiccione
    
	
 
    	
 
    	
Steve Trepiccione
    
	
 
    	
 
    	
Managing Director
    

 

Signature Page to Credit
 Agreement

 

 

	
 
    	
THE BANK OF THE WEST,
    
	
 
    	
as Co- Lead   Arranger and as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Alterman
    
	
 
    	
 
    	
David   Alterman
    
	
 
    	
Its:
    	
Senior   Vice President, Regional Manager
    

 

Signature Page to Credit
 Agreement

 

 

	
 
    	
IBERIABANK,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Edgar Santa Cruz
    
	
 
    	
 
    	
Edgar   Santa Cruz
    
	
 
    	
Its:
    	
Senior   Vice President
    

 

Signature Page to Credit
 Agreement

 

 

ANNEX A

 

LENDERS AND PRO RATA SHARES

 

	
Lender
    	
 
    	
Revolving Commitment
   Amount
    	
 
    	
Pro Rata Share*/
    	
 
    
	
The PrivateBank and Trust Company
    	
 
    	
$
    	
35,000,000
    	
 
    	
0.466666666
    	
%
    
	
The Bank of the West
    	
 
    	
$
    	
25,000,000
    	
 
    	
0.333333333
    	
%
    
	
IBERIABANK
    	
 
    	
$
    	
15,000,000
    	
 
    	
0.200000000
    	
%
    
	
TOTALS
    	
 
    	
$
    	
75,000,000
    	
 
    	
100
    	
%
    

 

*/                                     Carry out to nine decimal places.

 

Annex A to Credit Agreement

 

 

ANNEX B

 

ADDRESSES FOR NOTICES

 

PRIMORIS SERVICES CORPORATION, as Borrower

 

John M. Perisich

Sr. Vice President/General Counsel

26000 Commercentre Dr.

Lake Forest, CA  92630

Telephone:  (949) 454-7110

Facsimile:  (949) 595-5544 Facsimile

 

THE PRIVATEBANK AND TRUST COMPANY, as Administrative Agent, Issuing Lender and a Lender

 

Notices of Borrowing , Conversion, Continuation and Letter of Credit Issuance

 

120 South LaSalle Street
 Chicago, Illinois 60603
 Attention: John M. O’Connell
 Telephone: (312) 564-1239
 Facsimile:  (312) 564-6888

 

All Other Notices

 

120 South LaSalle Street
 Chicago, Illinois 60603
 Attention: John M. O’Connell
 Telephone: (312) 564-1239
 Facsimile:  (312) 564-6888

 

With a Copy to:

 

James E. Carroll

Perkins Coie LLP

131 South Dearborn Street, Suite 1700

Chicago, Illinois 60603

Telephone:  (312) 324-8445

Facsimile:  (312) 324-9445

 

IBERIABANK

 

Edgar Santa Cruz

Senior Vice President

601 Poydras Street, Suite 2075

New Orleans, LA 70130

Telephone: (504) 310-7332

Facsimile: (504) 310-7322

 

Annex B to Credit Agreement

 

 

With a copy to:

 

William H. Langenstein III

Chaffe McCall, LLP

1100 Poydras Street, Suite 2300

New Orleans, LA 70163

Telephone: (504) 585-7037

Facsimile: (504) 585-7075

 

BANK OF THE WEST

 

	
 
    	
Primary Credit   Contact
    	
 
    	
Secondary Credit   Contact
    
	
Name:
    	
David Alterman
    	
 
    	
Scott Nicholson
    
	
Company:
    	
Bank of the West
    	
 
    	
Bank of the West
    
	
Title:
    	
Senior Vice   President
    	
 
    	
Vice President
    
	
Address:
    	
15165 Ventura Blvd.,   Ste. 445
    	
 
    	
15165 Ventura   Blvd.
    
	
 
    	
Sherman Oaks,   CA  91403
    	
 
    	
Sherman Oaks,   CA  91403
    
	
Telephone:
    	
818-728-3629
    	
 
    	
818-986-4194
    
	
Facsimile:
    	
818-728-3611
    	
 
    	
818-728-3611
    
	
Email
    	
David.Alterman@bankofthewest.com
    	
 
    	
M.Scott.Nicholson@bankofthewest.com
    

 

 

EXHIBIT A

 

FORM OF NOTE

 

	
 
    	
,                 
    
	
$
    	
Chicago, Illinois
    

 

The undersigned, for value received, promises to pay to the order of                              (the “Lender”) at the principal office of The PrivateBank and Trust Company (the “Administrative Agent”) in Chicago, Illinois the aggregate unpaid amount of all Loans made to the undersigned by the Lender pursuant to the Credit Agreement referred to below (as shown on the schedule attached hereto (and any continuation thereof) or in the records of the Lender), such principal amount to be payable on the dates set forth in the Credit Agreement.

 

The undersigned further promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such Loan is paid in full, payable at the rate(s) and at the time(s) set forth in the Credit Agreement.  Payments of both principal and interest are to be made in lawful money of the United States of America.

 

This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Credit Agreement, dated as of [Date of Agreement] (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; terms not otherwise defined herein are used herein as defined in the Credit Agreement), among the undersigned, certain financial institutions (including the Lender) and Administrative Agent, to which Credit Agreement reference is hereby made for a statement of the terms and provisions under which this Note may or must be paid prior to its due date or its due date accelerated.

 

This Note is made under and governed by the laws of the State of Illinois applicable to contracts made and to be performed entirely within such State.

 

	
 
    	
PRIMORIS SERVICES   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    

 

Exhibit A to Credit Agreement

 

 

EXHIBIT B

 

FORM OF COMPLIANCE CERTIFICATE

 

To:                                                     The PrivateBank and Trust Company, as Administrative Agent

 

Please refer to the Credit Agreement dated as of [Date of Agreement]  (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Primoris Services Corporation (the “Borrower”), various financial institutions and The PrivateBank and Trust Company, as Administrative Agent.  Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement.

 

I.                                        Reports.  Enclosed herewith is a copy of the [annual audited/quarterly/monthly] report of Borrower as at                           ,          (the “Computation Date”), which report fairly presents in all material respects the financial condition and results of operations [(subject to the absence of footnotes and to normal year-end adjustments)] of Borrower as of the Computation Date and has been prepared in accordance with GAAP consistently applied.

 

II.                                  Financial Tests.  Borrower hereby certifies and warrants to you that the following is a true and correct computation as at the Computation Date of the following ratios and/or financial restrictions contained in the Credit Agreement:

 

A.                                    Section 11.14.1 - Tangible Net Worth

 

	
1.
    	
Tangible Net Worth
    	
$
    
	
 
    	
 
    	
 
    
	
 
    	
Minimum required
    	
At Computation Period ending December 31, 2012, $100,000,000   plus the greater of zero or 25% of Q4, 2012 Net   Income($                                                              )
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
At Computation Period ending   December 31, 2013, December 31, 2012 requirement plus the greater   of zero or 25% of 2013 Net Income   ($                                  )
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
At Computation Period ending   December 31, 2014 and each December 31 thereafter, the preceding   year’s requirement plus the greater of zero or 25% of that year’s Net   Income    ($                                      )
    

 

B.                                    Calculation of Consolidated EBIT

 

	
1.
    	
Consolidated operating earnings   before interest and taxes
    	
$
    
	
 
    	
 
    	
 
    
	
2.
    	
Income/loss from non-consolidated   entities
    	
$
    
	
 
    	
 
    	
 
    
	
3.
    	
Sum of (1) and (2) or   remainder of (2) minus (1)
    	
$
    
	
 
    	
 
    	
 
    
	
4.
    	
Less income or loss from   non-controlling interests
    	
$
    
	
 
    	
 
    	
 
    
	
5.
    	
Remainder of (3) minus (4)
    	
$
    

 

Exhibit B to Credit Agreement

 

 

C.                                    Calculation of EBITDA

 

	
1.
    	
Consolidated EBIT
    	
$
    
	
 
    	
 
    	
 
    
	
2.
    	
Depreciation
    	
$
    
	
 
    	
 
    	
 
    
	
3.
    	
Amortization
    	
$
    
	
 
    	
 
    	
 
    
	
4.
    	
Other Noncash Charges
    	
$
    
	
 
    	
 
    	
 
    
	
5.
    	
Sum of (1) through (4)
    	
$
    

 

D.                                    Section 11.14.2 - Minimum Fixed Charge Coverage Ratio

 

	
2.
    	
EBITDA
    	
$
    
	
 
    	
 
    	
 
    
	
3.
    	
Unfinanced Capital Expenditures
    	
$
    
	
 
    	
 
    	
 
    
	
4.
    	
Tax Expense
    	
$
    
	
 
    	
 
    	
 
    
	
5.
    	
Dividends
    	
$
    
	
 
    	
 
    	
 
    
	
6.
    	
Distributions
    	
$
    
	
 
    	
 
    	
 
    
	
7.
    	
Share Buybacks
    	
$
    
	
 
    	
 
    	
 
    
	
8.
    	
Sum of (2) through (6)
    	
$
    
	
 
    	
 
    	
 
    
	
9.
    	
Remainder of (1) minus (7)
    	
$
    
	
 
    	
 
    	
 
    
	
10.
    	
Interest Expense
    	
$
    
	
 
    	
 
    	
 
    
	
11.
    	
Required payments of principal of Funded Debt
    	
$
    
	
 
    	
 
    	
 
    
	
12.
    	
Sum of (9) and (10)
    	
$
    
	
 
    	
 
    	
 
    
	
13.
    	
Ratio of (8) to (11)
    	
 
    
	
 
    	
 
    	
 
    
	
14.
    	
Minimum Required
    	
      1.25 to 1
    

 

E.                                    Section 11.14.3 - Maximum Senior Debt to EBITDA Ratio

 

	
15.
    	
Senior Debt
    	
$
    
	
 
    	
 
    	
 
    
	
16.
    	
EBITDA
    	
$
    
	
 
    	
(from Item B(1) above)
    	
 
    
	
 
    	
 
    	
 
    
	
17.
    	
Ratio of (1) to (2)
    	
              to   1
    
	
 
    	
 
    	
 
    
	
18.
    	
Maximum allowed
    	
      2.25 to 1
    

 

 

F.                                     Section 11.14.4 - Unencumbered Assets*

 

	
Describe Assets
    	
 
    	
Value
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    
	
Total Value
    	
 
    	
 
    	
 
    
	
Minimum Required Value
    	
 
    	
$
    	
45,000,000
    	
 
    

 

*Include source of valuations for individual assets, or groups of related assets, in excess of $                        million.

 

G.                                   List any additional Subsidiaries, Affiliates or Investments since delivery of the last Compliance Certificate.

 

 

 

Borrower further certifies to you that no Default or Event of Default has occurred and is continuing.

 

Borrower has caused this Certificate to be executed and delivered by its duly authorized officer on                   ,         .

 

	
 
    	
PRIMORIS SERVICES   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

EXHIBIT C

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]  Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each]  Assignee identified in item 2 below ([the][each, an] “Assignee”).  [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees] hereunder are several and not joint.]   Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including, without limitation, the Letters of Credit included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”).  Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

 

	
1.
    	
Assignor[s]:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Assignee[s]:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
[for each   Assignee, indicate [Affiliate][Approved Fund] of [identify   Lender]]
    
	
 
    	
 
    	
 
    
	
3.
    	
Borrower(s):
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
4.
    	
Administrative   Agent: The   PrivateBank and Trust Company, as the administrative agent under the Credit   Agreement
    

 

Exhibit C to Credit Agreement

 

 

5.                                      Credit Agreement:                                             [Credit Agreement, dated as of [                ,             ], among Primoris Services Corporation, the Lenders from time to time party thereto, and The PrivateBank and Trust Company, as Administrative Agent

 

6.                                      Assigned Interest:

 

	
Assignor[s]
    	
 
    	
Assignee[s]
    	
 
    	
Facility
   Assigned
    	
 
    	
Aggregate
   Amount of
   Commitment/
   Loans for all
   Lenders
    	
 
    	
Amount of
   Commitment/
   Loans
   Assigned
    	
 
    	
Percentage
   Assigned of
   Commitment/
   Loans
    	
 
    	
[CUSIP
   Number]
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    

 

[7.                            Trade Date:                                       ]

 

Effective Date:                                      , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

	
 
    	
ASSIGNOR
    
	
 
    	
[NAME OF   ASSIGNOR]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ASSIGNEE
    
	
 
    	
[NAME OF   ASSIGNEE]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
[Consented to   and] Accepted:
    	
 
    
	
 
    	
 
    
	
THE PRIVATEBANK   AND TRUST COMPANY, as
    	
 
    
	
 Administrative Agent
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

 

[                                      ](1)

 

STANDARD TERMS AND CONDITIONS FOR
 ASSIGNMENT AND ASSUMPTION

 

1.                                      Representations and Warranties.

 

1.1.                            Assignor.  [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

 

1.2.                            Assignee.  [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under the Credit Agreement (subject to such consents, if any, as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section      thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vi) it has, independently and without reliance upon Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest; and (b) agrees that (i) it will, independently and without reliance upon Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

2.                                      Payments.  From and after the Effective Date, Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.

 

 

3.                                      General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Illinois.

 

 

EXHIBIT D

 

FORM OF NOTICE OF BORROWING

 

	
To:
    	
The PrivateBank   and Trust Company, as Administrative Agent
    
	
 
    	
120 S. LaSalle   Street
    
	
 
    	
Chicago, Illinois   60603
    
	
 
    	
Attention:
    
	
 
    	
Telecopier:
    

 

Please refer to the Credit Agreement dated as of [Date of Agreement] (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Primoris Services Corporation (the “Borrower”), various financial institutions and The PrivateBank and Trust Company, as Administrative Agent.  Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement.

 

The undersigned hereby gives irrevocable notice, pursuant to Section 2.2.2 of the Credit Agreement, of a request hereby for a borrowing as follows:

 

(i)            The requested borrowing date for the proposed borrowing (which is a Business Day) is                             ,         .

 

(ii)           The aggregate amount of the proposed borrowing is $                            .

 

(iii)          The type of Revolving Loans comprising the proposed borrowing are [Base Rate] [LIBOR] Loans.

 

(iv)          The duration of the Interest Period for each LIBOR Loan made as part of the proposed borrowing, if applicable, is                        months (which shall be 1, 2 or 3 months).

 

The undersigned hereby certifies that on the date hereof and on the date of borrowing set forth above, and immediately after giving effect to the borrowing requested hereby: (i) there exists and there shall exist no Default or Event of Default under the Credit Agreement; and (ii) each of the representations and warranties contained in the Credit Agreement and the other Loan Documents is true and correct as of the date hereof, except to the extent that such representation or warranty expressly relates to another date and except for changes therein expressly permitted or expressly contemplated by the Credit Agreement.

 

Borrower has caused this Notice of Borrowing to be executed and delivered by its officer thereunto duly authorized on                       ,             .

 

	
 
    	
PRIMORIS SERVICES   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    

 

Exhibit D to Credit Agreement

 

 

EXHIBIT E

 

FORM OF NOTICE OF CONVERSION/CONTINUATION

 

	
To:
    	
The PrivateBank   and Trust Company, as Administrative Agent
    
	
 
    	
120 S. LaSalle   Street
    
	
 
    	
Chicago, Illinois   60603
    
	
 
    	
Attention:
    
	
 
    	
Telecopier:
    

 

Please refer to the Credit Agreement dated as of [Date of Agreement] (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Primoris Services Corporation (the “Borrower”), various financial institutions and The PrivateBank and Trust Company, as Administrative Agent.  Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement.

 

The undersigned hereby gives irrevocable notice, pursuant to Section 2.2.3 of the Credit Agreement, of its request to:

 

(a)           on [    date    ] convert $[                ]of the aggregate outstanding principal amount of the [              ] Loan, bearing interest at the [                ] Rate, into a(n) [                ] Loan [and, in the case of a LIBOR Loan, having an Interest Period of [          ] month(s)];

 

[(b)        on [    date    ] continue $[                ]of the aggregate outstanding principal amount of the [              ] Loan, bearing interest at the LIBOR Rate, as a LIBOR Loan having an Interest Period of [          ] month(s)].

 

The undersigned hereby represents and warrants that all of the conditions contained in Section 12.2 of the Credit Agreement have been satisfied on and as of the date hereof, and will continue to be satisfied on and as of the date of the conversion/continuation requested hereby, before and after giving effect thereto.

 

Borrower has caused this Notice of Conversion/Continuation to be executed and delivered by its officer thereunto duly authorized on                       ,             .

 

	
 
    	
PRIMORIS SERVICES   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    

 

Exhibit E to Credit Agreement

 

 

EXHIBIT F

 

FORM OF SUBORDINATION AGREEMENT

 

Date:                              , 20      

 

Subordination Agreement

 

Primoris Services Corporation, a Delaware corporation (“Primoris”) has received loans, credit and other financial accommodations from The PrivateBank as Administrative Agent for itself and other lenders and from Prudential Investment Management, Inc. which is acting as agent for various noteholders (all such loans and accommodations are “Superior Indebtedness”, as described below, and such creditors’ agent or representative are herein called the “Senior Creditors”).

 

The undersigned is a creditor (the “Subordinate Creditor”) of Primoris or one of its subsidiaries (the “Borrower”).  In consideration of loans made or to be made, credit given or to be given, or other financial accommodations afforded or to be afforded to Primoris, on such terms as may be agreed upon between the Senior Creditors (the indebtedness of Borrower to which is the “Superior Indebtedness”) and Primoris, the Subordinate Creditor agrees that all monetary obligations of the Borrower to the Subordinate Creditor except for (i) wages earned and (ii) other payments (such as reimbursements and appropriate bonuses) to be made in the ordinary course of the Borrower’s business (collectively, the “Subordinated Indebtedness”) now existing or hereafter arising and howsoever evidenced or acquired (the aggregate principal amount of such Subordinated Indebtedness as of the date hereof being that amount outstanding pursuant to that certain Promissory Note, in form attached hereto as EXHIBIT A, in the face amount of                                      and 00/100 Dollars ($                        ) (the “Promissory Note”) of the Borrower payable to the Subordinate Creditor) shall be and remain junior and subordinate to the Senior Indebtedness whether now existing or hereafter arising, whether direct or indirect, secured or unsecured, absolute or contingent, joint and several, and howsoever owned, or acquired and whether the Borrower is or is not in bankruptcy, receivership, liquidation or any similar insolvency proceeding.

 

Addresses for notice purposes are set forth on the signature page.

 

Without limiting the generality of the foregoing, the Subordinate Creditor further agrees as follows:

 

1(a).        Except as provided in Section 1(c), so long as there is any default (whether with respect to payment or otherwise), or default would result therefrom, on any Superior Indebtedness no payment of principal or interest (notwithstanding the expressed maturity or any time for the payment of principal on the Promissory Note) shall be made on the Promissory Note except with the Senior Creditors’ prior written consent and the Subordinate Creditor will take no steps, whether by suit or otherwise to compel or enforce the collection of the Promissory Note, nor will the Subordinate Creditor use the Promissory Note by way of counterclaim, set off, recoupment or otherwise as to diminish, discharge or otherwise satisfy in whole or in part any indebtedness or liability of the Subordinate Creditor to the Borrower.

 

1(b).        The Subordinate Creditor shall not be entitled to accelerate outstanding obligations payable by the Borrower under the Promissory Note until 180 days after the date that the default giving rise to such right to accelerate was triggered and notice thereof was delivered to the Senior Creditors.

 

1(c).        The Borrower may, however, pay scheduled principal (including scheduled prepayments of principal) and interest on the Promissory Note without obtaining written consent of the Senior Creditors, so long as no event of default on Superior Indebtedness has occurred, or will occur as a result of such payment, and Subordinate Creditor need not give the Senior Creditors notice of such payments.

 

Exhibit F to Credit Agreement

 

 

2.             The Senior Creditors need not at any time give the Subordinate Creditor notice of any kind of the creation or existence of any Superior Indebtedness, nor of the amount or terms thereof, all such notice being hereby expressly waived.  Also, the Senior Creditors may at any time from time to time, without the consent of or notice to the Subordinate Creditor, without incurring responsibility to the Subordinate Creditor, and without impairing or releasing the obligation of the Subordinate Creditor under this agreement (i) renew, refund, refinance or extend the maturity of any Superior Indebtedness, or any part thereof, or otherwise revise, amend or alter the terms and conditions thereof, (ii) sell, exchange, release or otherwise deal with any property by whomsoever at any time pledged, mortgaged or otherwise hypothecated or subjected to a lien to secure any Superior Indebtedness, and (iii) exercise or refrain from exercising any rights against the Borrower and others, including any guarantors or the Subordinate Creditor.

 

3.             The Subordinate Creditor without prior written consent of the Senior Creditors will not sell, assign, transfer, pledge or hypothecate any Subordinated Indebtedness, or any part thereof, or agree to discharge or forgiveness of the same so long as there remains any Superior Indebtedness except subject to and in accordance with the terms hereof and upon the agreement of the transferee or assignee to abide by and be bound by the terms hereof.

 

4.             Upon receipt of notice of a default under the Superior Indebtedness or, regardless of notice, upon the bankruptcy, reorganization, receivership or liquidation of the Borrower, then until the Superior Indebtedness has been paid in full the Subordinate Creditor shall not be entitled to, and shall not accept any payment or distribution with respect to the Subordinated Indebtedness and will turn over to the Agent for the benefit of the Senior Creditors, in the form received, any such payment or other distribution the Subordinate Creditor does receive.

 

5.             The Subordinate Creditor will cause all Subordinated Indebtedness to be at all times evidenced by the Promissory Note or notes of the Borrower and will cause all such notes to bear thereon a legend substantially as follows:

 

“The indebtedness evidenced by this Note is subordinate to any and all indebtedness, obligations and liabilities of the maker hereof to certain of the Borrower’s secured lenders and their successors and assigns in the manner and to the extent set forth in that certain Subordination Agreement dated                           , 20      , to which reference is hereby made for a more full statement thereof.  The holder has agreed thereby without said lenders’ written consent not to sell, assign, transfer, pledge or hypothecate this Note.”

 

6.             This Subordination Agreement shall be continuing and binding until terminated in writing by the Senior Creditors.

 

	
 
    	
 
    
	
 
    	
(“Subordinate   Creditor”)
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
				

 

 

The PrivateBank and Trust Company

as Administrative Agent, Collateral Agent

and Lender

120 South LaSalle Street

2nd Floor

Chicago, Illinois  60603

 

Prudential Investment Management, Inc.

c/o Prudential Capital Group

2200 Ross Avenue, Suite 4200E

Dallas, Texas  75201

 

 

Primoris Services Corporation  hereby acknowledges receipt of a copy of the above Subordination Agreement and agrees to be bound by the terms and provisions thereof, to make no payment or distribution contrary to the terms thereof and to do every other act and thing necessary or appropriate to be done or performed by it in order to carry out the terms of the Subordination Agreement.

 

Dated:                                        ,

 

Primoris Services Corporation

 

	
By:
    	
 
    	
 
    
	
Its:Exhibit 10.2

 

PRIMORIS SERVICES CORPORATION

 

$50,000,000

 

3.65% Senior Secured Notes, Series A, due December 28, 2022

 

$25,000,000

 

Private Shelf Facility

 

 

NOTE PURCHASE AND PRIVATE SHELF AGREEMENT

 

 

Dated December 28, 2012

 

	
 
    

 

 

TABLE OF CONTENTS

 

	
SECTION
    	
 
    	
HEADING
    	
 
    	
PAGE
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 1.
    	
 
    	
AUTHORIZATION OF NOTES
    	
 
    	
1
    
	
Section 1.1
    	
 
    	
Authorization of Issue of Series A Notes
    	
 
    	
1
    
	
Section 1.2
    	
 
    	
Authorization of Issue of Shelf Notes
    	
 
    	
1
    
	
Section 2.
    	
 
    	
SALE AND PURCHASE OF NOTES
    	
 
    	
2
    
	
Section 2.1
    	
 
    	
Sale and Purchase of Series A Notes
    	
 
    	
2
    
	
Section 2.2
    	
 
    	
Sale and Purchase of Shelf Notes
    	
 
    	
2
    
	
Section 3.
    	
 
    	
CLOSING
    	
 
    	
6
    
	
Section 3.1
    	
 
    	
Series A Closing
    	
 
    	
6
    
	
Section 3.2
    	
 
    	
Facility Closings
    	
 
    	
7
    
	
Section 3.3
    	
 
    	
Rescheduled Facility Closings
    	
 
    	
7
    
	
Section 4.
    	
 
    	
CONDITIONS TO CLOSING
    	
 
    	
8
    
	
Section 4.1
    	
 
    	
Representations and Warranties
    	
 
    	
8
    
	
Section 4.2
    	
 
    	
Performance; No Default; No Material Adverse Effect
    	
 
    	
8
    
	
Section 4.3
    	
 
    	
Certificates
    	
 
    	
8
    
	
Section 4.4
    	
 
    	
Opinions of Counsel
    	
 
    	
9
    
	
Section 4.5
    	
 
    	
Purchase Permitted By Applicable Law, etc.
    	
 
    	
9
    
	
Section 4.6
    	
 
    	
Sale of Other Notes
    	
 
    	
10
    
	
Section 4.7
    	
 
    	
Payment of Fees
    	
 
    	
10
    
	
Section 4.8
    	
 
    	
Private Placement Number
    	
 
    	
10
    
	
Section 4.9
    	
 
    	
Changes in Corporate Structure
    	
 
    	
10
    
	
Section 4.10
    	
 
    	
Funding Instructions
    	
 
    	
10
    
	
Section 4.11
    	
 
    	
Proceedings and Documents
    	
 
    	
11
    
	
Section 4.12
    	
 
    	
Certain Documents
    	
 
    	
11
    
	
Section 5.
    	
 
    	
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
    	
 
    	
12
    
	
Section 5.1
    	
 
    	
Organization; Power and Authority
    	
 
    	
12
    
	
Section 5.2
    	
 
    	
Authorization, etc.
    	
 
    	
13
    
	
Section 5.3
    	
 
    	
Disclosure
    	
 
    	
13
    
	
Section 5.4
    	
 
    	
Organization and Ownership of Shares of Subsidiaries;   Affiliates
    	
 
    	
13
    
	
Section 5.5
    	
 
    	
Financial Statements; Material Liabilities
    	
 
    	
14
    
	
Section 5.6
    	
 
    	
Compliance with Laws, Other Instruments, etc.
    	
 
    	
14
    
	
Section 5.7
    	
 
    	
Governmental Authorizations, etc.
    	
 
    	
14
    
	
Section 5.8
    	
 
    	
Litigation; Observance of Agreements, Statutes and Orders
    	
 
    	
15
    
	
Section 5.9
    	
 
    	
Taxes
    	
 
    	
15
    
	
Section 5.10
    	
 
    	
Title to Property; Leases
    	
 
    	
15
    
	
Section 5.11
    	
 
    	
Licenses, Permits, etc.
    	
 
    	
16
    
	
Section 5.12
    	
 
    	
Compliance with ERISA
    	
 
    	
16
    
	
Section 5.13
    	
 
    	
Private Offering by the Company
    	
 
    	
17
    
	
Section 5.14
    	
 
    	
Use of Proceeds; Margin Regulations
    	
 
    	
17
    
	
Section 5.15
    	
 
    	
Existing Indebtedness; Future Liens
    	
 
    	
18
    
	
Section 5.16
    	
 
    	
Foreign Assets Control Regulations, etc.
    	
 
    	
18
    
	
Section 5.17
    	
 
    	
Status under Certain Statutes
    	
 
    	
20
    
	
Section 5.18
    	
 
    	
Environmental Matters
    	
 
    	
20
    

 

 

	
Section 5.19
    	
 
    	
Hostile Tender Offers
    	
 
    	
21
    
	
Section 5.20
    	
 
    	
Real Property
    	
 
    	
21
    
	
Section 5.21
    	
 
    	
Labor Matters
    	
 
    	
21
    
	
Section 5.22
    	
 
    	
Subordinated Debt
    	
 
    	
22
    
	
Section 5.23
    	
 
    	
Solvency
    	
 
    	
22
    
	
Section 5.24
    	
 
    	
Insurance
    	
 
    	
22
    
	
Section 6.
    	
 
    	
REPRESENTATIONS OF THE PURCHASERS
    	
 
    	
23
    
	
Section 6.1
    	
 
    	
Purchase for Investment
    	
 
    	
23
    
	
Section 6.2
    	
 
    	
Source of Funds
    	
 
    	
23
    
	
Section 7.
    	
 
    	
INFORMATION AS TO COMPANY
    	
 
    	
24
    
	
Section 7.1
    	
 
    	
Financial and Business Information
    	
 
    	
24
    
	
Section 7.2
    	
 
    	
Officer’s Certificate
    	
 
    	
28
    
	
Section 7.3
    	
 
    	
Visitation Rights
    	
 
    	
29
    
	
Section 7.4
    	
 
    	
Electronic Delivery
    	
 
    	
29
    
	
Section 8.
    	
 
    	
PAYMENT AND PREPAYMENT OF THE NOTES
    	
 
    	
30
    
	
Section 8.1
    	
 
    	
Required Prepayments; Maturity
    	
 
    	
30
    
	
Section 8.2
    	
 
    	
Optional Prepayments with Make-Whole Amount
    	
 
    	
31
    
	
Section 8.3
    	
 
    	
Mandatory Prepayments
    	
 
    	
31
    
	
Section 8.4
    	
 
    	
Allocation of Partial Prepayments
    	
 
    	
34
    
	
Section 8.5
    	
 
    	
Maturity; Surrender, etc.
    	
 
    	
35
    
	
Section 8.6
    	
 
    	
Purchase of Notes
    	
 
    	
35
    
	
Section 8.7
    	
 
    	
Make-Whole Amount
    	
 
    	
35
    
	
Section 8.8
    	
 
    	
Payments Due on Non-Business Days
    	
 
    	
37
    
	
Section 9.
    	
 
    	
AFFIRMATIVE COVENANTS
    	
 
    	
37
    
	
Section 9.1
    	
 
    	
Compliance with Law
    	
 
    	
37
    
	
Section 9.2
    	
 
    	
Insurance
    	
 
    	
37
    
	
Section 9.3
    	
 
    	
Maintenance of Properties
    	
 
    	
39
    
	
Section 9.4
    	
 
    	
Payment of Taxes and Claims
    	
 
    	
39
    
	
Section 9.5
    	
 
    	
Corporate Existence, etc.
    	
 
    	
39
    
	
Section 9.6
    	
 
    	
Books and Records
    	
 
    	
39
    
	
Section 9.7
    	
 
    	
Collateral; Subsequently Acquired Subsidiaries
    	
 
    	
40
    
	
Section 9.8
    	
 
    	
Information Required by Rule 144A
    	
 
    	
41
    
	
Section 9.9
    	
 
    	
Covenant to Secure Notes Equally
    	
 
    	
41
    
	
Section 9.10
    	
 
    	
Notes and Guaranty Agreements to Rank Pari Passu
    	
 
    	
41
    
	
Section 9.11
    	
 
    	
ERISA
    	
 
    	
42
    
	
Section 9.12
    	
 
    	
Environmental Covenants
    	
 
    	
42
    
	
Section 9.13
    	
 
    	
Deposit Accounts
    	
 
    	
43
    
	
Section 9.14
    	
 
    	
Permissible Payments
    	
 
    	
43
    
	
Section 9.15
    	
 
    	
[Omitted]
    	
 
    	
43
    
	
Section 9.16
    	
 
    	
Further Assurances
    	
 
    	
43
    
	
Section 9.17
    	
 
    	
Post-Closing Requirements
    	
 
    	
43
    
	
Section 10.
    	
 
    	
NEGATIVE COVENANTS
    	
 
    	
43
    
	
Section 10.1
    	
 
    	
Indebtedness
    	
 
    	
43
    
	
Section 10.2
    	
 
    	
Liens
    	
 
    	
44
    
	
Section 10.3
    	
 
    	
Merger, Consolidation, etc.
    	
 
    	
45
    
	
Section 10.4
    	
 
    	
Modification of Organizational Documents
    	
 
    	
46
    

 

 

	
Section 10.5
    	
 
    	
Transactions with Affiliates
    	
 
    	
46
    
	
Section 10.6
    	
 
    	
Dispositions
    	
 
    	
46
    
	
Section 10.7
    	
 
    	
Line of Business
    	
 
    	
47
    
	
Section 10.8
    	
 
    	
Investments
    	
 
    	
47
    
	
Section 10.9
    	
 
    	
Restriction of Amendments to Subordination Agreements
    	
 
    	
48
    
	
Section 10.10
    	
 
    	
Change of Fiscal Year
    	
 
    	
48
    
	
Section 10.11
    	
 
    	
Financial Covenants
    	
 
    	
48
    
	
Section 10.12
    	
 
    	
Cancellation of Debt
    	
 
    	
49
    
	
Section 10.13
    	
 
    	
Laws, Regulations
    	
 
    	
49
    
	
Section 10.14
    	
 
    	
Terrorism Sanctions Regulations
    	
 
    	
49
    
	
Section 10.15
    	
 
    	
Most Favored Lender Status
    	
 
    	
49
    
	
Section 10.16
    	
 
    	
Hedging Transactions
    	
 
    	
50
    
	
Section 10.17
    	
 
    	
Inconsistent Agreements
    	
 
    	
50
    
	
Section 11.
    	
 
    	
EVENTS OF DEFAULT
    	
 
    	
50
    
	
Section 12.
    	
 
    	
REMEDIES ON DEFAULT, ETC.
    	
 
    	
53
    
	
Section 12.1
    	
 
    	
Acceleration
    	
 
    	
53
    
	
Section 12.2
    	
 
    	
Other Remedies
    	
 
    	
54
    
	
Section 12.3
    	
 
    	
Rescission
    	
 
    	
54
    
	
Section 12.4
    	
 
    	
No Waivers or Election of Remedies, Expenses, etc.
    	
 
    	
54
    
	
Section 13.
    	
 
    	
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
    	
 
    	
54
    
	
Section 13.1
    	
 
    	
Registration of Notes
    	
 
    	
54
    
	
Section 13.2
    	
 
    	
Transfer and Exchange of Notes
    	
 
    	
55
    
	
Section 13.3
    	
 
    	
Replacement of Notes
    	
 
    	
55
    
	
Section 14.
    	
 
    	
PAYMENTS ON NOTES
    	
 
    	
56
    
	
Section 14.1
    	
 
    	
Place of Payment
    	
 
    	
56
    
	
Section 14.2
    	
 
    	
Home Office Payment
    	
 
    	
56
    
	
Section 15.
    	
 
    	
EXPENSES, ETC.
    	
 
    	
56
    
	
Section 15.1
    	
 
    	
Transaction Expenses
    	
 
    	
56
    
	
Section 15.2
    	
 
    	
Indemnification
    	
 
    	
57
    
	
Section 15.3
    	
 
    	
Survival
    	
 
    	
58
    
	
Section 16.
    	
 
    	
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE   AGREEMENT
    	
 
    	
58
    
	
Section 17.
    	
 
    	
AMENDMENT AND WAIVER
    	
 
    	
59
    
	
Section 17.1
    	
 
    	
Requirements
    	
 
    	
59
    
	
Section 17.2
    	
 
    	
Solicitation of Holders of Notes
    	
 
    	
59
    
	
Section 17.3
    	
 
    	
Binding Effect, etc.
    	
 
    	
60
    
	
Section 17.4
    	
 
    	
Notes Held by Company, etc.
    	
 
    	
60
    
	
Section 18.
    	
 
    	
NOTICES
    	
 
    	
61
    
	
Section 19.
    	
 
    	
REPRODUCTION OF DOCUMENTS
    	
 
    	
62
    
	
Section 20.
    	
 
    	
CONFIDENTIAL INFORMATION
    	
 
    	
62
    
	
Section 21.
    	
 
    	
SUBSTITUTION OF PURCHASER
    	
 
    	
63
    
	
Section 22.
    	
 
    	
MISCELLANEOUS
    	
 
    	
64
    
	
Section 22.1
    	
 
    	
Successors and Assigns
    	
 
    	
64
    
	
Section 22.2
    	
 
    	
Accounting Terms
    	
 
    	
64
    
	
Section 22.3
    	
 
    	
Severability
    	
 
    	
64
    
	
Section 22.4
    	
 
    	
Construction, etc.
    	
 
    	
64
    
	
Section 22.5
    	
 
    	
Counterparts
    	
 
    	
65
    
	
Section 22.6
    	
 
    	
Governing Law
    	
 
    	
65
    
	
Section 22.7
    	
 
    	
Jurisdiction and Process; Waiver of Jury Trial
    	
 
    	
65
    
	
Section 22.8
    	
 
    	
Transaction References
    	
 
    	
66
    

 

 

	
SCHEDULES AND EXHIBITS
    
	
 
    
	
INFORMATION SCHEDULE
    
	
SCHEDULE A
    	
—
    	
Series A   Purchaser Schedule
    
	
SCHEDULE B
    	
—
    	
DEFINED   TERMS
    
	
SCHEDULE 5.3
    	
—
    	
Disclosures
    
	
SCHEDULE 5.4(a)
    	
—
    	
Organization;   Capital Securities
    
	
SCHEDULE 5.4(b)
    	
—
    	
Existing   Liens on Capital Securities
    
	
SCHEDULE 5.4(c)
    	
—
    	
Certain   Restrictions
    
	
SCHEDULE 5.12(c)
    	
—
    	
ERISA   Matters
    
	
SCHEDULE 5.15(b)
    	
—
    	
Future   Liens
    
	
SCHEDULE 5.15(c)
    	
—
    	
Restrictions   on Indebtedness
    
	
SCHEDULE 5.20
    	
—
    	
Real   Property
    
	
SCHEDULE 5.21
    	
—
    	
Labor   Matters
    
	
SCHEDULE 5.24
    	
—
    	
Insurance   Summary
    
	
SCHEDULE 9.2
    	
—
    	
Insurance   Requirements
    
	
SCHEDULE 10.1(c)
    	
—
    	
Existing   Indebtedness Permitted by Section 10.2(d)
    
	
SCHEDULE 10.1(g)
    	
—
    	
Existing   Indebtedness
    
	
SCHEDULE 10.2(c)
    	
—
    	
Existing   Liens
    
	
SCHEDULE 10.7
    	
—
    	
Line   of Business
    
	
SCHEDULE 10.8(a)
    	
—
    	
Existing   Investments in Subsidiaries
    
	
SCHEDULE 10.8(f)
    	
—
    	
Existing   Investments
    
	
 
    	
 
    	
 
    
	
EXHIBIT 1-A
    	
—
    	
Form of   Series A Note
    
	
EXHIBIT 1-B
    	
—
    	
Form of   Shelf Note
    
	
EXHIBIT 2.2(d)
    	
—
    	
Form of   Request for Purchase
    
	
EXHIBIT 2.2(f)
    	
—
    	
Form of   Confirmation of Acceptance
    
	
EXHIBIT 4.4(a)
    	
—
    	
Form of   General Counsel Opinion
    
	
EXHIBIT 4.4(b)
    	
—
    	
Form of   Senior Agent Opinion
    
	
EXHIBIT 7.2
    	
—
    	
Form of   Compliance Certificate
    
	
EXHIBIT B-1
    	
—
    	
Form of   Guaranty Agreement
    
	
EXHIBIT B-2
    	
—
    	
Form of   Intercreditor Agreement
    
	
EXHIBIT B-3
    	
—
    	
Form of   Security Agreement
    
	
EXHIBIT B-4
    	
—
    	
Form of   Subordination Agreement
    

 

 

PRIMORIS SERVICES CORPORATION

2100 McKinney Ave., Suite 1500 
 Dallas, TX 75201

 

$50,000,000 3.65% Senior Secured Notes, Series A, due December 28, 2022

 

$25,000,000 Private Shelf Facility

 

December 28, 2012

 

To Each of the Purchasers Listed in

Schedule A hereto (each a “Series A Purchaser”)

 

To Prudential Investment Management, Inc. (“Prudential”)

 

To each other Prudential Affiliate which becomes

bound by this Agreement as hereinafter

provided (together with the Series A Purchasers, each,

a “Purchaser” and collectively, the “Purchasers”):

 

Ladies and Gentlemen:

 

PRIMORIS SERVICES CORPORATION, a Delaware corporation (together with any successor thereto that becomes a party hereto pursuant to Section 10.3, (the “Company”), agrees with each of the Purchasers as follows:

 

Section 1.                                          AUTHORIZATION OF NOTES.

 

Section 1.1                                                           Authorization of Issue of Series A Notes.

 

The Company will authorize the issue and sale of $50,000,000 aggregate principal amount of its 3.65% Senior Secured Notes, Series A, due December 28, 2022 (as amended, restated or otherwise modified from time to time pursuant to Section 17 and including any such notes issued in substitution therefor pursuant to Section 13, the “Series A Notes”).  The Series A Notes shall be substantially in the form set out in Exhibit 1-A.  Certain capitalized and other terms used in this Agreement are defined in Schedule B; and references to a “Schedule” or an “Exhibit” are references to a Schedule or an Exhibit attached to this Agreement unless otherwise specified.  References to a “Section” are references to a Section of this Agreement unless otherwise specified.

 

Section 1.2                                                           Authorization of Issue of Shelf Notes.

 

The Company will authorize the issue of its additional senior secured promissory notes (the “Shelf Notes”, such term to include any such notes issued in substitution thereof pursuant to Section 13) in the aggregate principal amount of $25,000,000, to be 

 

1

 

dated the date of issue thereof, to mature, in the case of each Shelf Note so issued, no more than 12 years after the date of original issuance thereof, to have an average life, in the case of each Shelf Note so issued, of no more than 10 years after the date of original issuance thereof, to bear interest on the unpaid balance thereof from the date thereof at the rate per annum, and to have such other particular terms, as shall be set forth, in the case of each Shelf Note so issued, in the Confirmation of Acceptance with respect to such Note delivered pursuant to Section 2.2(f), and to be substantially in the form of Exhibit 1-B attached hereto.  The terms “Note” and “Notes” as used herein shall include each Series A Note and each Shelf Note delivered pursuant to any provision of this Agreement and each Note delivered in substitution or exchange for any such Note pursuant to any such provision.  Notes which have (i) the same final maturity, (ii) the same principal prepayment dates, (iii) the same principal prepayment amounts (as a percentage of the original principal amount of each Note), (iv) the same interest rate, (v) the same interest payment periods and (vi) the same date of issuance (which, in the case of a Note issued in exchange for another Note, shall be deemed for these purposes the date on which such Note’s ultimate predecessor Note was issued), are herein called a “Series” of Notes.

 

Section 2.                                          SALE AND PURCHASE OF NOTES.

 

Section 2.1                                                           Sale and Purchase of Series A Notes.

 

Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Series A Purchaser and each Series A Purchaser will purchase from the Company, at the Series A Closing provided for in Section 3.1, Series A Notes in the principal amount specified opposite such Series A Purchaser’s name in Schedule A at the purchase price of 100% of the principal amount thereof.  The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non- performance of any obligation by any other Purchaser hereunder.

 

Section 2.2                                                           Sale and Purchase of Shelf Notes.

 

(a)                                 Facility.  Prudential is willing to consider, in its sole discretion and within limits which may be authorized for purchase by Prudential Affiliates from time to time, the purchase of Shelf Notes pursuant to this Agreement.  The willingness of Prudential to consider such purchase of Shelf Notes is herein called the “Facility”.  At any time, the aggregate principal amount of Shelf Notes stated in Section 1.2, minus the aggregate principal amount of Shelf Notes purchased and sold pursuant to this Agreement prior to such time, minus the aggregate principal amount of Accepted Notes (as hereinafter defined) which have not yet been purchased and sold hereunder prior to such time, is herein called the “Available Facility Amount” at such time.  NOTWITHSTANDING THE WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF SHELF NOTES BY PRUDENTIAL AFFILIATES, THIS AGREEMENT IS ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.

 

2

 

(b)                                 Issuance Period.  Shelf Notes may be issued and sold pursuant to this Agreement until the earlier of (i) the third anniversary of the date of this Agreement (or if such anniversary date is not a Business Day, the Business Day next preceding such anniversary) and (ii) the thirtieth day after Prudential shall have given to the Company, or the Company shall have given to Prudential, a written notice stating that it elects to terminate the issuance and sale of Shelf Notes pursuant to this Agreement (or if such thirtieth day is not a Business Day, the Business Day next preceding such thirtieth day).  The period during which Shelf Notes may be issued and sold pursuant to this Agreement is herein called the “Issuance Period”.

 

(c)                                  Periodic Spread Information.  Provided no Default or Event of Default exists, not later than 9:30 A.M. (New York City local time) on a Business Day during the Issuance Period if there is an Available Facility Amount on such Business Day, the Company may request by telecopier or telephone, and Prudential will, to the extent reasonably practicable, provide to the Company on such Business Day (or, if such request is received after 9:30 A.M. (New York City local time) on such Business Day, on the following Business Day), information (by telecopier or telephone) with respect to various spreads at which Prudential Affiliates might be interested in purchasing Notes of different average lives; provided, however, that the Company may not make such requests more frequently than once in every five Business Days or such other period as shall be mutually agreed to by the Company and Prudential.  The amount and content of information so provided shall be in the sole discretion of Prudential but it is the intent of Prudential to provide information which will be of use to the Company in determining whether to initiate procedures for use of the Facility.  Information so provided shall not constitute an offer to purchase Notes, and neither Prudential nor any Prudential Affiliate shall be obligated to purchase Notes at the spreads specified.  Information so provided shall be representative of potential interest only for the period commencing on the day such information is provided and ending on the earlier of the fifth Business Day after such day and the first day after such day on which further spread information is provided.  Prudential may suspend or terminate providing information pursuant to this Section 2.2(c) for any reason, including its determination that the credit quality of the Company has declined since the date of this Agreement.

 

(d)                                 Request for Purchase.  The Company may from time to time during the Issuance Period make requests for purchases of Shelf Notes (each such request being a “Request for Purchase”).  Each Request for Purchase shall be made to Prudential by telecopier or overnight delivery service, and shall (i) specify the aggregate principal amount of Shelf Notes covered thereby, which shall not be less than $10,000,000 and not be greater than the Available Facility Amount at the time such Request for Purchase is made, (ii) specify the principal amounts, final maturities, principal prepayment dates and amounts and interest payment periods (which shall be quarterly, with interest being payable in arrears) of the Shelf Notes covered thereby, (iii) specify the use of proceeds of 

 

3

 

such Shelf Notes, (iv) specify the proposed day for the closing of the purchase and sale of such Shelf Notes, which shall be a Business Day during the Issuance Period not less than 10 days and not more than 25 days after the making of such Request for Purchase, (v) specify the number of the account and the name and address of the depository institution to which the purchase prices of such Shelf Notes are to be transferred on the Closing for such purchase and sale, (vi) certify that the representations and warranties contained in Section 5 are true on and as of the date of such Request for Purchase and that there exists on the date of such Request for Purchase no Event of Default or Default, and (vii) be substantially in the form of Exhibit 2.2(d) attached hereto.  Each Request for Purchase shall be in writing signed by the Company and shall be deemed made when received by Prudential.

 

(e)                                  Rate Quotes.  Not later than five Business Days after the Company shall have given Prudential a Request for Purchase pursuant to Section 2.2(d), Prudential may, but shall be under no obligation to, provide to the Company by telephone or telecopier, in each case between 9:30 A.M. and 1:30 P.M. New York City local time (or such later time as Prudential may elect) interest rate quotes for the several principal amounts, maturities, principal prepayment schedules, and interest payment periods of Shelf Notes specified in such Request for Purchase.  Each quote shall represent the interest rate per annum payable on the outstanding principal balance of such Shelf Notes at which a Prudential Affiliate would be willing to purchase such Shelf Notes at 100% of the principal amount thereof.

 

(f)                                   Acceptance.  Within the Acceptance Window with respect to any interest rate quotes provided pursuant to Section 2.2(e), the Company may, subject to Section 2.2(g), elect to accept such interest rate quotes as to not less than $10,000,000 aggregate principal amount of the Shelf Notes specified in the related Request for Purchase.  Such election shall be made by an Authorized Officer of the Company notifying Prudential by telephone or telecopier within the Acceptance Window that the Company elects to accept such interest rate quotes, specifying the Shelf Notes (each such Shelf Note being an “Accepted Note”) as to which such acceptance (an “Acceptance”) relates.  The day the Company notifies Prudential of an Acceptance with respect to any Accepted Notes is herein called the “Acceptance Day” for such Accepted Notes.  Any interest rate quotes as to which Prudential does not receive an Acceptance within the Acceptance Window shall expire, and no purchase or sale of Shelf Notes hereunder shall be made based on such expired interest rate quotes.  Subject to Section 2.2(g) and the other terms and conditions hereof, the Company agrees to sell to a Prudential Affiliate, and Prudential agrees to cause the purchase by a Prudential Affiliate of, the Accepted Notes at 100% of the principal amount of such Notes.  As soon as practicable following the Acceptance Day, the Company, Prudential and each Prudential Affiliate which is to purchase any such Accepted Notes will execute a confirmation of such Acceptance substantially in the form of Exhibit 2.2(f) attached hereto (a “Confirmation of Acceptance”).  If the Company should fail to execute and return to Prudential within three Business Days following the Company’s receipt thereof a Confirmation of Acceptance with respect to any Accepted Notes, Prudential may at its election at any time prior to Prudential’s receipt thereof cancel the closing with respect to such Accepted Notes by so notifying the Company in writing.

 

4

 

(g)                                  Market Disruption.  Notwithstanding the provisions of Section 2.2(f), if Prudential shall have provided interest rate quotes pursuant to Section 2.2(e) and thereafter prior to the time an Acceptance with respect to such quotes shall have been notified to Prudential in accordance with Section 2.2(f) the domestic market for U.S. Treasury securities or derivatives shall have closed or there shall have occurred a general suspension, material limitation, or significant disruption of trading in securities generally on the New York Stock Exchange, London, or in the domestic market for U.S. Treasury securities or derivatives, then such interest rate quotes shall expire, and no purchase or sale of Shelf Notes hereunder shall be made based on such expired interest rate quotes.  If the Company thereafter notifies Prudential of the Acceptance of any such interest rate quotes, such Acceptance shall be ineffective for all purposes of this Agreement, and Prudential shall promptly notify the Company that the provisions of this Section 2.2(g) are applicable with respect to such Acceptance.

 

(h)                                 Fees.

 

(i)                                                             Structuring Fee.  The Company will pay to Prudential in immediately available funds the fees (the “Structuring Fee”) described in the fee letter dated the date hereof between the Company and Prudential.

 

(ii)                                                          Issuance Fee.  The Company will pay to each Purchaser in immediately available funds a fee (the “Issuance Fee”) on each Closing Day occurring on or after January 1, 2013 in an amount equal to 0.10% of the aggregate principal amount of Notes sold to such Purchaser on such Closing Day.

 

(iii)                                                       Delayed Delivery Fee.  If the closing of the purchase and sale of any Accepted Note is delayed for any reason beyond the original Closing Day for such Accepted Note, the Company will pay to each Purchaser which shall have agreed to purchase such Accepted Note on the Cancellation Date or actual closing date of such purchase and sale a fee (the “Delayed Delivery Fee”) calculated as follows:

 

(BEY - MMY) X DTS/360 X PA

 

where “BEY” means Bond Equivalent Yield, i.e., the bond equivalent yield per annum of such Accepted Note; “MMY” means Money Market Yield, i.e., the yield per annum on a commercial paper investment of the highest quality selected by Prudential on the date Prudential receives notice of the delay in the closing for such Accepted Note having a maturity date or dates the same as, or closest to, the Rescheduled Closing Day or Rescheduled Closing Days for such Accepted Note (a new alternative investment being selected by Prudential each time such closing is delayed); “DTS” means Days to Settlement, i.e., the number of actual days elapsed from and including the original Closing Day with respect to such Accepted Note (in the case of the first such payment with respect to such Accepted Note) or from and including the date of the next preceding payment (in the case of any subsequent delayed delivery fee payment with respect to such Accepted Note) to but excluding the date of such payment; and “PA” means Principal Amount, i.e., the principal amount of the Accepted Note for which such calculation is being made.  In no case shall the Delayed Delivery Fee be less than zero.  Nothing contained herein shall obligate any Purchaser to purchase any Accepted Note on any day other than the Closing Day for such Accepted Note, as the same may be rescheduled from time to time in compliance with Section 3.3.

 

5

 

(iv)                                                      Cancellation Fee.  If the Company at any time notifies Prudential in writing that the Company is canceling the closing of the purchase and sale of any Accepted Note, or if Prudential notifies the Company in writing under the circumstances set forth in the last sentence of Section 2.2(f) or the penultimate sentence of Section 3.3 that the closing of the purchase and sale of such Accepted Note is to be canceled, or if the closing of the purchase and sale of such Accepted Note is not consummated on or prior to the last day of the Issuance Period (the date of any such notification, or the last day of the Issuance Period, as the case may be, being the “Cancellation Date”), the Company will pay to each Purchaser which shall have agreed to purchase such Accepted Note no later than one day after the Cancellation Date in immediately available funds an amount (the “Cancellation Fee”) calculated as follows:

 

PI X PA

 

where “PI” means Price Increase, i.e., the quotient (expressed in decimals) obtained by dividing (a) the excess of the ask price (as determined by Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the bid price (as determined by Prudential) of the Hedge Treasury Notes(s) on the Acceptance Day for such Accepted Note by (b) such bid price; and “PA” has the meaning in Section 2.2(h)(iii).  The foregoing bid and ask prices shall be as reported by TradeWeb LLC (or, if such data for any reason ceases to be available through TradeWeb LLC, any publicly available source of similar market data).  Each price shall be based on a U.S. Treasury security having a par value of $100.00 and shall be rounded to the second decimal place.  In no case shall the Cancellation Fee be less than zero.

 

Section 3.                                          CLOSING.

 

Section 3.1                                                           Series A Closing.

 

The sale and purchase of the Series A Notes to be purchased by each Series A Purchaser shall occur at the offices of Baker Botts L.L.P., 2001 Ross Avenue, Dallas, TX 75201, at 10:00 a.m., Central time, at a closing (the “Series A Closing”) on December 28, 2012 or on such other Business Day thereafter on or prior to December 31, 2012 as may be agreed upon by the Company and the Series A Purchasers (the day of the Series A Closing being the “Series A Closing Day”).  At the Series A Closing the Company will deliver to each Series A Purchaser the Series A Notes to be purchased by such Series A Purchaser in the form of a single Series A Note (or such greater number of Series A Notes in denominations of at least $100,000 as such Purchaser may request) dated the date of the Series A Closing and registered in such Series A Purchaser’s name (or in the name of its nominee), against delivery by such Series A 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 2208141 at Private Bank & Trust, 120 S. LaSalle Street, Chicago, IL 60603,  

 

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ABA Number 071006486.  If at the Series A Closing the Company shall fail to tender such Series A Notes to any Series A Purchaser as provided above in this Section 3.1, or any of the conditions specified in Section 4 shall not have been fulfilled to such Series A Purchaser’s satisfaction, such Series A Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Series A Purchaser may have by reason of any of the conditions specified in Section 4 not having been fulfilled to such Series A Purchaser’s satisfaction or such failure by the Company to tender such Notes.  The Series A Closing and each Shelf Closing are referred to as a “Closing”.

 

Section 3.2                                                           Facility Closings.

 

Not later than 11:30 A.M. (New York City local time) on the Closing Day for any Accepted Notes, the Company will deliver to each Purchaser listed in the Confirmation of Acceptance relating thereto at the offices of Baker Botts L.L.P., 2001 Ross Avenue, Dallas, TX 75201 or at such other place pursuant to the directions of Prudential, the Accepted Notes to be purchased by such Purchaser in the form of one or more Notes in authorized denominations as such Purchaser may request for each Series of Accepted Notes to be purchased on such Closing Day, dated the date of such Closing Day and registered in such Purchaser’s name (or in the name of its nominee), against payment of the purchase price thereof by transfer of immediately available funds for credit to the Company’s account specified in the Request for Purchase of such Notes.

 

Section 3.3                                                           Rescheduled Facility Closings.

 

If the Company fails to tender to any Purchaser the Accepted Notes to be purchased by such Purchaser on the scheduled Closing Day for such Accepted Notes as provided above in Section 3.2, or any of the conditions specified in Section 4 shall not have been fulfilled by the time required on such scheduled Closing Day, the Company shall, prior to 1:00 P.M., New York City local time, on such scheduled Closing Day notify Prudential (which notification shall be deemed received by each Purchaser) in writing whether (i) such closing is to be rescheduled (such rescheduled date to be a Business Day during the Issuance Period not less than one Business Day and not more than 10 Business Days after such scheduled Closing Day (the “Rescheduled Closing Day”)) and certify to Prudential (which certification shall be for the benefit of each Purchaser) that the Company reasonably believes that it will be able to comply with the conditions set forth in Section 4 on such Rescheduled Closing Day and that the Company will pay the Delayed Delivery Fee in accordance with Section 2.2(h)(iii) or (ii) such closing is to be canceled.  In the event that the Company shall fail to give such notice referred to in the preceding sentence, Prudential (on behalf of each Purchaser) may at its election, at any time after 1:00 P.M., New York City local time, on such scheduled Closing Day, notify the Company in writing that such closing is to be canceled.  Notwithstanding anything to the contrary appearing in this Agreement, the Company may not elect to reschedule a closing with respect to any given Accepted Notes on more than one occasion, unless Prudential shall have otherwise consented in writing.

 

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Section 4.                                          CONDITIONS TO CLOSING.

 

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser at the Closing for such Notes is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at such Closing, of the following conditions:

 

Section 4.1                                                           Representations and Warranties.

 

The representations and warranties of the Company in this Agreement and of each of the Note Parties in the other Note Documents shall be correct when made and at the time of the applicable Closing (except to the extent of changes caused by the transactions herein contemplated).

 

Section 4.2                                                           Performance; No Default; No Material Adverse Effect.

 

The Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at such Closing.  Before and after giving effect to the issue and sale of such Notes (and the application of the proceeds thereof as contemplated by Section 5.14) no Default or Event of Default shall have occurred and be continuing.  Neither the Company nor any Subsidiary shall have entered into any transaction since December 31, 2011 that would have been prohibited by Section 10 had such Sections applied since such date.

 

Section 4.3                                                           Certificates.

 

(a)                                 Officer’s Certificate.  The Company shall have delivered to such Purchaser an Officer’s Certificate, dated the date of such Closing, certifying that the conditions specified in Section 4.1, Section 4.2 and Section 4.9 have been fulfilled.

 

(b)                                 Secretary’s Certificate.  Each Note Party shall have delivered to such Purchaser each of the following:

 

(i)                                                             copies of the resolutions of the board of directors or equivalent governing body of each of the Note Parties approving the Note Documents to which it is a party and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the Note Documents to which it is a party, in each case certified as such by the Secretary or an Assistant Secretary of such Note Party and attached to the certificate described in Section 4.3(b)(ii) below (provided that for any Closing Day occurring after the Series A Closing Day, the Company may certify that there has been no change to any applicable authorization or approval since the date on which it was most recently delivered to such Purchaser under this Section 4.3(b)(i) as an alternative to the further delivery thereof);

 

(ii)                                                          a certificate of the Secretary or an Assistant Secretary of each of the Note Parties certifying the names and true signatures of the officers of such Note Party authorized to sign the Note Documents to which it is a party and the other 

 

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documents to be delivered hereunder (provided that for any Closing Day occurring after the Series A Closing Day, the Secretary or an Assistant Secretary and one other officer of the Company may certify that there has been no change to the officers of the Company authorized to sign Accepted Notes and other documents to be delivered therewith since the date on which a certificate setting forth the names and true signatures of such officers, as described above, was most recently delivered to such Purchaser under this Section 4.3(b)(ii), as an alternative to the further delivery thereof); and

 

(iii)                                                       copies of (a) the certificate of incorporation (or similar) and the bylaws of the Company and (b) the operating agreement or similar governing document of each Guarantor in each case certified as such by the Secretary or an Assistant Secretary of such Note Party and attached to the certificate described in Section 4.3(b)(ii) (provided, that for any Closing, the Company may certify that there has been no change to any applicable constitutive document of the Company and the Guarantors since the date on which it was most recently delivered to such Purchaser under this Section 4.3(b), as an alternative to the further delivery thereof).

 

Section 4.4                                                           Opinions of Counsel.

 

Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of such Closing (a) from the General Counsel of the Company, substantially in the form set forth in Exhibit 4.4(a) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company hereby instructs its counsel to deliver such opinion to the Purchasers), (b) from counsel to the Senior Agent, substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company hereby instructs counsel for the Senior Agent to deliver such opinion to the Purchasers) and (c) from Baker Botts L.L.P., the Purchasers’ special counsel in connection with such transactions.

 

Section 4.5                                                           Purchase Permitted By Applicable Law, etc.

 

On the date of such 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 T, U 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.

 

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Section 4.6                                                           Sale of Other Notes.

 

Contemporaneously with such Closing the Company shall sell to each other Purchaser and each other Purchaser shall purchase the Notes to be purchased by it at such Closing as specified in Schedule A (in the case of the Series A Notes) or the applicable Confirmation of Acceptance (in the case of Shelf Notes).

 

Section 4.7                                                           Payment of Fees.

 

(a)                                 Without limiting the provisions of Section 15.1, the Company shall have paid to Prudential and each Purchaser on or before such Closing any fees due it pursuant to or in connection with this Agreement, including any Structuring Fee due pursuant to Section 2.2(h)(i), any Issuance Fee due pursuant to Section 2.2(h)(ii) and any Delayed Delivery Fee due pursuant to Section 2.2(h)(iii).

 

(b)                                 Without limiting the provisions of Section 15.1, the Company shall have paid on or before such Closing the fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to such Closing.

 

Section 4.8                                                           Private Placement Number.

 

A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for such Notes.

 

Section 4.9                                                           Changes in Corporate Structure.

 

Other than as permitted by this Agreement or otherwise disclosed to the holders, the Company shall not have changed its jurisdiction of incorporation or organization, as applicable, or been a party to any merger or consolidation or 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 Section 5.5.

 

Section 4.10                                                    Funding Instructions.

 

With respect to the Series A Closing only, at least three Business Days prior to the date of such Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Company confirming the information specified in Section 3.1 including (i) the name and address of the transferee bank, (ii) such transferee bank’s ABA number and (iii) the account name and number into which the purchase price for the Notes is to be deposited.

 

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Section 4.11                                                    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 its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.

 

Section 4.12                                                    Certain Documents.  Such Purchaser shall have received the following:

 

(i)                                                             The Note(s) to be purchased by such Purchaser at such Closing.

 

(ii)                                                          The Guaranty Agreement to be delivered to such Purchaser at such Closing in accordance with the terms hereof, duly executed and delivered by each party required to be a Guarantor hereunder.

 

(iii)                                                       The Intercreditor Agreement duly executed and delivered by each party required to be a party thereto, which shall be in form and substance satisfactory to such Purchaser.

 

(iv)                                                      The Security Agreement executed by each Note Party and the other Security Documents duly executed and delivered by each Note Party party required to be a party thereto.

 

(v)                                                         The Perfection Certificate executed by each Note Party.

 

(vi)                                                      A good standing certificate for each of the Company and the Guarantors from the Secretary of State of their respective states of incorporation or formation dated of a recent date prior to such Closing and such other evidence of the status of the Company and each Guarantor as such Purchaser may reasonably request.

 

(vii)                                                   [Omitted.]

 

(viii)                                                Evidence of all such actions as such Purchaser shall reasonably require to perfect the Liens created pursuant to the Security Documents, including (i) unless otherwise excepted in the Security Documents, as applicable, the delivery to the Collateral Agent of all property with respect to which possession is necessary or desirable for the purpose of perfecting such liens, (ii) with respect to Collateral covered by the Security Documents, the filing of appropriately completed and duly authorized Uniform Commercial Code financing statements, and (iii) with respect to all Collateral constituting certificated Capital Securities in any Note Party or any of their Subsidiaries, to the extent required in the Security Documents, delivery to the Collateral Agent of original stock certificates and stock transfer powers with regard to all of the applicable Capital Securities.

 

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(ix)                                                      Evidence reasonably satisfactory to such Purchaser that the Liens created by the Security Documents constitute first priority liens (except for any liens expressly permitted in the Note Documents), including satisfactory Uniform Commercial Code or other applicable search reports and satisfactory authorizations to file releases of Liens or termination statements with respect to any existing prior liens to be released.

 

(x)                                                         Certificates of insurance satisfactory to such Purchaser in all respects evidencing the existence of all insurance required to be maintained by the Note Parties and all other terms of the Note Documents, together with loss payable endorsements in favor of the Collateral Agent and additional insured endorsements in favor of the Collateral Agent and the holders of Notes.

 

(xi)                                                      Evidence that the Senior Credit Agreement is (or substantially simultaneously shall be) in full force and effect, together with a fully executed copy thereof and of each other Senior Credit Document  requested by such Purchaser, which shall be in form and substance satisfactory to such Purchaser.

 

(xii)                                                   A certificate of a responsible officer of the Note Parties certifying on behalf of the Note Parties as to the solvency of the Note Parties and their Subsidiaries (taken as a whole), as of the date of Closing, after giving effect to the sale of the Notes, and the funding of the initial loans under the Senior Credit Agreement, in form and substance satisfactory to such Purchaser.

 

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 and validly existing in good standing under the laws of the State of Delaware, and is duly qualified as a corporation company and in good standing in each jurisdiction in which such qualification is required by law except where the failure to be so qualified, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  Each other Note Party is (i) duly organized and validly existing in good standing under the laws of its state of organization and (ii) duly qualified as a foreign corporation or other business entity and in good standing in each jurisdiction in which such qualification is required by law except where the failure to be so qualified, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  Each of the Company and the other Note Parties has the limited liability company, partnership, corporate or other organizational 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, the Notes and the other Note Documents to which it is a party and to perform the provisions hereof and thereof.

 

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Section 5.2                                                           Authorization, etc.

 

The execution, delivery and performance by each of the Company and the other Note Parties of this Agreement, the Notes and the other Note Documents to which such Person is a party and the to which each is a party are within such Person’s limited liability company, partnership, corporate or other organizational power and have been duly authorized by all necessary limited liability company, partnership, corporate or equivalent action.  This Agreement, the Notes and the other Note Documents constitute, or upon the execution and delivery thereof, will constitute, a legal, valid and binding obligation of the Company and the Note Parties party thereto, enforceable against the Company and such Note Parties in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

Section 5.3                                                           Disclosure.

 

This Agreement and the documents, certificates or other writings (including the financial statements listed on Schedule 5.3 and the financial statements provided pursuant to the terms hereof) delivered to the Purchasers by or on behalf of the Company in connection with the transactions contemplated hereby (this Agreement and such documents, certificates or other writings and such financial statements delivered to each Purchaser prior to the applicable Closing being referred to, collectively, as the “Disclosure Documents”), 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 Disclosure Documents, since the end of the most recent Fiscal Year for which audited financial statements have been furnished, there has been no change in the financial condition, operations, business, properties or prospects of the Company or any Subsidiary except changes that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect.  There is no fact known to the Company that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents.

 

Section 5.4                                                           Organization and Ownership of Shares of Subsidiaries; Affiliates.

 

(a)                                 Schedule 5.4(a) contains (except as noted therein) complete and correct lists of (i) 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, (ii) the Company’s Affiliates, other than Subsidiaries, and (iii) the Company’s directors and senior officers, and (iv) each class of the Company’s capital stock or similar equity interests issued and outstanding, in each case as of the date hereof.

 

(b)                                 All of the outstanding shares of capital stock or similar equity interests of each Subsidiary 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(b) and except for Liens permitted by Section 10.2).

 

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(c)                                  No Subsidiary is a party to, or otherwise subject to any legal, regulatory, contractual or other restriction (other than the agreements listed on Schedule 5.4(c) and customary limitations imposed by corporate law or similar statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.

 

Section 5.5                                                           Financial Statements; Material Liabilities.  The Company has delivered to each Purchaser copies of the financial statements of the Company and its Subsidiaries.  All of such 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 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).  The Company and its Subsidiaries do not have any Material liabilities that are not disclosed in the Disclosure Documents.

 

Section 5.6                                                           Compliance with Laws, Other Instruments, etc.

 

The execution, delivery and performance by the Company and each of the other Note Parties of this Agreement, the Notes and the other Note Documents will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien (other than the Liens arising under any of the Note Documents) in respect of any property of the Company or any other Note Party under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, shareholders agreement or any other agreement or instrument to which the Company or any other Note Party is bound or by which the Company or any other Note Party or any of their respective properties may be bound or affected, (ii) 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 other Note Party or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any other Note Party.

 

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 each of the Company and the other Note Parties of each of this Agreement, the Notes and the other Note Documents, (other than any consent or approval which has been obtained and is in full force and effect and filings required to evidence the Liens arising under the Security Documents).

 

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Section 5.8                                                           Litigation; Observance of Agreements, Statutes and Orders.

 

(a)                                 There are no actions, suits, investigations or proceedings pending or, to the best knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)                                 Neither the Company nor any Subsidiary is (i) in default under any agreement or instrument to which it is a party or by which it is bound, (ii) in violation of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or (iii) in violation of any applicable law, ordinance, rule or regulation of any Governmental Authority (including, without limitation, Environmental Laws, the USA PATRIOT Act or any of the other laws and regulations that are referred to in Section 5.16), which default or violation could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 5.9                                                           Taxes.

 

The Company and  its Subsidiaries have filed all 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 Material taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any such taxes and assessments 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, individually or in the aggregate, 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 U.S. federal, state or other taxes for all fiscal periods are adequate.  The U. S. federal income tax liabilities of the Company and its Subsidiaries have been finally determined (whether by reason of completed audits or the statute of limitations having run) for all Fiscal Years up to and including the Fiscal Year ended December 31, 2009.

 

Section 5.10                                                    Title to Property; Leases.

 

Each Note Party owns good and, in the case of real property, marketable title to all of its properties and assets, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights) , free and clear of all Liens, charges and claims (including infringement claims with respect to patents, trademarks, service marks, copyrights and the like) except as permitted by Section 10.2.  No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except filings evidencing Liens permitted by Section 10.2 and filings for which termination statements have been delivered to the Collateral Agent and the Purchasers.

 

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Section 5.11                                                    Licenses, Permits, etc.

 

(a)                                 The Company and each other Note Party own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others.

 

(b)                                 To the best knowledge of the Company, no product or service of the Company or any other Note Party infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person.

 

(c)                                  To the best knowledge of the Company, there is no Material violation by any Person of any right of the Company or any other Note Party with respect to any patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Company or any of its 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 except for such instances of noncompliance as have not resulted in and could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any ERISA Affiliate has incurred 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 (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that could, individually or in the aggregate, reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any 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 section 430(k) of the Code or to any such penalty or excise tax provisions under the Code or federal law or section 4068 of ERISA or by the granting of a security interest in connection with the amendment of a Plan, other than such liabilities or Liens as would not be individually or in the aggregate Material.

 

(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 $10,000,000 in the case of any single Plan and by more than $10,000,000 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 meaning specified in section 3 of ERISA.

 

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(c)                                  Except as disclosed on Schedule 5.12(c), the Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.

 

(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 Accounting Standards Codification Topic 715-60, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Company and its Subsidiaries is not material.

 

(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 to each Purchaser in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources 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 any similar Securities for sale to, or solicited any offer to buy the Notes or any similar Securities from, or otherwise approached or negotiated in respect thereof with, any Person other than the Purchasers and other Institutional Investors, each of which has been offered the Notes at a private sale for investment.  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 to the registration requirements of section 5 of the Securities Act or to the registration requirements of any Securities or blue sky laws of any applicable jurisdiction.

 

Section 5.14                                                    Use of Proceeds; Margin Regulations.

 

The Company will apply the proceeds of the sale of the Series A Notes for (i) Capital Expenditures and (ii) general corporate purposes and will apply the proceeds of the sale of the Shelf Notes as set forth in the applicable Request for Purchase. 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 U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any Securities under such circumstances as to involve the Company or any of its Subsidiaries 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).  Margin stock does not constitute more than 5% of the value of the Consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5% of the value of such assets.  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 U.

 

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Section 5.15                                                    Existing Indebtedness; Future Liens.

 

(a)                                 Neither the Company nor any of its Subsidiaries has outstanding any Indebtedness except as permitted by Section 10.1.  Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company or such Subsidiary and no event or condition exists with respect to any Indebtedness of the Company or any Subsidiary  that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

 

(b)                                 Except as disclosed in Schedule 5.15(b), neither the Company nor any of the other Note Parties has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 10.2.

 

(c)                                  Neither the Company nor any other Note Party is a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Company or such Note Party, any agreement relating thereto or any other agreement (including, but not limited to, its charter or any other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness of any of the Company and the other Note Parties, except as specifically indicated in Schedule 5.15(c).

 

Section 5.16                                                    Foreign Assets Control Regulations, etc.

 

(a)                                 Neither the Company nor any Controlled Entity is (i) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by the Office of Foreign Assets Control, United States Department of the Treasury (“OFAC”) (an “OFAC Listed Person”) (ii) an agent, department, or instrumentality of, or is otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) any Person, entity, organization, foreign country or regime that is subject to any OFAC Sanctions Program,  or (iii) otherwise blocked, subject to sanctions under or engaged in any activity in violation of other United States economic sanctions, including but not limited to, the Trading with the Enemy Act, the International Emergency Economic Powers Act, the Comprehensive Iran Sanctions, Accountability and Divestment Act (“CISADA”) or any similar law or regulation with respect to Iran or any other country, the Sudan Accountability and Divestment Act, any OFAC Sanctions Program, or any economic sanctions regulations administered and enforced by the United States or any enabling legislation or executive order relating to any of the foregoing (collectively, “U.S. Economic Sanctions”) (each OFAC Listed Person and each other Person, entity, organization and government of a country described in clause (i), clause (ii) or clause 

 

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(iii), a “Blocked Person”).  Neither the Company nor any Controlled Entity has been notified that its name appears or may in the future appear on a state list of Persons that engage in investment or other commercial activities in Iran or any other country that is subject to U.S. Economic Sanctions.

 

(b)                                 No part of the proceeds from the sale of the Notes hereunder constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly, (i) in connection with any investment in, or any transactions or dealings with, any Blocked Person, or (ii) otherwise in violation of U. S. Economic Sanctions.

 

(c)                                  Neither the Company nor any Controlled Entity (i) has been found in violation of, charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes under the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act), the USA PATRIOT Act or any other United States law or regulation governing such activities (collectively, “Anti-Money Laundering Laws”) or any U.S. Economic Sanctions violations, (ii) to the Company’s actual knowledge after making due inquiry, is under investigation by any Governmental Authority for possible violation of Anti-Money Laundering Laws or any U.S. Economic Sanctions violations, (iii) has been assessed civil penalties under any Anti-Money Laundering Laws or any U.S. Economic Sanctions, or (iv) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering Laws. The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable current and future Anti-Money Laundering Laws and U. S. Economic Sanctions.

 

(1)                                 Neither the Company nor any Controlled Entity (i) has been charged with, or convicted of bribery or any other anti-corruption related activity under any applicable law or regulation in a U.S. or any non-U.S. country or jurisdiction, including but not limited to, the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010 (collectively, “Anti-Corruption Laws”), (ii) to the Company’s actual knowledge after making due inquiry, is under investigation by any U. S. or non-U. S. Governmental Authority for possible violation of Anti-Corruption Laws, (iii) has been assessed civil or criminal penalties under any Anti-Corruption Laws or (iv) has been or is the target of sanctions imposed by the United Nations or the European Union;

 

(2)                                 To the Company’s actual knowledge after making due inquiry, neither the Company nor any Controlled Entity has, within the last five years, directly or indirectly offered, promised, given, paid or authorized the offer, promise, giving or payment of anything of value to a Governmental Official or a commercial counterparty for the purposes of: (i) influencing any act, decision or failure to act by such Government Official in his or her official capacity or such commercial counterparty, (ii) inducing a Governmental Official to do or omit to do any act in violation of the Governmental Official’s lawful duty, or (iii) inducing a Governmental Official or a commercial counterparty to use his or her influence with a government or instrumentality to affect any act or decision of such government or entity; in each case in order to obtain, retain or direct business or to otherwise secure an improper advantage; and

 

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(3)                                 No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any improper payments, including bribes, to any Governmental Official or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage. The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable current and future Anti-Corruption Laws.

 

(d)                                 Neither the sale of the Notes by the Company hereunder nor the 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.

 

(e)                                  Neither the Company nor any Subsidiary (i) is a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or (ii) engages in any dealings or transactions with any such Person.  The Company and its Subsidiaries are in compliance, in all material respects, with the USA Patriot Act.

 

(f)                                   No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases that such Act applies to the Company and its Subsidiaries.

 

Section 5.17                                                    Status under Certain Statutes.

 

Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 2005, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.

 

Section 5.18                                                    Environmental Matters.

 

(a)                                 Neither the Company nor any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted asserting any claim against the Company or any of its Subsidiaries or any of their respective real properties or other assets now or formerly owned, leased or operated by any of them, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect.

 

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(b)                                 Neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of 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, except, in each case, such as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(c)                                  Neither the Company nor any Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them in a manner which is contrary to any Environmental Law that could, individually, or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(d)                                 Neither the Company nor any Subsidiary has disposed of any Hazardous Materials in a manner which is contrary to any Environmental Law that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(e)                                  All buildings on all real properties now owned, leased or operated by the Company or any Subsidiary are in compliance with applicable Environmental Laws, except where failure to comply could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

Section 5.19                                                    Hostile Tender Offers.

 

None of the proceeds of the sale of any Notes will be used to finance a Hostile Tender Offer.

 

Section 5.20                                                    Real Property.

 

Set forth on Schedule 5.20 is a complete and accurate list, as of the date hereof, of the address of all real property owned or leased by any Note Party, together with, in the case of leased property, the name and mailing address of the lessor of such property.

 

Section 5.21                                                    Labor Matters.

 

Except as set forth on Schedule 5.21, no Note Party is subject to any labor or collective bargaining agreement.  There are no existing or threatened strikes, lockouts or other labor disputes involving any Note Party that singly or in the aggregate could reasonably be expected to have a Material Adverse Effect.  Hours worked by and payment made to employees of the Note Parties are in substantial compliance with the Fair Labor Standards Act or any other applicable law, rule or regulation dealing with such matters.

 

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Section 5.22                                                    Subordinated Debt.

 

Other than in respect of Indebtedness subject to the Subordination Agreement (Rockford), the subordination provisions of the Subordinated Debt are enforceable against the holders of the Subordinated Debt by the holders of the Notes.  All obligations of the Note Parties arising under the Notes and the other Note Documents constitute senior Indebtedness entitled to the benefits of the subordination provisions contained in the Subordinated Debt, other than in respect of Indebtedness subject to the Subordination Agreement (Rockford).

 

Section 5.23                                                    Solvency.

 

On the date hereof, and immediately prior to and after giving effect to the issuance of the Notes and the use of the proceeds thereof, with respect to each Note Party, individually, (a) the fair value of its assets is greater than the amount of its liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated in accordance with GAAP, (b) the present fair saleable value of its assets is not less than the amount that will be required to pay the probable liability on its debts as they become absolute and matured, (c) it is able to realize upon its assets and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business, (d) it does not intend to, and does not believe that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature and (e) it is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which its property would constitute unreasonably small capital.

 

Section 5.24                                                    Insurance.

 

Set forth on Schedule 5.24 is a complete and accurate summary of the property and casualty insurance program of the Note Parties as of the date hereof (including the names of all insurers, policy numbers, expiration dates, amounts and types of coverage, annual premiums, deductibles, self-insured retention, and a description in reasonable detail of any fronting arrangement or other risk assumption arrangement involving any Note Party).  Each Note Party and its properties are insured with financially sound and reputable insurance companies which are not Affiliates of the Note Parties, in such amounts, with such deductibles/self-insured retentions and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where such Note Parties operate.

 

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Section 6.                                          REPRESENTATIONS OF THE PURCHASERS.

 

Section 6.1                                                           Purchase for Investment.

 

Each Purchaser severally represents that it is purchasing the Notes purchased by it hereunder for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their 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 severally 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 such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:

 

(a)                                 the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the NAIC (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

 

(b)                                 the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

 

(c)                                  the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this Section 6.2(c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

 

(d)                                 the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no employee benefit plan’s assets that are managed by the QPAM in such 

 

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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 Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, represent more than 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 maintains an ownership interest in the Company that would cause the QPAM and the Company to be “related” within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM and (ii) the names of any employee benefit plans whose assets in the 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 Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this Section 6.2(d); or

 

(e)                                  the Source constitutes assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 5% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this Section 6.2(e); or

 

(f)                                   the Source is a governmental plan; or

 

(g)                                  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 Section 6.2(g); or

 

(h)                                 the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

 

As used in this Section 6.2, the terms “employee benefit plan,” “governmental plan,” 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 any of the Notes that is an Institutional Investor:

 

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(a)                                 Quarterly Statements -- within 45 days (or such shorter period as is the earlier of (x) 15 days greater than the period applicable to the filing of the Company’s Quarterly Report on Form 10-Q (the “Form 10-Q”) with the SEC regardless of whether the Company is subject to the filing requirements thereof and (y) the date by which such financial statements are required to be delivered under the Senior Credit Agreement or the date on which such corresponding financial statements are delivered under the Senior Credit Agreement if such delivery occurs earlier than such required delivery date) after the end of each Fiscal Quarter in each Fiscal Year of the Company (other than the last Fiscal Quarter of each such Fiscal Year), duplicate copies of,

 

(i)                                                             a consolidated balance sheet and statement of cash flows of the Company and its Subsidiaries as at the end of such Fiscal Quarter, and

 

(ii)                                                          a consolidated statement of income, of the Company and its Subsidiaries, for such Fiscal Quarter and (in the case of the second and third quarters) for the portion of the Fiscal Year ending with such Fiscal 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 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 Form 10-Q prepared in compliance with the requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(a), provided, further, that the Company shall be deemed to have made such delivery of such Form 10-Q if it shall have timely made such Form 10-Q available on “EDGAR” and on its home page on the worldwide web (at the date of this Agreement located at:  http//www.prim.com) and shall have given each Purchaser prior notice of such availability on EDGAR and on its home page in connection with each delivery (such availability and notice thereof being referred to as “Electronic Delivery”);

 

(b)                                 Annual Statements -- within 90 days (or such shorter period as is the earlier of (x) 15 days greater than the period applicable to the filing of the Company’s Annual Report on Form 10-K (the “Form 10-K”) with the SEC regardless of whether the Company is subject to the filing requirements thereof and (y) the date by which such financial statements are required to be delivered under the Senior Credit Agreement or the date on which such corresponding financial statements are delivered under the Senior Credit Agreement if such delivery occurs earlier than such required delivery date) after the end of each Fiscal Year of the Company, duplicate copies of

 

(i)                                                             a consolidated balance sheet and statement of cash flows of the Company and its Subsidiaries as at the end of such Fiscal Year, and

 

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(ii)                                                          a consolidated statement of income of the Company and its Subsidiaries for such Fiscal 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 an opinion thereon (without a “going concern” or similar qualification or exception and without any qualification or exception as to the scope of the audit on which such opinion is based) of independent 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 the standards of the Public Company Accounting Oversight Board (United States), 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 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 Securities Exchange Act of 1934) prepared in accordance with the requirements therefor and filed with the SEC, shall be deemed to satisfy the requirements of this Section 7.1(b), provided, further, that the Company shall be deemed to have made such delivery of such Form 10-K if it shall have timely made Electronic Delivery thereof;

 

(c)                                  Guarantor Financial Information.  The Company shall furnish, or cause to be furnished, information regarding the business affairs, operations and financial condition of each Guarantor to the extent reasonably requested by the Required Holders.  The Company represents and warrants to each Purchaser that (i) each Guarantor shall at all times maintain a standard and modern system of accounting, on the accrual basis of accounting and in all respects in accordance with GAAP, and (ii) any of the Required Holders and/or the Collateral Agent shall have the right pursuant to Section 7.3 to inspect the books and records of each Guarantor and make extracts therefrom.  If the Company ceases to be publicly traded, then the Company agrees to immediately advise the holders of any development, condition or event that may have a Material Adverse Effect.

 

(d)                                 Projections.  As soon as practicable, and in any event not later than 60 days after the commencement of each Fiscal Year, financial projections for the Company and its Subsidiaries for such Fiscal Year prepared in a manner consistent with the projections delivered by the Company to the Purchasers prior to the date hereof or otherwise in a manner reasonably satisfactory to the Required Holders, accompanied by a certificate of a Senior Officer of the Company on behalf of the Company to the effect that (a) such projections were prepared by the Company in good faith, (b) the Company has a reasonable basis for the assumptions contained in such projections and (c) such projections have been prepared in accordance with such assumptions.

 

(e)                                  Subordinated Debt Notices.  Promptly following receipt, copies of any notices (including notices of default or acceleration) received from any holder or trustee of, under or with respect to any Subordinated Debt.

 

(f)                                   SEC and Other Reports -- promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the Company or any Subsidiary to its principal lending banks as a whole (excluding 

 

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information sent to such banks in the ordinary course of administration of a bank facility, such as information relating to pricing and borrowing availability) or to its public Securities holders generally, and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by the Company or any Subsidiary with the SEC and of all press releases and other statements made available generally by the Company or any Subsidiary to the public concerning developments that are Material;

 

(g)                                  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 or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to Section 11(g), 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;

 

(h)                                 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:

 

(i)                                                             with respect to any Plan, any reportable event, as defined in section 4043(c) 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

 

(ii)                                                          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

 

(iii)                                                       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, could reasonably be expected to have a Material Adverse Effect;

 

(i)                                     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, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect;

 

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(j)                                    Resignation or Replacement of Auditors -- within ten days following the date on which the Company’s auditors resign or the Company elects to change auditors, as the case may be, notification thereof, together with such supporting information as the Required Holders may request.

 

(k)                                 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 (including, but without limitation, actual copies of the Company’s Form 10-Q and Form 10-K) 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 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) shall be accompanied by a certificate of a Senior Financial Officer in the form of Exhibit 7.2 attached hereto (a “Compliance Certificate”) setting forth (which, in the case of Electronic Delivery of any such financial statements, shall be by separate concurrent delivery of such certificate to each holder of Notes):

 

(a)                                 Covenant Compliance -- the information from such financial statements that is required in order to establish whether the Company was in compliance with the requirements of this Agreement, including Section 10.11, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such provision that involves mathematical calculations, the information from such financial statements that is required to perform such calculations) and detailed calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Section, and the calculation of the amount, ratio or percentage then in existence).  In the event that the Company or any Subsidiary has made an election to measure any financial liability using fair value (which election is being disregarded for purposes of determining compliance with this Agreement pursuant to Section 22.2) as to the period covered by any such financial statement, such Senior Financial Officer’s certificate as to such period shall include a reconciliation from GAAP with respect to such election; and

 

(b)                                 Event of Default -- a statement that such Senior Financial 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), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.

 

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Section 7.3                                                           Visitation Rights.

 

The Company shall permit the representatives of each holder of any of the 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) its independent public accountants, 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 7.4                                                           Electronic Delivery.

 

Financial statements, opinions of independent certified public accountants, other information and Officer’s Certificates that are required to be delivered by the Company pursuant to Sections 7.1(a), (b), (f) or (k) and Section 7.2 shall be deemed to have been delivered if the Company satisfies any of the following requirements:

 

(i)                                                             such financial statements satisfying the requirements of Section 7.1(a) or (b) and related Officer’s Certificate satisfying the requirements of Section 7.2 are delivered to each holder of a Note by e-mail;

 

(ii)                                                          the Company shall have timely filed such Form 10-Q or Form 10-K, satisfying the requirements of Section 7.1(a) or Section 7.1(b), as the case may be, with the SEC;

 

(iii)                                                       such financial statements satisfying the requirements of Section 7.1(a) or Section 7.1(b) and related Officer’s Certificate(s) satisfying the requirements of Section 7.2 are timely posted by or on behalf of the Company on IntraLinks or on any other similar website to which each holder of Notes has free access; or

 

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(iv)                                                      the Company shall have filed any of the items referred to in Section 7.1(f) or Section 7.1(k) with the SEC and shall have made such items available on its home page on the internet or on IntraLinks or on any other similar website to which each holder of Notes has free access;

 

provided however, that in the case of any clauses (ii), (iii) or (iv), the Company shall have given each holder of a Note prior written notice, which may be by e-mail or in accordance with Section 18, of such posting or filing in connection with each delivery, provided further, that upon request of any holder to receive paper copies of such forms, financial statements and Officer’s Certificates or to receive them by e-mail, the Company will promptly e-mail them or deliver such paper copies, as the case may be, to such holder.

 

Section 8.                                          PAYMENT AND PREPAYMENT OF THE NOTES.

 

Section 8.1                                                           Required Prepayments; Maturity.

 

(a)                                 Series A Notes.  The Company will prepay the Series A Notes at par and without payment of the Make-Whole Amount or any premium on the dates and in the principal amounts set forth below (or such lesser principal amount as shall then be outstanding):

 

	
DATE
    	
 
    	
AMOUNT
    	
 
    
	
December   28, 2016
    	
 
    	
$
    	
7,142,857.14
    	
 
    
	
December   28, 2017
    	
 
    	
$
    	
7,142,857.14
    	
 
    
	
December   28, 2018
    	
 
    	
$
    	
7,142,857.14
    	
 
    
	
December   28, 2019
    	
 
    	
$
    	
7,142,857.14
    	
 
    
	
December   28, 2020
    	
 
    	
$
    	
7,142,857.14
    	
 
    
	
December   28, 2021
    	
 
    	
$
    	
7,142,857.14
    	
 
    

 

, provided that upon any partial prepayment of the Series A Notes pursuant to Section 8.2 or 8.3, the principal amount of each required prepayment of the Series A Notes becoming due under this Section 8.1(a) on and after the date of such prepayment shall be reduced in the same proportion as the aggregate unpaid principal amount of the Series A Notes is reduced as a result of such prepayment.

 

(b)                                 Shelf Notes.  Each Series of Shelf Notes shall be subject to required prepayments, if any, set forth in the Notes of such Series, provided that upon any partial prepayment of the Shelf Notes of any Series pursuant to Section 8.2 or 8.3, the principal amount of each required prepayment of the Shelf Notes of such Series becoming due under this Section 8.1(b) on and after the date of such prepayment shall be reduced in the same proportion as the aggregate unpaid principal amount of the Shelf Notes of such Series is reduced as a result of such prepayment.

 

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As provided therein, the entire unpaid principal balance of each Note shall be due and payable on the Maturity Date thereof.

 

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, any Series of Notes (subject to the final sentence of this Section 8.2), in an amount that is an integral multiple of $100,000 and not less than $5,000,000, at 100% of the principal amount so prepaid, and the Make-Whole Amount determined for the prepayment date with respect to such principal amount.  The Company will give each holder of the Series of Notes to be prepaid 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 unless the Company and the Required Holders agree to another time period pursuant to Section 17.  Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Series of 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 8.4), 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.  Two Business Days prior to such prepayment, the Company shall deliver to each holder of the Series of Notes to be prepaid a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.  If a Default or an Event of Default exists at the time the Company gives any written notice of optional prepayment, such notice shall be given to the holders of all Notes of all Series then outstanding, and the optional prepayment shall be made with respect to all Series of Notes rather than solely with respect to the Notes of a particular Series.

 

Section 8.3                                                           Mandatory Prepayments.

 

(a)                                 Change of Control.

 

(i)                                                             Notice of Change of Control or Control Event.  The Company will, within five Business Days after any Responsible Officer has knowledge of the occurrence of any Change of Control or Control Event, give written notice of such Change of Control or Control Event to each holder of any of the Notes.  If a Change of Control has occurred, such notice shall contain and constitute an offer by the Company to prepay the Notes as described in Section 8.3(a)(ii) and shall be accompanied by the certificate described in Section 8.3(a)(v).

 

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(ii)                                                          Offer to Prepay Notes.  The offer to prepay Notes contemplated by this Section 8.3(a) shall be an offer to prepay, in accordance with and subject to this Section 8.3, all, but not less than all, each of the Notes held by each holder (in this case only, “holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the “Proposed Change of Control Prepayment Date”).  Such Proposed Change of Control Prepayment Date shall be not less than 10 days and not more than 30 days after the date of such offer (if the Proposed Change of Control Prepayment Date shall not be specified in such offer, the Proposed Change of Control Prepayment Date shall be the 20th day after the date of such offer).

 

(iii)                                                       Acceptance; Rejection.  The Company shall, on or before the seventh day prior to the Proposed Change of Control Prepayment Date, give telephonic re-notification and confirmation thereof to each holder which shall have designated a recipient of such notices in either Schedule A attached hereto or by notice in writing to the Company.  A holder of Notes may accept the offer to prepay made pursuant to this Section 8.3(a) by causing a notice of such acceptance to be delivered to the Company on or before the fifth day prior to the Proposed Change of Control Prepayment Date.  A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 8.3(a) on or before such date shall be deemed to constitute an acceptance of such offer by such holder.

 

(iv)                                                      Prepayment.  Prepayment of the Notes to be prepaid pursuant to this Section 8.3(a) shall be at 100% of the principal amount of the Notes, together with interest accrued to the actual date of such prepayment and Make-Whole Amount, if any.

 

(v)                                                         Officer’s Certificate.  Each offer to prepay the Notes pursuant to this Section 8.3(a) shall be accompanied by a certificate, executed by a Responsible Officer of the Company and dated the date of such offer, specifying: (i) the Proposed Change of Control Prepayment Date; (ii) that such offer is made pursuant to this Section 8.3(a); (iii) the principal amount of each Note offered to be prepaid; (iv) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Change of Control Prepayment Date and Make-Whole Amount, if any; (v) that the conditions of this Section 8.3(a) have been fulfilled; and (vi) in reasonable detail, the nature and date of the Change of Control.

 

(b)                                 Offer to Prepay Notes in Other Circumstances.

 

(i)                                                             Notice of Other Events.  The Company will promptly give to each holder of Notes written notice of the occurrence of any event described in clauses (c) through (e) of this Section 8.3.  Each such notice shall contain and constitute an offer to prepay the Notes as described in Section 8.3(b)(ii) and shall be accompanied by the certificate described in Section 8.3(b)(v).

 

(ii)                                                          Offer to Prepay Notes.  Each offer to prepay Notes contemplated by the foregoing clause (i) shall be an offer to prepay, in accordance with and subject to this Section 8.3(b), Notes held by each holder (in this case only (without limitation of any other provision hereof), “holder” in respect of any Note registered in the name of a

 

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nominee for a disclosed beneficial owner shall mean such beneficial owner), in an amount (which amount shall consist of both principal and, only in the case of Section 8.3(d) and Section 8.3(e), the Make-Whole Amount, if any, with respect thereto) equal to the Modified Ratable Portion of the Net Cash Proceeds and on the date specified in such offer (the “Proposed Other Prepayment Date”).  Such Proposed Other Prepayment Date shall be not more than five days after the receipt of Net Cash Proceeds by the Company or the applicable Subsidiary (subject to reinvestment rights in the case of an event described in clause (c) below) in respect of the event specified in clauses (c) through (e) of this Section 8.3, as the case may be.

 

(iii)                                                       Acceptance.  A holder of Notes may accept the offer to prepay made pursuant to this Section 8.3(b) by causing a notice of such acceptance to be delivered to the Company on or before the fifth day prior to the Proposed Other Prepayment Date.  A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 8.3(b) on or before such date shall be deemed to constitute an acceptance of such offer by such holder; provided that an offer to prepay made pursuant to this Section 8.3(b) arising out of an event described in Section 8.3(d), on or before such date shall be deemed to constitute a rejection of such offer by such holder.

 

(iv)                                                      Prepayment.  Prepayment of the Notes to be prepaid pursuant to this Section 8.3(b) shall be in an amount equal to the applicable Modified Ratable Portion, and, except in the case of an event describe in Section 8.3(d) which gives rise to a required prepayment pursuant to this Section 8.3(b), the Make-Whole Amount, if any, determined for the date of prepayment with respect to such principal amount.  Interest on such principal amount accrued to the date of prepayment shall also be due and payable on such date.  The prepayment shall be made on the Proposed Other Prepayment Date.

 

(v)                                                         Officer’s Certificate.  Each offer to prepay the Notes pursuant to this Section 8.3(b) shall be accompanied by a certificate, executed by a Responsible Officer and dated the date of such offer, specifying: (a) the Proposed Other Prepayment Date; (b) that such offer is made pursuant to this Section 8.3(b); (c) the principal amount of each Note offered to be prepaid; (d) the interest and Make-Whole Amount, if any, that would be due on each Note offered to be prepaid, accrued to the Proposed Other Prepayment Date; (e) that the conditions of this Section 8.3(b) have been fulfilled; and (f) in reasonable detail, the nature and scheduled consummation date of the transaction pursuant to which such prepayment offer is being made.

 

(c)                                  Net Cash Proceeds of Asset Dispositions.  The Company will offer to prepay Notes in accordance with the provisions of Section 8.3(b) and this Section 8.3(c) if the Company or any Note Party shall at any time or from time to time make a Disposition with respect to any property that, pursuant to Section 10.6, results in a requirement to prepay the Notes and that gives rise to a Modified Ratable Portion; provided that in the case of any such Disposition, so long as no Default or Event of Default then exists or would result therefrom, if the Company states in its notice of such event that the Company or the relevant other Note Party intends to reinvest, within 180 days of the applicable Disposition, (i) the Net Cash Proceeds thereof, in the event that the assets subject to such Disposition constituted Collateral, in property, all or substantially

 

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all (as determined by the Collateral Agent) of which property is purchased with such Net Cash Proceeds shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent or (ii) the Net Cash Proceeds thereof, in the event that the assets subject to such Disposition did not constitute Collateral, in assets similar to the assets which were subject to such Disposition or in property which is otherwise used or useful in the business of the Company and the other Note Parties and, in each case, such property is located within the United States, then the Company shall not be required to make a mandatory prepayment under Section 8.3(b) in respect of such Net Cash Proceeds to the extent such Net Cash Proceeds are actually reinvested in such assets or property within such 180 day period or committed to be reinvested within 90 days thereafter.  Promptly after the end of such 180 day period (or such 90 day period, if applicable), the Company shall notify the holders of the Notes and the Collateral Agent as to whether the Company or such other Note Party has reinvested such Net Cash Proceeds in such similar assets or property, and, to the extent such Net Cash Proceeds have not been so reinvested, the Company shall promptly comply with clause (b)(iv) of this Section 8.3.  If the Required Holders or the Collateral Agent so request, all proceeds of such Disposition shall be deposited with the Collateral Agent (or its agent) and held by it as Collateral.

 

(d)                                 Net Cash Proceeds of Issuance of Capital Securities.  The Company will offer to prepay Notes in accordance with the provisions of Section 8.3(b) and this Section 8.3(d) if, after the date of Closing, the Company or any Subsidiary shall receive Net Cash Proceeds from any issuance of Capital Securities of any Note Party (excluding (x) any issuance of Capital Securities pursuant to any employee or director option program, benefit plan or compensation program and (y) any issuance by a Subsidiary to the Company or another Note Party) that gives rise to a Modified Ratable Portion and a Default or Event of Default then exists.  The Company acknowledges that its performance hereunder shall not limit the rights and remedies of the holders of the Notes for any breach of the terms of the this Agreement or the other Note Documents.

 

(e)                                  Net Cash Proceeds of Incurrence of Indebtedness.  The Company will offer to prepay the Notes in accordance with the provisions of Section 8.3(b) and this Section 8.3(e) if, after the date of Closing, the Company or any Subsidiary shall issue any Indebtedness of any Note Party (excluding Indebtedness permitted by Section 10.1) that gives rise to a Modified Ratable Portion and a Default or Event of Default then exists or would result therefrom.  The Company acknowledges that its performance hereunder shall not limit the rights and remedies of the holders of the Notes for any breach of Section 10.1 hereof or any other terms of the Note Documents.

 

Section 8.4                                                           Allocation of Partial Prepayments.

 

In the case of any partial prepayment of the Notes of any Series, the principal amount of the Notes of such Series to be prepaid shall be allocated among all of the Notes of such Series at the time outstanding (or in the case of a prepayment pursuant to Section 8.3, all the Notes the holders of which shall have accepted, or be deemed to have accepted, the offer to prepay such Notes) in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.

 

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Section 8.5                                                           Maturity; Surrender, etc.

 

In the case of each prepayment of Notes of any Series 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 (which shall be a Business Day), 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 cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

 

Section 8.6                                                           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 of any Series except upon the payment or prepayment of the Notes of such Series in accordance with the terms of this Agreement and the Notes of such Series.  The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment or prepayment of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.

 

Section 8.7                                                           Make-Whole Amount.

 

“Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of (i) the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over (ii) 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” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or Section 8.3 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

 

“Discounted Value” means, 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.

 

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“Reinvestment Yield” means, with respect to the Called Principal of any Note, 0.5% over  the yield to maturity implied by the yield(s) reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1”  (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities (“Reported”) having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there are no such U. S. Treasury securities Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will be determined by (a) converting U. S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between the yields Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

 

If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with respect to the Called Principal of any Note, 0.5% over the yield to maturity implied by the U. S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there is no such U. S. Treasury constant maturity having a term equal to such Remaining Average Life, such implied yield to maturity will be determined by interpolating linearly between (1) the U. S. Treasury constant maturity so reported with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

 

“Remaining Average Life” means, with respect to any Called Principal, the number of years obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years, computed on the basis of a 360-day year composed of twelve 30-day months and calculated to two decimal places, 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” means, 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 8.5 or Section 12.1.

 

36

 

“Settlement Date” means, 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 Section 8.3 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

 

Section 8.8                                                           Payments Due on Non-Business Days.

 

Anything in this Agreement or the Notes to the contrary notwithstanding (but without limiting the requirement in Section 8.2 that the notice of any optional prepayment specify a Business Day as the date fixed for such prepayment), any payment of interest on any Note that is due on a date that is not 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 9.                                          AFFIRMATIVE COVENANTS.

 

The Company covenants that so long as any of the Notes are outstanding and, if no Notes are outstanding, for so long as the Company may request the purchase of any Shelf Notes hereunder:

 

Section 9.1                                                           Compliance with Law.  Without limiting Section 10.14, 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, ERISA, the USA Patriot Act, Environmental Laws and the other laws and regulations referred to in Section 5.16, 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, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 9.2                                                           Insurance.  Maintain, and cause each other Note Party to maintain the insurance required by this Section 9.2 at all times (or, to the extent consistent with prudent business practice, a program of self-insurance) with responsible insurance companies.  The Company shall maintain, and cause each other Note Party to maintain, such insurance coverage as may be required by any law or governmental regulation or court decree or order applicable to it and such other insurance, to such extent and against such hazards and liabilities, as is customarily maintained by companies similarly situated, but which shall insure against all risks and liabilities of the type identified on Schedule 9.2 and shall have insured amounts no less than, and deductibles or self-insured retentions no higher than as is customarily maintained by companies similarly situated,;

 

37

 

and, upon request of the Required Holders or the Collateral Agent, furnish to the holders of the Notes and the Collateral Agent original or electronic copies of policies evidencing such insurance if then available, or if not then available, within three (3) Business Days of the date such policies become available to the Company, and a certificate setting forth in reasonable detail the nature and extent of all insurance maintained by the Note Parties.  The Company shall cause each issuer of an insurance policy to provide the Collateral Agent and the holders with an endorsement (i) showing the Collateral Agent as loss payee with respect to each policy of property or casualty insurance and naming the Collateral Agent as an additional insured, where permissible, with respect to each policy of liability insurance, (ii) providing that 30 days’ notice will be given to the Collateral Agent and the holders prior to any cancellation of, material reduction or change in coverage provided by or other material modification to such policy and (iii) reasonably acceptable in all other respects to the Collateral Agent and the Required Holders.  The Company shall execute and deliver to the Collateral Agent and the holders of the Notes a collateral assignment, in form and substance satisfactory to the Collateral Agent and the Required Holders, of each business interruption insurance policy maintained by the Company.

 

UNLESS THE COMPANY PROVIDES THE COLLATERAL AGENT AND THE HOLDERS OF THE NOTES WITH EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY THIS AGREEMENT AND THE OTHER NOTE DOCUMENTS, AND IN THE EVENT THE COMPANY FAILS TO PURCHASE FURTHER OR OTHER INSURANCE AS REASONABLY REQUIRED BY THE COLLATERAL AGENT AND THE REQUIRED HOLDERS IN ORDER TO BE IN COMPLIANCE WITH THE INSURANCE COVERAGE REQUIREMENTS OF THIS AGREEMENT AND THE OTHER NOTE DOCUMENTS, THE COLLATERAL AGENT MAY PURCHASE INSURANCE AT THE COMPANY’S EXPENSE TO PROTECT THE COLLATERAL AGENT’S INTERESTS IN THE COLLATERAL.  SUCH INSURANCE MAY, BUT NEED NOT, PROTECT ANY NOTE PARTY’S INTERESTS.  THE COVERAGE THAT THE COLLATERAL AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT IS MADE AGAINST ANY NOTE PARTY IN CONNECTION WITH THE COLLATERAL.  THE COMPANY MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE COLLATERAL AGENT, BUT ONLY AFTER PROVIDING THE COLLATERAL AGENT WITH EVIDENCE THAT THE COMPANY HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT.  IF THE COLLATERAL AGENT PURCHASES INSURANCE FOR THE COLLATERAL, THE COMPANY WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT MAY BE IMPOSED WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE.  THE COSTS OF THE INSURANCE MAY BE ADDED TO THE OUTSTANDING PRINCIPAL AMOUNT OF THE NOTES.  THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF THE INSURANCE THE NOTE PARTIES MAY BE ABLE TO OBTAIN ON THEIR OWN.

 

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Section 9.3                                                           Maintenance of Properties.  The Company will, and will cause each of the other Note Parties 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 such other Note Party 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, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 9.4                                                           Payment of Taxes and Claims.  The Company will, and will cause each of the other Note Parties 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 the same 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 other Note Party, provided that neither the Company nor any other Note Party need pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof is contested by the Company or such Note Party on a timely basis in good faith and in appropriate proceedings, and the Company or a Note Party has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Note Party.

 

Section 9.5                                                           Corporate Existence, etc.  Subject to Section 10.3, the Company will at all times preserve and keep in full force and effect its corporate existence.  The Company will at all times preserve and keep in full force and effect the corporate existence of each of the other Note Parties (unless merged into the Company or another Note Party) and all rights and franchises of the Company and the other Note Parties 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 could not, individually or in the aggregate, have a Material Adverse Effect.

 

Section 9.6                                                           Books and Records.  The Company will, and will cause each of the other Note Parties to, maintain proper books of record and account in conformity with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company or such other Note Party, as the case may be.  The Company will, and will cause each of the other Note Parties to, keep books, records and accounts which, in reasonable detail, accurately reflect all transactions and Dispositions of assets.  The Company and the other Note Parties have devised a system of internal accounting controls sufficient to provide reasonable assurances that their respective books, records, and accounts accurately reflect all transactions and Dispositions of assets and the Company will, and will cause each of the other Note Parties to, continue to maintain such system.

 

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Section 9.7                                                           Collateral; Subsequently Acquired Subsidiaries.

 

(a)                                 It is the intent of the parties that all obligations of the Note Parties under the Note Documents shall be guaranteed by (i) each Domestic Subsidiary of the Company, whether now existing or hereafter acquired or created and (ii) any other Subsidiary any other Subsidiary that guarantees or otherwise becomes liable at any time in respect of any Indebtedness under the Senior Credit Agreement or the other Senior Credit Documents, and shall be, to the extent set forth in the Security Documents, secured by substantially all the property and assets of each of the Note Parties, whether now existing or hereafter acquired, including, without limitation, securities accounts, accounts, chattel paper, instruments, deposit accounts, investment property, documents, contracts, letter-of-credit rights, general intangibles, equipment, inventory, permits, patents, trademarks, copyrights, trade names, service marks, Capital Securities issued by the Company’s Subsidiaries or other Persons and other properties  acquired after the date hereof, to the extent required by the Security Documents.

 

(b)                                 At the Company’s expense, the Company shall execute and deliver (and, where applicable, authorize the filing of), and shall cause the other Note Parties to execute and deliver (and, where applicable, authorize the filing of), any and all financing statements, continuation statements and amendments and other instruments, agreements or other documents, and take all action (including, without limitation, filing all Uniform Commercial Code financing statements, continuation statements and amendments, filing or recording mortgages and deeds of trust and filing assignments or other documents customarily filed with the U.S. Patent and Trademark Office or the U.S. Copyright Office) that may be required under applicable law, or that the Required Holders or the Collateral Agent may reasonably request in order to effectuate the transactions contemplated by the Note Documents and in order to grant, preserve, protect and perfect the validity and first priority of the security interests and Liens created or purported to be created by the Security Documents or in order to effectuate the intent of the parties set forth in clause (a) of this Section 9.7.

 

(c)                                  At the Company’s expense, the Company shall:  (a) (x) cause each subsequently acquired or organized Domestic Subsidiary, within 30 days after such acquisition or organization (or, if earlier, on the date such Subsidiary Guaranties or otherwise becomes liable at any time in respect of any Indebtedness under the Senior Credit Agreement or the other Senior Credit Documents), and (y) any other Subsidiary that guarantees or otherwise becomes liable at any time in respect of any Indebtedness under the Senior Credit Agreement or the other Senior Credit Documents, concurrently therewith, to execute and deliver (1) a joinder to the Subsidiary Guaranty (in the form contemplated thereby), pursuant to which such Subsidiary shall become a Guarantor and shall agree to be bound by the terms and provisions thereof, (2) an opinion of counsel reasonably satisfactory to the Required Holders covering such matters relating to such Subsidiary as the Required Holders may reasonably request, (3) certificates in form and substance substantially similar to the certificates described in Section 4.3(b), and (4) the Security Agreement and each Security Document that the Required Holders or the Collateral Agent may request in order to grant the Collateral Agent a valid, first priority perfected pledge or security interest in, to the extent required by the Security Documents, substantially all of the assets and properties of such Subsidiary, including without limitation, any outstanding Capital Securities of any other Subsidiary or other Person

 

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which may be held by such Subsidiary; (b) deliver or cause such Subsidiary to deliver to the Collateral Agent all certificates, stock powers and other documents required by the Security Documents executed by such Subsidiary, or take or cause such Subsidiary to take such other actions, all as may be necessary to provide the Collateral Agent with a first priority perfected pledge of and security interest in all outstanding Capital Securities owned or held by such Subsidiary, to the extent so required by the Security Documents; provided, that nothing in this clause (c) shall in any way limit or modify the right of the holders of the Notes to enforce the provisions of Section 10.

 

(d)                                 Any security interests and Liens described in this Section 9.7 shall be created under the Security Documents and other security agreements, pledge agreements, assignments and other instruments, agreements and other documents in form, scope and substance reasonably satisfactory to the Required Holders and to the Collateral Agent, and at the Company’s expense, the Company will deliver or cause to be delivered to the Collateral Agent all such instruments, agreements and other documents, including, without limitation, legal opinions, landlord and warehousemen Lien waivers and lien searches, as the Required Holders or the Collateral Agent shall reasonably request to evidence compliance with this Section 9.7.

 

Section 9.8                                                           Information Required by Rule 144A.  The Company will, upon the request of the holder of any Note, provide such holder, and any Qualified Institutional Buyer designated by such holder, such financial and other information as such holder may reasonably determine to be necessary in order to permit compliance with the information requirements of Rule 144A under the Securities Act in connection with the resale of Notes, except at such times as the Company is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act.

 

Section 9.9                                                           Covenant to Secure Notes Equally.  The Company will, if it or any other Note Party shall create or assume any Lien upon any of its property or assets, whether now owned or hereafter acquired, other than Liens permitted by the provisions of Section 10.2 (unless prior written consent to the creation or assumption thereof shall have been obtained pursuant to Section 17.1), make or cause to be made effective provision whereby the Notes and the Subsidiary Guaranty will be secured by such Lien equally and ratably with any and all other Indebtedness thereby secured; provided, that the creation and maintenance of such equal and ratable Lien shall not in any way limit or modify the right of the holders of the Notes to enforce the provisions of Section 10.2.

 

Section 9.10                                                    Notes and Guaranty Agreements to Rank Pari Passu.  All payment obligations arising under this Agreement and the Notes shall be maintained at a rank (i) not less than pari passu with all other Notes from time to time issued and outstanding hereunder, without any preference among themselves and (ii) not less than pari passu with all other secured Indebtedness (actual or contingent) of the Company.  All payment obligations of each Guarantor under the Subsidiary Guaranty in respect of the Notes and the Subsidiary Guaranty shall be maintained (i) at a rank pari passu with all payment obligations of such Guarantor under the Subsidiary Guaranty and the Notes guaranteed thereby, without any preference among themselves and (ii) not less than pari passu in respect of all other secured Indebtedness (actual or contingent) of such Guarantor.

 

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Section 9.11                                                    ERISA.

 

(a)                                 Maintain, and cause each other member of the Controlled Group to maintain, each Pension Plan in substantial compliance with all applicable requirements of law and regulations.

 

(b)                                 Make, and cause each other member of the Controlled Group to make, on a timely basis, all required contributions to any Multiemployer Pension Plan.

 

(c)                                  Not, and not permit any other member of the Controlled Group to (i) seek a waiver of the minimum funding standards of ERISA, (ii) terminate or withdraw from any Pension Plan or Multiemployer Pension Plan or (iii) take any other action with respect to any Pension Plan that would reasonably be expected to entitle the PBGC to terminate, impose liability in respect of, or cause a trustee to be appointed to administer, any Pension Plan, unless the actions or events described in clauses (i), (ii) and (iii) individually or in the aggregate would not have a Material Adverse Effect.

 

Section 9.12                                                    Environmental Covenants.

 

(a)                                 The Company will promptly notify each holder of Notes of and provide such holder with copies of any written notifications of violations or written notifications of discharges or releases or threatened releases or discharges of a Hazardous Material on, upon, into or from any property of any Note Party, or any property where any Note Party is conducting operations, which are received or are given or required to be given by or on behalf of any Note Party to any federal, state or local Tribunal if any of the foregoing could reasonably be expected to have a Material Adverse Effect.  Copies of such notifications shall be delivered to the holders at the same time as they are delivered to any Tribunal.

 

(b)                                 If any release or threatened release or other disposal of Hazardous Material shall occur or shall have occurred on any real property or any other assets of any Note Party, the Company shall, or shall cause the applicable Note Party to, cause the prompt containment and removal of such Hazardous Materials and the remediation of such real property or other assets as necessary to comply with all Environmental Laws and to preserve the value of such real property or other assets.

 

(c)                                  Without limiting the generality of the foregoing, the Company shall, and shall cause each other Note Party to, comply with any Federal or state judicial or administrative order requiring the performance at any real property of any Note Party of activities in response to the release or threatened release of a Hazardous Material.  To the extent that the transportation of Hazardous Material is permitted by this Agreement, the Company shall, and shall cause the other Note Parties to, dispose of such Hazardous Materials, or of any other wastes, only at licensed disposal facilities operating in compliance with Environmental Laws.

 

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Section 9.13                                                    Deposit Accounts.  Unless the Required Holders otherwise consent in writing, in order to facilitate the Collateral Agent’s and the holders’ maintenance and monitoring of the Collateral Agent’s security interests in the Collateral, maintain all of their principal deposit accounts with the Collateral Agent and/or any other depositary institution party to the Intercreditor Agreement.

 

Section 9.14                                                    Permissible Payments.  So long as there is compliance, on a Pro Forma Basis, with the financial covenants contained in Section 10.11 hereof, the Company may (a) make any distribution to any holders of its Capital Securities, (b) purchase or redeem any of its Capital Securities, (c) pay any management fees or similar fees to any of its equity holders or any Affiliate thereof, (d) subject to clause (g) hereof, make any redemption, prepayment (whether mandatory or optional), defeasance, repurchase or any other payment in respect of any Subordinated Debt, (e) set aside funds for any of the foregoing, (f) may make regularly scheduled payments of interest and principal in respect of Subordinated Debt to the extent permitted under the subordination provisions thereof, and (g) pay any Earn-Outs; provided that, for purposes of clarification, Subsidiaries of the Company shall at all times be permitted to make dividends or distributions to any of the Note Parties.

 

Section 9.15                                                    [Omitted].

 

Section 9.16                                                    Further Assurances.  At any time or from time to time upon the request of the Required Holders, the Company will, and will cause its Subsidiaries to, promptly execute, acknowledge and deliver such further documents and do such other acts and things as the Required Holders may reasonably request in order to effect fully the purposes of the Note Documents.

 

Section 9.17                                                    Post-Closing Requirements.  Within 60 days of the date hereof (or such reasonable additional days as necessary to comply with applicable law in respect of the dissolution required below), the Company shall provide to the Series A Purchasers and any other holder of a Note evidence satisfactory to such holders that Onquest Heaters, Inc. dissolved and neither the Company nor any of its Subsidiaries owns any of the Capital Securities issued by Onquest Heaters, Inc.

 

Section 10.                                   NEGATIVE COVENANTS.

 

The Company covenants that so long as any of the Notes are outstanding and, if no Notes are outstanding, for so long as the Company may request the purchase of any Shelf Notes hereunder:

 

Section 10.1                                                    Indebtedness.  The Company will not, and will not permit any other Note Party to, create, incur, assume or suffer to exist any Indebtedness, except:

 

(a)                                 Indebtedness of any Note Party under the Note Documents;

 

(b)                                 Indebtedness in respect of the Senior Credit Agreement; provided, that such Indebtedness, and the Senior Lenders, shall at all times remain subject to the Intercreditor Agreement;

 

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(c)                                  Indebtedness secured by Liens permitted by Section 10.2(d) (including Indebtedness set forth on Schedule 10.1(c) attached hereto), and extensions, renewals and refinancings thereof subject to compliance, on a Pro Forma Basis, with the financial covenants set forth in Section 10.11 herein;

 

(d)                                 Indebtedness of the Company to any Guarantor or Indebtedness of any Guarantor to the Company or to another Guarantor;

 

(e)                                  Subordinated Debt provided that (i) the Company is in compliance, on a Pro Forma Basis, with the financial covenants set forth in Section 10.11 herein including compliance, on a Pro Forma Basis, with the Fixed Charge Coverage Ratio such that the denominator also includes the greater of $7,500,000 or the actual maximum amount of annual principal amortization under all of the Notes regardless of whether or not such amortization has occurred in the past 12 months; and (ii) the aggregate amount of Subordinated Debt shall not exceed 0.5x Consolidated EBITDA, on a Pro Forma Basis, calculated as of the date such Subordinated Debt is, or is to be, issued;

 

(f)                                   Indebtedness in the form of Hedging Obligations permitted under Section 10.16;

 

(g)                                  Indebtedness existing on the date hereof and set forth in Schedule 10.1(g) and extensions, renewals and replacements of any such Indebtedness (including any unfunded commitments in respect thereof) with Indebtedness of a similar type that does not increase the outstanding principal amount thereof;

 

(h)                                 Contingent Liabilities arising with respect to customary indemnification obligations in favor of sellers in connection with Permitted Acquisitions to the extent permitted under Section 10.8 and purchasers in connection with Dispositions permitted under Section 10.6; and

 

(i)                                     other unsecured Indebtedness subject to compliance, on a Pro Forma Basis, with the financial covenants set forth in Section 10.11 herein.

 

Section 10.2                                                    Liens.  Subject to Section 10.11(d), the Company will not, and will not permit any of the other Note Parties to, create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except:

 

(a)                                 Liens for taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves in accordance with GAAP and the execution or other enforcement of which is effectively stayed;

 

(b)                                 Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by law and (ii) Liens in the form of deposits or pledges incurred in connection with worker’s compensation, unemployment compensation and other types of social security (excluding

 

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Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being diligently contested in good faith by appropriate proceedings and not involving any advances or borrowed money or the deferred purchase price of property or services and, in each case, for which it maintains adequate reserves in accordance with GAAP and the execution or other enforcement of which is effectively stayed;

 

(c)                                  any Lien on any property or asset of any of the Company and/or any other Note Party existing on the date hereof and set forth in Schedule 10.2(c); provided that (i) such Lien shall not apply to any other property or asset of the Note Parties and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof (including unfunded commitments thereunder) that do not increase the outstanding principal amount thereof except by the amount paid, and fees and expenses reasonably incurred, in connection with such refinancing;

 

(d)                                 subject to the limitation set forth in Section 10.1(c), (i) Liens arising in connection with Capital Leases (and attaching only to the property being leased pursuant to such Capital Lease), (ii) Liens existing on property at the time of the acquisition thereof by any Note Party (and not created in contemplation of such acquisition), provided that such acquisition is made in compliance with Section 10.8, and (iii) Liens on equipment or real property; provided that unless otherwise permitted in this Section 10.2, such Liens permitted by sub-clause (iii) of this clause (d) are not in favor of the Collateral Agent, the Senior Agent, the Senior Lenders or any of their respective Affiliates unless such Liens are subject to the Intercreditor Agreement;

 

(e)                                  attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding $3,000,000, in the aggregate for all of the foregoing, arising in connection with court proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings;

 

(f)                                   easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of any Note Party; and

 

(g)                                  Liens in favor of the Collateral Agent under the Security Documents to the extent such Liens are subject to the Intercreditor Agreement and to the extent securing the Secured Obligations.

 

Section 10.3                                                    Merger, Consolidation, etc.  The Company will not, and will not permit any of the other Note Parties to, merge or consolidate with or into any other Person or convey, transfer or lease substantially all of its assets to any Person, except that:

 

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(a)                                 (x) any Subsidiary may merge or consolidate with or into, or transfer its assets to, any Guarantor; provided that in any such merger or consolidation, the continuing or surviving Person is such Guarantor and (y) any Subsidiary may merge or consolidate with or into, or transfer its assets to, the Company; provided that in any such merger or consolidation, the continuing or surviving Person is the Company; and

 

(b)                                 other than as set forth in clause (a), the Company may merge or consolidate with or into any Person (other than any of its Subsidiaries); provided that in any such merger or consolidation, the continuing or surviving Person is the Company and such merger or consolidation is otherwise in compliance with Section 10.8 and the requirements of a Permitted Acquisition.

 

Section 10.4                                                    Modification of Organizational Documents.  The Company will not, and will not permit any of the other Note Parties to, amend or modify the charter, by-laws or other organizational documents of such Person in any way which could reasonably be expected to materially and adversely affect the interests of the holders of the Notes; and will not, and will not permit any of the other Note Parties to, change its state of formation or its organizational form in any way which could reasonably be expected to materially and adversely affect on the interests of the holders of the Notes.

 

Section 10.5                                                    Transactions with Affiliates.  The Company will not, and will not permit any of the other Note Parties to, enter into, or cause, suffer or permit to exist any transaction, arrangement or contract with any of such Person’s Affiliates which is on terms which are less favorable than are obtainable from any Person which is not an Affiliate of such Note Party, except transactions between or among the Note Parties not involving any other Affiliate.

 

Section 10.6                                                    Dispositions.  The Company will not, and will not permit any of the other Note Parties to make any Disposition except (a) transfers of assets to any of the Note Parties, (b) Dispositions of Inventory of any of the Note Parties and Fixed Assets of any of the Note Parties (in each case subject to clause (d) of this Section 10.6 and the latter also subject Section 10.11(d)) sold in the ordinary course of business, (c) obsolete or worn out equipment and (d) subject to the following sentence, Dispositions to the extent the aggregate Net Cash Proceeds of such Dispositions does not exceed, in any such Fiscal Year, 20% of the Consolidated Tangible Assets of the Company and the other Note Parties, as of the end of the immediately preceding Fiscal Year, and to the extent 100% of the consideration for such Dispositions is in cash; provided that, to the extent otherwise meeting the requirements of this clause (d), (1) Net Cash Proceeds from Dispositions which in the event that the assets subject to such Disposition constituted Collateral, such Net Cash Proceeds are reinvested in property, all or substantially all (as determined by the Collateral Agent) of which such property shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent or (2) in the event that the assets subject to such Disposition did not constitute Collateral, such Net Cash Proceeds are reinvested in assets similar to the assets which were subject to such Disposition or in property which is otherwise used or useful in the business of the Company and the other Note Parties, and in each case, such property is located within the United States; provided further that, to the extent actually reinvested in such assets or property within the 180-day period after the applicable Disposition or committed to be reinvested within 90 days after the end of such period, such Net Cash Proceeds will be

 

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excluded from the calculation of aggregate Net Cash Proceeds in such Fiscal Year.  If the Net Cash Proceeds of any Disposition for any Fiscal Year are greater than 20% of the Consolidated Tangible Assets of the Company and the other Note Parties, the Company shall make the required prepayments and otherwise comply with the provisions of Section 8.3.

 

Section 10.7                                                    Line of Business.  The Company will not, and will not permit any of the other Note Parties to, engage in any business if, as a result, the general nature of the business in which the Company and the other Note Parties, taken as a whole, would then be engaged would be substantially changed from the general nature of the business in which the Company and the other Note Parties, taken as a whole, are engaged on the date of this Agreement as described in Schedule 10.7.

 

Section 10.8                                                    Investments.  The Company will not, and will not permit any of the other Note Parties to, make or permit to exist any Investment in any other Person, except the following:

 

(a)                                 (i) Investments in the form of contributions by any Note Party in respect of the Capital Securities of any Guarantor, or (ii) as set forth on Schedule 10.8(a), Investments in existence on the date hereof in the form of contributions by any Note Party in respect of the Capital Securities of any other Subsidiary of the Company;

 

(b)                                 Investments constituting Indebtedness permitted by Section 10.1;

 

(c)                                  Investments in the form of Contingent Liabilities constituting Indebtedness permitted by Section 10.1;

 

(d)                                 Cash Equivalent Investments;

 

(e)                                  Investments in the Capital Securities of Account Debtors received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such Account Debtors;

 

(f)                                   to the extent not otherwise permitted hereunder, Investments in existence on the date hereof and listed on Schedule 10.8(f);

 

(g)                                  to the extent not otherwise permitted hereunder, Investments in Joint Ventures (other than Construction Partnerships) in an aggregate amount not to exceed $50,000,000 at any time;

 

(h)                                 [Omitted.]

 

(i)                                     Investments in the form of Permitted Acquisitions; provided that such Investments in Foreign Subsidiaries shall at no time exceed $20,000,000.

 

In valuing any Investments for the purpose of applying any limitations set forth in this Agreement, such Investments shall be taken at the original cost thereof (but without reduction or increase for any subsequent appreciation or depreciation thereof) less any amount actually repaid or recovered on account of capital or principal (but without reduction for any offsetting Investments made by the investee in the investor).

 

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Section 10.9                                                    Restriction of Amendments to Subordination Agreements.  The Company will not, and will not permit any of the other Note Parties to, amend or otherwise modify, or waive any rights under any provisions of any Subordinated Debt or any Subordination Agreements.

 

Section 10.10                                             Change of Fiscal Year.  The Company will not, and will not permit any of the other Note Parties to, change such Person’s Fiscal Year from its present Fiscal Year (ending on December 31).

 

Section 10.11                                             Financial Covenants.

 

(a)                                 Tangible Net Worth.  The Company will not permit Consolidated Tangible Net Worth, calculated as of the last day of each Fiscal Quarter (commencing December 31, 2012), to be less than $100,000,000, which required minimum amount will increase (i) on December 31, 2012, by twenty-five percent (25%) of Consolidated Net Income, as reported on the Company’s annual audited financial statements delivered pursuant to Section 7.1(b) for the fourth Fiscal Quarter of 2012 (but without reduction for any net loss) and (ii) thereafter, annually, commencing December 31, 2013, and each anniversary of such date by an amount equal to twenty-five percent (25%) of Consolidated Net Income reported on the Company’s annual audited financial statements delivered pursuant to Section 7.1(b) for the preceding Fiscal Year (but without reduction for any net loss).

 

(b)                                 Fixed Charge Coverage Ratio.  The Company will not permit Fixed Charge Coverage Ratio, calculated at the end of each Fiscal Quarter, commencing December 31, 2012, for the period of four consecutive Fiscal Quarters most recently ended, taken as a single period, to be less than 1.25:1.00.

 

(c)                                  Senior Debt to Consolidated EBITDA Ratio.  The Company will not permit, at any time, the ratio of (i) Senior Debt (excluding, to the extent otherwise constituting Senior Debt, Earn-Outs) at such time to (ii) Consolidated EBITDA, calculated on the last day of each Fiscal Quarter, commencing December 31, 2012, for the period of four consecutive Fiscal Quarters most recently ended, taken as a single period, to be more than 2.25:1.00.

 

(d)                                 Consolidated Unencumbered Fixed Assets.  The Company will not permit, at any time, Unencumbered Fixed Assets owned by any of the Company and the other Note Parties, to be valued at less than $45,000,000, calculated at the greatest of (a) net book value, (b) most recent insurance valuation, (c) market value (such as, for example, in the case of equipment, the value therefore as published by Ritchie Bros. Auctioneers), or (d) the estimated value provided by an independent third party acceptable to the Required Holders (in the case of Fixed Assets to which the foregoing clause (c) or (d) applies, with estimates of equipment value to be updated annually and estimates of real property value to be in accordance with most recent appraisals provided to the Purchasers

 

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prior to the date hereof); provided that, in the case of real property to which any of clauses (b), (c) or (d) shall apply, such calculation shall deduct from such insurance value, market value or estimated value, as applicable, the amount of any Indebtedness secured by a Lien on such real property.  These Fixed Assets may be substituted for from time to time with consent of the Senior Agent.

 

Section 10.12                                             Cancellation of Debt.  The Company will not, and will not permit any of the other Note Parties to, cancel any claim or debt owing to it, except in exchange for reasonable consideration or in the ordinary course of the Company’s business, and except for the cancellation of debts or claims not to exceed $3,000,000 in any Fiscal Year.

 

Section 10.13                                             Laws, Regulations.  The Company will not, and will not permit any of its Subsidiaries to, fail to comply with the laws, regulations and executive orders referred to in Section 9.1.

 

Section 10.14                                             Terrorism Sanctions Regulations.  The Company will not and will not permit any Controlled Entity (a) to become (including by virtue of being owned or controlled by a Blocked Person), own or control a Blocked Person or any Person that is the target of sanctions imposed by the United Nations or by the European Union, or (b) directly or indirectly to have any investment in or engage in any dealing or transaction (including, without limitation, any investment, dealing or transaction involving the proceeds of the Notes) with any Person if such investment, dealing or transaction (i) would cause any holder to be in violation of any law or regulation applicable to such holder, or (ii) is prohibited by or subject to sanctions under any U. S. Economic Sanctions, or (c) to engage, nor shall any Affiliate of either engage, in any activity that could subject such Person or any holder to sanctions under CISADA or any similar law or regulation with respect to Iran or any other country that is subject to U.S. Economic Sanctions.

 

Section 10.15                                             Most Favored Lender Status.  The Company will not, and will not permit any other Note Party to, enter into, assume or otherwise be bound or obligated (including, without limitation, by amendment to the Senior Credit Agreement) under any agreement creating or evidencing Indebtedness in excess of $10,000,000 containing one or more Additional Covenants (other than those in existence on the date hereof) or Additional Defaults (other than those in existence on the date hereof), unless prior written notice of such agreement shall have been provided to the holders of the Notes.  Unless the Company and the other Note Parties shall enter into, assume or otherwise become bound by or obligated under any such agreement with the prior written waiver by the Required Holders of the application of this Section 10.15, the terms of this Agreement shall, without any further action on the part of the Company or any of the holders of the Notes, be deemed to be amended automatically to include each Additional Covenant and each Additional Default contained in such agreement.  The Company further covenants to promptly execute and deliver at its expense (including the reasonable fees and expenses of counsel for the holders of the Notes) an amendment to this Agreement in form and substance satisfactory to the Required Holders evidencing the amendment of this Agreement to include such Additional Covenants and Additional Defaults, provided that the execution and delivery of such amendment shall not be a precondition to the effectiveness of such amendment as provided for in this Section 10.15, but shall merely be for the convenience of the parties hereto.

 

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Section 10.16                                             Hedging Transactions.  The Company will not, and will not permit any of the other Note Parties to, incur any Hedging Obligations other than as approved by the Required Holders and incurred in favor of a Senior Lender or an Affiliate thereof for bona fide hedging purposes and not for speculation.

 

Section 10.17                                             Inconsistent Agreements.  The Company will not, and will not permit any of the other Note Parties to, enter into any agreement containing any provision which would (a) be violated or breached by the issuance of any Notes, the performance by any Note Party of any of its obligations hereunder or under any other Note Document, (b) prohibit any Note Party from granting to the Collateral Agent, a Lien on any of its assets or (c) create or permit to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends or make other distributions to the Company or any other Note Party, or pay any Indebtedness owed to the Company or any other Note Party, (ii) make loans or advances to any Note Party or (iii) transfer any of its assets or properties to any Note Party, other than (A) customary restrictions and conditions contained in agreements relating to the sale of all or a substantial part of the assets of any Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary to be sold and such sale is permitted hereunder (B) restrictions or conditions imposed by any agreement relating to purchase money Indebtedness, Capital Leases and other secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, (C) customary provisions in leases and other contracts restricting the assignment thereof and (D) provisions contained in the Senior Credit Documents, for so long as the obligations arising thereunder are subject to the Intercreditor Agreement.

 

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 days after the same becomes due and payable; or

 

(c)                                  any default in the payment when due, or in the performance or observance, of any material obligation of, or condition agreed to by, any Note Party with respect to any material purchase or lease of goods or services where such default, singly or in the aggregate with all other such defaults, might reasonably be expected to have a Material Adverse Effect; or

 

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(d)           failure by any Note Party to comply with or to perform any covenant set forth in Sections 5.14, 7.1, 7.2, 9.2, 9.5, 9.9, 9.10 or Section 10; or (b) failure by any Note Party to comply with or to perform any other provision of this Agreement or any other Note Document (and not constituting an Event of Default under any other provision of this Section 11) and continuance of such failure described in this clause (b) for 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) 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 Section 11(d); or

 

(e)           any representation or warranty made by any Note Party herein or any other Note Document is breached or is false or misleading in any material respect, or any schedule, certificate, financial statement, report, notice or other writing furnished by any Note Party to any holder of a Note, Prudential or the Collateral Agent in connection herewith or any other Note Document is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified; or

 

(f)            (i) the Company or any other Note Party 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 Indebtedness that is outstanding in an aggregate principal amount of at least $3,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any other Note Party is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least $3,000,000 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 Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) 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 Indebtedness to convert such Indebtedness into equity interests), (x) the Company or any other Note Party has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $3,000,000, or (y) one or more Persons have the right to require the Company or any Subsidiary so to purchase or repay such Indebtedness; or

 

(g)           the Company or any Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) 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, (iii) makes an assignment for the benefit of its creditors, (iv) 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, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or

 

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(h)           a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by the Company or any of its 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 Subsidiaries, or any such petition shall be filed against the Company or any of its Subsidiaries and such petition shall not be dismissed within 60 days; or

 

(i)            one or more judgments or orders for the payment of money aggregating in excess of $3,000,000, including, without limitation, any such final order enforcing a binding arbitration decision, are rendered against one or more of the Company or any other Note Party and which judgments are not, within 30 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 30 days after the expiration of such stay; or

 

(j)            if (i) 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, (ii) 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, (iii) 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 an amount that could reasonably be expected to have a Material Adverse Effect, (iv) 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, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary 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 Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect.  As used in this 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; or

 

(k)           Any subordination provision in any document or instrument governing Subordinated Debt, or any subordination provision in any subordination agreement that relates to any Subordinated Debt, or any subordination provision in any agreement or instrument giving rise to any Contingent Liability by any Note Party of any Subordinated Debt, shall cease to be in full force and effect, or any Note Party or any other Person (including the holder of any applicable Subordinated Debt) shall contest in any manner the validity, binding nature or enforceability of any such provision; or

 

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(l)            this Agreement, any Note, the Guaranty Agreement, any of the Security Documents or any other Note Document, or any material provision thereof, shall for any reason cease to be, or shall be asserted by any Note Party not to be, a legal, valid and binding obligation of any Note Party, enforceable in accordance with its terms, or the Lien purported to be created by any of the Security Documents shall for any reason cease to be, or be asserted by any Note Party not to be, a valid, first priority perfected Lien against any portion of the Collateral (except to the extent otherwise permitted under this Agreement or any of the Security Documents).

 

Section 12.                                   REMEDIES ON DEFAULT, ETC.

 

Section 12.1         Acceleration.

 

(a)           If an Event of Default with respect to the Company described in Section 11(g) or (h) (other than an Event of Default described in clause (i) of Section 11(g) or described in clause (vi) of Section 11(g) by virtue of the fact that such clause encompasses clause (i) of Section 11(g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.

 

(b)           If any other Event of Default has occurred and is continuing, the Required Holders 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 Section 11(a) or (b) has occurred and is continuing, 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.

 

(d)           Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon (including, but not limited to, interest accrued thereon at the Default Rate) and (y) 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 parties 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.

 

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Section 12.2         Other Remedies.  If any Default or Event of Default has occurred and is continuing, 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 and/or the Collateral Agent may proceed to protect and enforce the rights of such holder and/or the Collateral Agent, as the case may be, 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 any other Note Document, 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. The holders of Notes shall have the other remedies contained in the Intercreditor Agreement, the Guaranty Agreement and the Security Documents.

 

Section 12.3         Rescission.  At any time after any Notes have been declared due and payable pursuant to Section 12.1(b) or (c), the Required Holders, 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 permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) neither the Company nor any other Person shall have paid any amounts which have become due solely by reason of such declaration, (c) 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 (d) 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,  by any Note or any other Note Document upon any holder or upon the Collateral Agent 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 (including the principal amount and stated interest thereon).  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.  If any holder of one or more Notes is a nominee, then (a) the name and address of the beneficial owner of

 

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such Note or Notes shall also be registered in such register as an owner and holder thereof and (b) at any such beneficial owner’s option, either such beneficial owner or its nominee may execute any amendment, waiver or consent pursuant to this Agreement.  Prior to due presentment for registration of transfer, the Person(s) in whose name any Note(s) 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 to the Company at the address and to the attention of the designated officer (all as specified in Section 18(c)), for registration of transfer or exchange (and in the case of a surrender for registration of transfer accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder’s attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee of such Note or part thereof), within ten Business Days thereafter, 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) of the same Series as such surrendered Note 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-A, in the case of a Series A Note, or in the form of Exhibit 1-B, in the case of a Shelf Note.  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 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 $100,000, 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 $100,000.  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.

 

Section 13.3         Replacement of Notes.  Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Section 18(c)) 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 $100,000,000 or a Qualified Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or

 

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(b)           in the case of mutilation, upon surrender and cancellation thereof, within ten Business Days thereafter, the Company at its own expense shall execute and deliver, in lieu thereof, a new Note of the same Series as such lost, stolen, destroyed or mutilated 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 New York City, New York at the principal office of JPMorgan Chase Bank, N.A. 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 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 its 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, interest and all other amounts becoming due hereunder by the method and at the address specified for such purpose below such Purchaser’s name in Schedule A (in the case of the Series A Notes) or as specified in such Purchaser’s Confirmation of Acceptance (in the case of a Shelf Note), 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 a Purchaser or its 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 a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have 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 by the Required Holders, local or other counsel) incurred by the Purchasers and each other holder of a Note in connection with such transactions and in connection with any

 

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amendments, waivers or consents under or in respect of this Agreement,  the Notes or any other Note Document (whether or not such amendment, waiver or consent becomes effective) within 15 Business Days after the Company’s receipt of any invoice therefor, 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 Notes or any other Note Document or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the Notes or any other Note Document, or by reason of being a holder of any Note, (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 Notes and by any other Note Document and (c) the costs and expenses incurred in connection with the initial filing of this Agreement and all related documents and financial information with the SVO provided, that such costs and expenses under this clause (c) shall not exceed $7,500.  In the event that any such invoice is not paid within 15 Business Days after the Company’s receipt thereof, interest on the amount of such invoice shall be due and payable at the Default Rate commencing with the 16th Business Day after the Company’s receipt thereof until such invoice has been paid.  The Company will pay, and will save each Purchaser and each other holder of a Note harmless from, (i) all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those, if any, retained by a Purchaser or other holder in connection with its purchase of the Notes) and (ii) any and all wire transfer fees that any bank deducts from any payment under such Note to such holder or otherwise charges to a holder of a Note with respect to a payment under such Note.

 

Section 15.2         Indemnification.  The Company hereby agrees to indemnify the Purchasers, the holders of Notes, the Collateral Agent and each of their Related Parties (each such Person being called an “Indemnitee”) from, and hold each Indemnitee harmless against, any and all losses, claims (including Environmental Claims), damages, liabilities (including Environmental Liabilities) and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any Person (other than such Indemnitee and its Related Parties, but including the Company or any of its Subsidiaries) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Note Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Note or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned by the Company or any of its Subsidiaries, or any Environmental Liability related in any way to the Company or any of its Subsidiaries, (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Company or any of its Subsidiaries, and regardless of whether any Indemnitee is a party thereto, (v) ownership by any holder of Notes or the Collateral Agent of any property following foreclosure

 

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under the Security Documents, to the extent such losses, liabilities, claims or damages arise out of or result from any Hazardous Materials, located in, on or under such property prior to or at the time of such foreclosure, including losses, liabilities, claims or damages which are imposed upon Persons under laws relating to or regulating Hazardous Materials, solely by virtue of ownership, or (vi) any holder of Notes or the Collateral Agent being deemed an operator of any such property by a court or other regulatory or administrative agency or tribunal or other third party, to the extent such losses, liabilities, claims or damages arise out of or result from any Hazardous Materials located in, on or under such property at or prior to any foreclosure thereon under the Security Documents; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Company or any other Note Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Note Document, if the Company or such Note Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  This Section 15.2 shall not apply with respect to taxes.

 

Without limiting the indemnification obligations of the Company under this Agreement or the indemnification obligations of the Company or any other Note Party under any other Note Document, to the extent permitted by applicable law, each holder hereby waives, any claim against the Company or any of its Related Parties on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Note Document or any agreement or instrument contemplated hereby or thereby, or the use of the proceeds thereof.  To the extent permitted by applicable law, the Company shall not assert, and hereby waives, any claim against any Indemnitee on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Note Document or any agreement or instrument contemplated hereby or thereby, or the use of the proceeds thereof.

 

Section 15.3         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, the Notes or any other Note Document, and the termination of this Agreement.

 

Section 16.                                   SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

 

All representations and warranties contained herein and in each other Note Document shall survive the execution and delivery of this Agreement, the Notes and the other Note Documents, 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

 

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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 or any other Note Party pursuant to this Agreement or any other Note Document shall be deemed representations and warranties of the Company or such other Note Party, as applicable, under this Agreement.  Subject to the preceding sentence, this Agreement, the Notes and the other Note Documents 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 WAIVER.

 

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;

 

(b)           (i) with the written consent of Prudential (and without the consent of any other holder of Notes), the provisions of Section 2.2 may be amended or waived (except insofar as any such amendment or waiver would affect any rights or obligations with respect to the purchase and sale of Notes which shall have become Accepted Notes prior to such amendment or waiver), and (ii) with the written consent of all of the Purchasers which shall have become obligated to purchase Accepted Notes of any Series (and not without the written consent of all such Purchasers), any of the provisions of Sections 2.2 and 4 may be amended or waived insofar as such amendment or waiver would affect only rights or obligations with respect to the purchase and sale of the Accepted Notes of such Series or the terms and provisions of such Accepted Notes; and

 

(c)           no amendment or waiver may, without the written consent of each Purchaser and the holder of each Note at the time outstanding affected thereby, (i) 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 (x) interest on the Notes or (y)of the Make-Whole Amount on, the Notes, (ii) 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 (iii) amend any of Sections 8 (except as set forth in the second sentence of Section 8.2 and Section 17.1(c)), 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,

 

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waiver or consent in respect of any of the provisions hereof or of the Notes or any other Note Document, unless such proposed amendment, waiver or consent relates only to a specific Series of Accepted Notes which have not yet been purchased, in which case such information will only be required to be delivered to the Purchasers which shall have become obligated to purchase Accepted Notes of such Series.  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 or any other Note Document 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.

 

(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 or provide other credit support, 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 or any other Note Document unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment.

 

(c)           Consent in Contemplation of Transfer.  Any consent given pursuant to this Section 17 or any other Note Document by a holder of a Note that has transferred or has agreed to transfer its Notes to the Company, any Subsidiary or any Affiliate of the Company (either pursuant to a waiver under Section 17.1(c) or subsequent to Section 8.6 having been amended pursuant to Section 17.1(c)) in connection with such consent shall be void and of no force or effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force or effect except solely as to such holder.

 

Section 17.3         Binding Effect, etc.  Any amendment or waiver consented to as provided in this Section 17 or any other Note Document 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 and no delay in exercising any rights hereunder or under any Note or any other Note Document shall operate as a waiver of any rights of any holder of such Note.

 

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,  the Notes or any other Note Document, or have directed the taking of any action provided herein, in the Notes or in any other Note Document 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.

 

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Section 18.                                   NOTICES.

 

Except to the extent otherwise provided in Section 7.4, all notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by an internationally recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by an internationally recognized overnight delivery service (with charges prepaid).  Any such notice must be sent:

 

(a)           if to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A (in the case of the Series A Notes) or as specified by such Purchaser in its Confirmation of Acceptance (in the case of Shelf Notes), or at such other address as such Purchaser or nominee shall have specified to the Company in writing,

 

(b)           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

 

(c)           if to the Company, to the following, or at such other address as the Company shall have specified to the holder of each Note in writing.

 

John M. Perisich
 Sr. Vice President/General Counsel
 26000 Commercentre Dr.
 Lake Forest, CA  92630
 Telephone:  (949) 454-7110 
 Facsimile:  (949) 595-5544 Facsimile

 

Notices under this Section 18 will be deemed given only when actually received.

 

Notwithstanding anything to the contrary in this Section 18, any communication pursuant to Section 2.2 shall be made by the method specified for such communication in Section 2.2, and shall be effective to create any rights or obligations under this Agreement only if, in the case of a telephone communication, an Authorized Officer of the party conveying the information and of the party receiving the information are parties to the telephone call, and in the case of a telecopier communication, the communication is signed by an Authorized Officer of the party conveying the information, addressed to the attention of an Authorized Officer of the party receiving the information, and in fact received at the telecopier terminal the number of which is listed for the party receiving the communication in the Information Schedule or at such other telecopier terminal as the party receiving the information shall have specified in writing to the party sending such information.

 

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Section 19.                                   REPRODUCTION OF DOCUMENTS.

 

This Agreement, the other Note Documents and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at any Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, electronic, digital, 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 (i) its directors, officers, employees, agents, attorneys, trustees and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by its Notes), (ii) its auditors, financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to which it 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 this Section 20), (v) any Person from which it offers to purchase any Security of the Company or any Subsidiary (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by this Section 20), (vi) any federal or state regulatory authority having

 

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jurisdiction over such Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser’s investment portfolio, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) 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,  this Agreement or any other Note Document.  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 this Section 20.

 

In the event that as a condition to receiving access to information relating to the Company or its Subsidiaries in connection with the transactions contemplated by or otherwise pursuant to this Agreement, any Purchaser or holder of a note is required to agree to a confidentiality undertaking (whether through IntraLinks, another secure website, a secure virtual workspace or otherwise) which is different from this Section 20, this Section 20 shall not be amended thereby and, as between such Purchaser or such holder and the Company, this Section 20 shall supersede any such other confidentiality undertaking.

 

Section 21.                                   SUBSTITUTION OF PURCHASER.

 

Each Purchaser shall have the right to substitute any one of its Affiliates or another Purchaser or any one of such other Purchaser’s Affiliates (a “Substitute Purchaser”) as the purchaser of the Notes that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both such Purchaser and such Substitute Purchaser, shall contain such Substitute Purchaser’s agreement to be bound by this Agreement and shall contain a confirmation by such Substitute Purchaser of the accuracy with respect to it of the representations set forth in Section 6.  Upon receipt of such notice, any reference to such Purchaser in this Agreement (other than in this Section 21), shall be deemed to refer to such Substitute Purchaser in lieu of such original Purchaser.  In the event that such Substitute Purchaser is so substituted as a Purchaser hereunder and such Substitute Purchaser thereafter transfers to such original Purchaser all of the Notes then held by such Substitute Purchaser, upon receipt by the Company of notice of such transfer, any reference to such Substitute Purchaser as a “Purchaser” in this Agreement (other than in this Section 21), shall no longer be deemed to refer to such Substitute Purchaser, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement.

 

63

 

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         Accounting Terms.  All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP.  Except as otherwise specifically provided herein, (i) all computations made pursuant to this Agreement shall be made in accordance with GAAP, and (ii) all financial statements shall be prepared in accordance with GAAP.  For purposes of determining compliance with the financial covenants contained in this Agreement, any election by the Company to measure any financial liability using fair value (as permitted by Accounting Standards Codification Topic No. 825-10-25 - Fair Value Option, International Accounting Standard 39 — Financial Instruments; Recognition and Measurement or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.  If any Note Party is required after the date of Closing to implement any change(s) in its accounting principles and practice as a result of any changes in GAAP mandated by the Financial Accounting Standards Board or any successor organization, and if such change(s) result in any material change in the method of any calculation set forth herein, including in Section 10.11, then for all periods after the date of implementation of such change(s) until one or more appropriate amendments of this Agreement addressing such change(s) in GAAP are negotiated, executed and delivered by the parties hereto in a form acceptable to all such parties, such calculations, as applicable, shall be made hereunder utilizing GAAP as in effect prior to such change(s).

 

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, etc.  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.

 

For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be deemed to be a part hereof.

 

64

 

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 New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

 

Section 22.7         Jurisdiction and Process; Waiver of Jury Trial.

 

(a)           The Company irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Agreement, the Notes or any other Note Document.  To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

(b)           The Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in Section 22.7(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 18 or at such other address of which such holder shall then have been notified pursuant to said Section.  The Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it.  Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

 

(c)           Nothing in this Section 22.7 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

 

(d)           THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.

 

65

 

Section 22.8         Transaction References.  The Company agrees that Prudential may (i) refer to its role in originating the purchase of the Notes from the Company and establishing the Facility, as well as the identity of the Company and the aggregate principal amount and issue date of the Notes and the maximum aggregate principal amount of the Shelf Notes and the date on which the Facility was established, on its internet site or in marketing materials, press releases, published “tombstone” announcements or any other print or electronic medium and (ii) display the Company’s corporate logo in conjunction with any such reference.

 

*    *    *    *    *

 

66

 

If you are in agreement with the foregoing, please sign the form of agreement on a counterpart of this Agreement and return it to the Company, whereupon this Agreement shall become a binding agreement between you and the Company.

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
PRIMORIS   SERVICES CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Peter J. Moerbeek
    
	
 
    	
Name:   Peter J. Moerbeek
    
	
 
    	
Title:   CFO
    

 

67

 

	
This   Agreement is hereby 

accepted   and agreed to as 

of   the date hereof.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
PRUDENTIAL   INVESTMENT MANAGEMENT, INC.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Timothy M. Laczkowski
    	
 
    	
 
    
	
 
    	
Timothy M. Laczkowski
    	
 
    	
 
    
	
 
    	
Vice President
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
THE PRUDENTIAL INSURANCE   COMPANY  OF AMERICA
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Timothy M. Laczkowski
    
	
 
    	
 
    	
 
    	
Timothy M. Laczkowski
    
	
 
    	
 
    	
 
    	
Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
PHYSICIANS   MUTUAL INSURANCE COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Prudential   Private Placement Investors, L.P. (as Investment Advisor)
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Prudential   Private Placement Investors, Inc. (as its General Partner)
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/   Timothy M. Laczkowski
    
	
 
    	
 
    	
 
    	
 
    	
Timothy M. Laczkowski
    
	
 
    	
 
    	
 
    	
 
    	
Vice President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
GLOBE LIFE AND ACCIDENT   INSURANCE COMPANY
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Prudential   Private Placement Investors, L.P. (as Investment Advisor)
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Prudential   Private Placement Investors, Inc. (as its General Partner)
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
/s/   Timothy M. Laczkowski
    
	
 
    	
 
    	
 
    	
 
    	
Timothy M. Laczkowski
    
	
 
    	
 
    	
 
    	
 
    	
Vice President
    
							

 

68

 

INFORMATION SCHEDULE

 

Authorized Officers for Prudential

(see Series A Purchaser Schedules below and the applicable Confirmation of Acceptance for any Shelf Note)

 

Authorized Officers for the Company

 

None.

 

69

 

PRIMORIS SERVICES CORPORATION

SERIES A PURCHASER SCHEDULES

 

	
 
    	
 
    	
 
    	
 
    	
Aggregate
   Principal
   Amount of Notes
   to be Purchased
    	
 
    	
Series A Note
   Denomination(s)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
    	
 
    	
$
    	
39,800,000.00
    	
 
    	
$
    	
25,000,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
14,800,000.00
    	
 
    
	
(1)
    	
 
    	
All payments on account of Notes held by such purchaser shall be made   by wire transfer of immediately available funds for credit to: 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
JPMorgan Chase Bank

New York, NY

ABA No.:  021-000-021
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Account Name:  Prudential   Managed Portfolio

Account No.:  P86188 (please do   not include spaces) (in the case of payments on account of the Note   originally issued in the principal amount of $25,000,000.00)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Account Name:  The Prudential -   Privest Portfolio

Account No.:  P86189 (please do   not include spaces) (in the case of payments on account of the Note   originally issued in the principal amount of $14,800,000.00)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Each such wire transfer shall set forth the name of the Company, a   reference to “3.65% Senior Secured Notes, Series A, due December 28,   2022, Security No. INV11582, PPN 74164F A*4” and the due date and application   (as among principal, interest and Make-Whole Amount) of the payment being   made. 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(2)
    	
 
    	
Address for all notices relating to payments:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Prudential Insurance Company of America

c/o Investment Operations Group

Gateway Center Two, 10th Floor

100 Mulberry Street

Newark, NJ 07102-4077

 

Attention:  Manager, Billings   and Collections
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(3)
    	
 
    	
Address for all other communications and notices:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Prudential Insurance Company of America

c/o Prudential Capital Group

2200 Ross Avenue, Suite 4200E

Dallas, TX 75201

 

Attention:  Managing Director,   Corporate Finance
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

70

 

	
(4)
    	
 
    	
Recipient of telephonic prepayment notices:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Manager, Trade Management Group

 

Telephone:  (973) 367-3141

Facsimile:   (888) 889-3832
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(5)
    	
 
    	
Address for Delivery of Notes:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Send physical security by nationwide overnight delivery service to:

 

Prudential Capital Group

2200 Ross Avenue, Suite 4200E

Dallas, TX 75201

 

Attention:  Jaya McClure, Esq.

Telephone:  (214) 720-6207
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(6)
    	
 
    	
Tax Identification No.:  22-1211670
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(7)
    	
 
    	
Authorized Officers:

 

Ric E. Abel

Matthew A. Baker

Julia   B. Buthman

Richard   P. Carrell

Brien F. Davis

Jennifer I. Graham

Randall   M. Kob

Timothy   M. Laczkowski

Brian   E. Lemons

Ingrida Soldatova

Brian N. Thomas
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

71

 

	
 
    	
 
    	
 
    	
 
    	
Aggregate
   Principal
   Amount of Notes
   to be Purchased
    	
 
    	
Series A Note
   Denomination(s)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
PHYSICIANS MUTUAL INSURANCE COMPANY
    	
 
    	
$
    	
3,000,000.00
    	
 
    	
$
    	
3,000,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Notes/Certificates to be registered in the name of:

How & Co.
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(1)
    	
 
    	
All payments on account of Notes held by such purchaser shall be made   by wire transfer of immediately available funds for credit to: 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Northern Trust Company

Chicago, IL

ABA No.:  071000152
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Account Name:  Physicians   Mutual Insurance Company

Account No.:  26-27099 (in the   case of payments on account of the Note originally issued in the principal   amount of $3,000,000.00)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Each such wire transfer shall set forth the name of the Company, a   reference to “3.65% Senior Secured Notes, Series A, due December 28,   2022, PPN 74164F A*4” and the due date and application (as among principal,   interest and Make-Whole Amount) of the payment being made.
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(2)
    	
 
    	
All notices of payments and written confirmations of such wire   transfers:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Physicians Mutual Insurance Company

2600 Dodge Street

Omaha, NE 68131

 

Attention:  Steve Scanlan

 

Facsimile:  (402) 633-1096
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(3)
    	
 
    	
Address for all other communications and notices:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

2200 Ross Avenue, Suite 4200E

Dallas, TX 75201

 

Attention:  Managing Director,   Corporate Finance
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

72

 

	
(4)
    	
 
    	
Address for Delivery of Notes:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)                                 Send physical   security by nationwide overnight delivery service to:

 

Northern Trust Co

Trade Securities Processing

801 South Canal Street

C1N

Chicago, IL 60607

 

Please include in the   cover letter accompanying the Notes a reference to the Purchaser’s account   number (Physicians Mutual Insurance Company-Prudential; Account Number 26-27099).

 

(b)                                 Send copy by   nationwide overnight delivery service to:

 

Prudential Capital Group

Gateway Center 2, 10th Floor

100 Mulberry

Newark, NJ 07102

 

Attention:    Trade Management, Manager

Telephone:    (973) 367-3141
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(5)
    	
 
    	
Tax Identification No.:    47-0270450
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

73

 

	
 
    	
 
    	
 
    	
 
    	
Aggregate
   Principal
   Amount of Notes
   to be Purchased
    	
 
    	
Note
   Denomination(s)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
GLOBE LIFE AND ACCIDENT INSURANCE COMPANY
    	
 
    	
$
    	
7,200,000.00
    	
 
    	
$
    	
7,200,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(1)
    	
 
    	
All payments on account of Notes held by such purchaser shall be made   by wire transfer of immediately available funds for credit to: 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Bank of New York Mellon

ABA: 021000018

GLA# 111566

Acct. Name:  Globe Life and   Accident Ins. Co. PFG Pvt.

Acct #: 6372308400
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Each such wire transfer shall set forth the name of the Company, a   reference to “3.65% Senior Secured Notes, Series A, due December 28,   2022, PPN 74164F A*4” and the due date and application (as among principal,   interest and Make-Whole Amount) of the payment being made.
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(2)
    	
 
    	
Address for all notices relating to payments:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Torchmark Corporation

Attention:  Alan Hintz

3700 S. Stonebridge Drive

McKinney, TX 75070

 

Email: AHINTZ@torchmarkcorp.com

 

Phone:  (972) 569-3694

Fax:  (972) 569-3282
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(3)
    	
 
    	
Address for all other communications and notices:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

2200 Ross Avenue, Suite 4200E

Dallas, TX 75201

 

Attention:  Managing Director,   Corporate Finance
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(4)
    	
 
    	
Address for Delivery of Notes:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)                                 Send physical   security by nationwide overnight delivery service to:

Bank of New York Mellon

1 Wall Street, 3rd Floor, Window A

New York, NY 10286

 

Please include in the cover letter accompanying   the Notes a reference to the Purchaser’s account number (Acct. Name:  Globe Life and Accident Ins. Co. PFG Pvt.;   Acct #:  637230).
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)                                 Send copy by   nationwide overnight delivery service to:

 

Prudential Capital Group

Gateway Center 2, 10th Floor

100 Mulberry

Newark, NJ 07102

 

Attention:    Trade Management, Manager

Telephone:    (973) 367-3141
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(5)
    	
 
    	
Tax Identification No.:    63-0782739
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

74

 

Schedule B

 

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:

 

“Acceptance” is defined in Section 2.2(f).

 

“Acceptance Day” is defined in Section 2.2(f).

 

“Acceptance Window” means, with respect to any interest rate quotes provided by Prudential pursuant to Section 2.2(e), the time period designated by Prudential during which the Company may elect to accept such interest rate quotes as to not less than $10,000,000 in aggregate principal amount of Shelf Notes specified in the related Request for Purchase.

 

“Accepted Note” is defined in Section 2.2(f).

 

“Account Debtors” shall mean, in respect of any account receivable, the Person or Persons obligated to pay such receivable in accordance therewith.

 

“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or a substantial portion of the assets of a Person, or of all or a substantial portion of any business or division of a Person, (b) the acquisition of in excess of 50% of the Capital Securities of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is already a Subsidiary).

 

“Additional Covenants” means any affirmative or negative covenant or similar restriction applicable to the Company or any Subsidiary (regardless of whether such provision is labeled or otherwise characterized as a covenant) the subject matter of which either (i) is similar to that of any covenant in Section 9 or Section 10 of this Agreement, or related definitions in Schedule B of this Agreement, but contains one or more percentages, amounts or formulas that is more restrictive than those set forth herein or more beneficial to the holder or holders of the Indebtedness created or evidenced by the document in which such covenant or similar restriction is contained (and such covenant or similar restriction shall be deemed an Additional Covenant only to the extent that it is more restrictive or more beneficial) or (ii) is different from the subject matter of any covenant in Section 9 or Section 10 of this Agreement, or related definitions in Schedule B of this Agreement.

 

“Additional Defaults” means any provision contained in any document or instrument creating or evidencing Indebtedness of the Company or any Subsidiary which permits the holder or holders of Indebtedness to accelerate (with the passage of time or giving of notice or both) the maturity thereof or otherwise requires the Company or any Subsidiary to purchase such Indebtedness prior to the stated maturity thereof and which either (i) is similar to any Default or Event of Default contained in Section 11 of this 

 

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Agreement, or related definitions in Schedule B of this Agreement, but contains one or more percentages, amounts or formulas that is more restrictive or has a shorter grace period than those set forth herein or is more beneficial to the holders of such other Indebtedness (and such provision shall be deemed an Additional Default only to the extent that it is more restrictive, has a shorter grace period or is more beneficial) or (ii) is different from the subject matter of any Default or Event of Default contained in Section 11 of this Agreement, or related definitions in Schedule B of this Agreement.

 

“Affiliate” means, at any time, (a) with respect to any Person, 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) with respect to the Company, shall include any Person beneficially owning or holding, directly or indirectly, 5% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 5% or more of any class of voting or equity interests and (c) with respect to Prudential, shall include any managed account, investment fund or other vehicle for which Prudential or any Prudential Affiliate acts as investment advisor or portfolio manager.  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.

 

“Agreement” means this Note Purchase and Private Shelf Agreement including all Schedules attached to this Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time, among the Company, Prudential and the Purchasers dated December 28, 2012.

 

“Anti-Corruption Laws” is defined in Section 5.16(d)(1).

 

“Anti-Money Laundering Laws” is defined in Section 5.16(c).

 

“Anti-Terrorism Order” means Executive Order No. 13,224 of September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.

 

“Authorized Officer” means (i) in the case of the Company, its chief executive officer, its chief financial officer, any other Person authorized by the Company to act on behalf of the Company and designated as an “Authorized Officer” of the Company in the Information Schedule attached hereto or any other Person authorized by the Company to act on behalf of the Company and designated as an “Authorized Officer” of the Company for the purpose of this Agreement in an Officer’s Certificate executed by the Company’s chief executive officer or chief financial officer and delivered to Prudential, and (ii) in the case of Prudential, any officer of Prudential designated as its “Authorized Officer” in the Information Schedule or any officer of Prudential designated 

 

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as its “Authorized Officer” for the purpose of this Agreement in a certificate executed by one of its Authorized Officers or a lawyer in its law department.  Any action taken under this Agreement on behalf of the Company by any individual who on or after the date of this Agreement shall have been an Authorized Officer of the Company and whom Prudential in good faith believes to be an Authorized Officer of the Company at the time of such action shall be binding on the Company even though such individual shall have ceased to be an Authorized Officer of the Company, and any action taken under this Agreement on behalf of Prudential by any individual who on or after the date of this Agreement shall have been an Authorized Officer of Prudential and whom the Company in good faith believes to be an Authorized Officer of Prudential at the time of such action shall be binding on Prudential even though such individual shall have ceased to be an Authorized Officer of Prudential.

 

“Available Facility Amount” is defined in Section 2.2(a).

 

“Blocked Person” is defined in Section 5.16(a).

 

“Business Day” means (a) for the purposes of Section 8.7 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, (b) for the purpose of Section 2.2 only, a day on which Prudential is open for business, and (c) 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 New York, New York are required or authorized to be closed.

 

“Cancellation Date” is defined in Section 2.2(h)(iv).

 

“Cancellation Fee” is defined in Section 2.2(h)(iv).

 

“Capital Lease” means, 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 Security” shall mean (i) any capital stock, partnership, membership, joint venture or other ownership or equity interest, participation or securities (whether voting or non-voting, whether preferred, common or otherwise, and including any stock appreciation, contingent interest or similar right) and (ii) any option, warrant, security or other right (including debt securities or other evidence of Indebtedness) directly or indirectly convertible into or exercisable or exchangeable for, or otherwise to acquire directly or indirectly, any stock, partnership, membership, joint venture or other ownership or equity interest, participation or security described in clause (i) hereof.

 

“Cash Equivalent Investment” means , at any time, (a) any evidence of Indebtedness, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case (unless issued by a Senior Lender or its holding company) rated at least A-l by S&P or P-l by Moody’s, (c) any certificate of deposit, time deposit or banker’s acceptance, 

 

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maturing not more than one year after such time, or any overnight Federal Funds transaction that is issued or sold by any Senior Lender or its holding company (or by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000), (d) any repurchase agreement entered into with any Senior Lender (or commercial banking institution of the nature referred to in clause (c)) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) above and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such Senior Lender (or other commercial banking institution) thereunder and (e) money market accounts or mutual funds which invest exclusively in assets satisfying the foregoing requirements, and (f) other short term liquid investments approved in writing by the Required Holders.

 

“CFC” means any Subsidiary that is a “controlled foreign corporation”, as defined in Section 957(a) of the Code.

 

“Change of Control” means the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Exchange Act and the rules of the SEC thereunder as in effect on the date hereof) other than Mr. Brian Pratt, of Capital Securities representing more than 35% of the ordinary voting power represented by the issued and outstanding Capital Securities of the Company.

 

“CISADA” means the Comprehensive Iran Sanctions, Accountability and Divestment Act.

 

“Closing” is defined in Section 3.1.

 

“Closing Day” means, with respect to the Series A Notes, the Series A Closing Day and, with respect to any Accepted Note, the Business Day specified for the closing of the purchase and sale of such Accepted Note in the Confirmation of Acceptance for such Accepted Note, provided that (i) if the Company and the Purchaser which is obligated to purchase such Accepted Note agree on an earlier Business Day for such closing, the “Closing Day” for such Accepted Note shall be such earlier Business Day, and (ii) if the closing of the purchase and sale of such Accepted Note is rescheduled pursuant to Section 3.3, the Closing Day for such Accepted Note, for all purposes of this Agreement except references to “original Closing Day” in Section 2.2(h)(iii), shall mean the Rescheduled Closing Day with respect to such Accepted Note.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.

 

“Collateral” means all properties, rights, interests, and privileges from time to time subject to the Liens granted to the Collateral Agent, or any security trustee therefor, by the Security Documents.

 

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“Collateral Agent” shall mean The PrivateBank and Trust Company, in its capacity as Collateral Agent for the Secured Parties, as provided under the Intercreditor Agreement, and its successors and assigns in such capacity.

 

“Company” means Primoris Services Corporation, a Delaware corporation or any successor that becomes such in the manner prescribed in Section 10.3.

 

“Confidential Information” is defined in Section 20.

 

“Confirmation of Acceptance” is defined in Section 2.2(f).

 

“Consolidated” means the consolidation of the accounts of, unless otherwise noted, the Company and its Subsidiaries in accordance with GAAP.

 

“Consolidated Capital Expenditures” means all expenditures which, in accordance with GAAP, would be required to be capitalized and shown on the Consolidated balance sheet of the Company, including expenditures in respect of Capital Leases, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (b) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

 

“Consolidated EBIT” means, for any period, (i) on a Consolidated basis, operating earnings before interest and taxes calculated in accordance with GAAP, and, without duplication, (ii) plus income (or less loss) from Persons in which the Company or any of its Subsidiaries holds an ownership interest in any Capital Securities issued by such Person and which Person is not consolidated with the Company, calculated in accordance with GAAP and (iii) less income (or plus loss) attributable to any non-controlling interest.

 

“Consolidated EBITDA” means, for any period, Consolidated EBIT for such period plus Consolidated depreciation, amortization and other noncash charges as agreed to by the Required Holders and determined in accordance with GAAP.

 

“Consolidated Interest Expense” means, for any period, Consolidated interest expense (including all imputed interest in respect of Capital Leases), determined in accordance with GAAP.

 

“Consolidated Net Income” means, for any period, cumulative Consolidated net income during such period, determined in accordance with GAAP.

 

“Consolidated Tangible Net Worth” means, for the Company and its Subsidiaries, at any date, the stockholders’ equity that would be reflected on a Consolidated balance sheet prepared in accordance with GAAP, plus the aggregate amount of Subordinated Debt, less (i) patents, trademarks, copyrights, deferred charges and other Intangible Assets (including, but not limited to, unamortized discounts and expenses, organizational expenses, experimental and developmental expenses, but 

 

B-5

 

excluding prepaid expenses); less (ii) all obligations owed by, excluding amounts owed by the Company and its Subsidiaries, any Affiliate of the Company and its Subsidiaries to the Company or any of its Subsidiaries; and less (iii) all loans made by the Company and/or its Subsidiaries to such Person’s officers, stockholders, or employees, in each case, determined in accordance with GAAP.

 

“Construction Partnership” means any joint venture to the extent not constituting an Investment (without giving effect to the final proviso of the definition of “Investment”) with any other Person (other than the Company or any of its Subsidiaries) which joint venture is entered into and exists for the purpose of engagement in business activities related to teaming the performance of construction or construction/engineering related services delivered by the Company or any other Note Party for one or more projects.

 

“Contingent Liability” means, with respect to any Person, each obligation and liability of such Person and all such obligations and liabilities of such Person incurred pursuant to any agreement, undertaking or arrangement by which such Person:  (a) guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend, obligation or other liability of any other Person in any manner (other than by endorsement of instruments in the course of collection), including any indebtedness, dividend or other obligation which may be issued or incurred at some future time; (b) guarantees the payment of dividends or other distributions upon the Capital Securities of any other Person; (c) undertakes or agrees (whether contingently or otherwise):  (i) to purchase, repurchase, or otherwise acquire any indebtedness, obligation or liability of any other Person or any property or assets constituting security therefor, (ii) to advance or provide funds for the payment or discharge of any indebtedness, obligation or liability of any other Person (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of any other Person, or (iii) to make payment to any other Person other than for value received; (d) agrees to lease property or to purchase securities, property or services from such other Person with the purpose or intent of assuring the owner of such indebtedness or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (e) to induce the issuance of, or in connection with the issuance of, any letter of credit for the benefit of such other Person; or (f) undertakes or agrees otherwise to assure a creditor against loss.  The amount of any Contingent Liability shall (subject to any limitation set forth herein) be deemed to be the outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness, obligation or other liability guaranteed or supported thereby.

 

“Control Event” means:

 

(i)                                     the execution by any Note Party or their respective Affiliates of any agreement or letter of intent with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, may reasonably be expected to result in a Change of Control,

 

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(ii)                                  the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change of Control, or

 

(iii)                               the making of any written offer by any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act as in effect on the date of this Agreement) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act as in effect on the date of this Agreement) to the holders of the Capital Securities of the Company, which offer, if accepted by the requisite number of holders, would result in a Change of Control.

 

“Controlled Entity” means (i) any of the Subsidiaries of the Company and any of their or the Company’s respective Controlled Affiliates and (ii) if the Company has a parent company, such parent company and its Controlled Affiliates.  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.

 

“Controlled Group” means all members of a controlled group of corporations, all members of a controlled group of trades or businesses (whether or not incorporated) under common control and all members of an affiliated service group which, together with the Company or any of its Subsidiaries, are treated as a single employer under section 414 of the Code or section 4001 of ERISA.

 

“Default” means 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” means that rate of interest that is equal to the lesser of (a) the greater of (i) 2% per annum above the rate of interest stated in clause (a) of the first paragraph of the applicable Series of Notes or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A. in New York City, New York as its “base” or “prime” rate, and (b) the maximum rate permitted by applicable law.

 

“Delayed Delivery Fee” is defined in Section 2.2(h)(iii).

 

“Disclosure Documents” is defined in Section 5.3.

 

“Disposition” means the sale, lease, transfer or disposal of assets of any of the Note Parties.

 

“Domestic Subsidiary” means a Subsidiary organized under the laws of a jurisdiction located in the United States of America.

 

B-7

 

“Earn-Outs” shall mean, at any time, contingent earn-out liabilities of the Company and its Subsidiaries, as reflected in the most recent financial statements delivered pursuant to Section 7.1(a) or (b).

 

“Electronic Delivery” is defined in Section 7.1(a).

 

“Environmental Claim” means any third party (including any Governmental Authority) action, lawsuit, claim or proceeding (including claims or proceedings at common law) which seeks to impose or alleges any liability for (a) pollution or contamination by, or releases or threatened releases of, Hazardous Materials into the air, surface water, ground water or land or the clean-up, abatement, removal, remediation or monitoring of such pollution, contamination or Hazardous Materials; (b) generation, recycling, reclamation, handling, treatment, storage, disposal or transportation of Hazardous Materials; (c) exposure to Hazardous Materials; or (d) the safety or health of employees.  An “Environmental Claim” includes a proceeding to issue, modify or terminate an Environmental Permit to the extent that such a proceeding attempts to redress violations of the applicable permit, license, or regulation as alleged by any Governmental Authority.

 

“Environmental Laws” means all present or future federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative or judicial orders, consent agreements, directed duties, requests, licenses, authorizations and permits of, and agreements with, any governmental authority, in each case relating to any matter arising out of or relating to public health and safety, or pollution or protection of the environment or workplace, including any of the foregoing relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, discharge, emission, release, threatened release, control or cleanup of any Hazardous Material.

 

“Environmental Liabilities” means all liabilities, contingent or otherwise, arising from any Environmental Claim, Environmental Permit or Environmental Law, at law or in equity, and whether based on negligence, strict liability or otherwise, including:  remedial, removal, response, abatement, restoration (including natural resources), investigative, or monitoring liabilities, personal injury and damage to property or natural resources, and any other related costs, expenses, losses, damages, penalties, fines, liabilities, indemnities and obligations, including attorney’s fees and court costs.

 

“ERISA” means 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” means 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.

 

B-8

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“Facility” is defined in Section 2.2(a).

 

“Fiscal Quarter” means a fiscal quarter of a Fiscal Year.

 

“Fiscal Year” means the fiscal year of Borrower and its Subsidiaries, which period shall be the 12-month period ending on December 31 of each year.

 

“Fixed Assets” means, on any date of determination and on a Consolidated basis determined in accordance with GAAP, equipment, real property and any other long term fixed asset of the Company and its Subsidiaries.

 

“Fixed Charge Coverage Ratio” means, on any date of determination for the Company and its Subsidiaries on a Consolidated basis determined in accordance with GAAP, the ratio of (x) Consolidated EBITDA, minus Unfinanced Capital Expenditures, tax expense and dividends/distributions/share buybacks to (y) the sum for such period of Consolidated Interest Expense, plus required payments of principal in respect of Funded Debt of the Company and its Subsidiaries, in each case calculated on a trailing 12 month basis.

 

“Foreign Subsidiary” means any Subsidiary other than a Domestic Subsidiary.

 

“Form 10-K” is defined in Section 7.1(b).

 

“Funded Debt” means, as to any Person at the time of calculation, all Indebtedness of such Person that matures more than one year from the date of its creation (or is renewable or extendible, at the option of such Person, to a date more than one year from such date).

 

“Form 10-Q” is defined in Section 7.1(a).

 

“GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession) and the Securities and Exchange Commission, which are applicable to the circumstances as of the date of determination.

 

B-9

 

“Governmental Authority” means

 

(i)                                     the government of the United States of America or any State or other political subdivision thereof, or

 

(ii)                                  any other 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

 

(j)                                    any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

 

“Governmental Official” means any governmental official or employee, employee of any government-owned or government-controlled entity, political party, any official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity.

 

“Guarantor” means each Subsidiary which is a party to the Guaranty Agreement.  “Guarantor” means any one of such Guarantors.

 

“Guaranty Agreement” means that certain Guaranty Agreement dated as of the date hereof in the form of Exhibit B-1 (including any and all supplements thereto) and executed by each Subsidiary Guarantor, as amended, restated, supplemented or otherwise modified from time to time.

 

“Hazardous Materials” means any and all pollutants, toxic or hazardous wastes or other substances that might pose a hazard to health and 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, but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized substances.

 

“Hedge Treasury Note(s)” means, with respect to any Accepted Note, the United States Treasury Note or Notes whose duration (as determined by Prudential) most closely matches the duration of such Accepted Note.

 

“Hedging Agreement” means any bank underwritten cash and/or derivative financial instrument including, but not limited to, any interest rate, currency or commodity swap agreement, cap agreement, collar agreement, spot foreign exchange, forward foreign exchange, foreign exchange option (or series of options) and any other agreement or arrangement designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices.

 

“Hedging Obligation” means, with respect to any Person, any liability of such Person under any Hedging Agreement.

 

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“holder” means, 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, provided, however, that if such Person is a nominee, then for the purposes of Section 7, Section 12, Section 17.2 and Section 18 and any related definitions in this Schedule B, “holder” shall mean the beneficial owner of such Note whose name and address appears in such register. “Hostile Tender Offer” means, with respect to the use of proceeds of any Note, any offer to purchase, or any purchase of, shares of capital stock of any corporation or equity interests in any other entity, or securities convertible into or representing the beneficial ownership of, or rights to acquire, any such shares or equity interests, if such shares, equity interests, securities or rights are of a class which is publicly traded on any securities exchange or in any over-the-counter market, other than purchases of such shares, equity interests, securities or rights representing less than 5% of the equity interests or beneficial ownership of such corporation or other entity for portfolio investment purposes, and such offer or purchase has not been duly approved by the board of directors of such corporation or the equivalent governing body of such other entity prior to the date on which the Company makes the Request for Purchase of such Note.

 

“INHAM Exemption” is defined in Section 6.2(e).

 

“Indebtedness”, with respect to any Person means, at any time, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all indebtedness evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person as lessee under Capital Leases which have been or should be recorded as liabilities on a balance sheet of such Person in accordance with GAAP, (d) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable in the ordinary course of business), (e) all indebtedness secured by a Lien on the property of such Person, whether or not such indebtedness shall have been assumed by such Person; provided that if such Person has not assumed or otherwise become liable for such indebtedness, such indebtedness shall be measured at the fair market value of such property securing such indebtedness at the time of determination, (f) all obligations, contingent or otherwise, with respect to the face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of such Person (including the Letters of Credit (as defined in the Senior Credit Agreement)), (g) all Hedging Obligations of such Person, (h) all Contingent Liabilities of such Person, (i) all Indebtedness of any partnership of which such Person is a general partner, (j) all non-compete payment obligations, the Earn-Outs and similar obligations and (k) any Capital Securities or other equity instrument, whether or not mandatorily redeemable, that under GAAP is characterized as debt, whether pursuant to financial accounting standards board issuance No. 150 or otherwise.

 

“Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a Note holding (together with one or more of its affiliates) more than 5% of the aggregate principal amount of the Notes of any Series then outstanding, (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, and (d) any Related Fund of any holder of any Note.

 

B-11

 

“Intangible Assets”  means, on any date of determination and on a Consolidated (unless otherwise noted) basis in accordance with GAAP, without duplication, general intangibles; software developed in-house or purchased, licensed or leased; accounts receivable and advances due from officers, directors, employees, stockholders, members, and owners; licenses, good will; prepaid expenses; escrow deposits; covenants not to complete; the excess of cost over book value of acquired assets; franchise fees, organizational costs; finance reserves held for recourse obligations; capitalized research and development costs; the capitalized cost of patents, trademarks, service marks and copyrights net of amortization; and other intangible assets.

 

“Intercreditor Agreement” means the Intercreditor and Collateral Agency Agreement, dated as of the date hereof (the initial form of which is attached hereto as Exhibit B-2), by and among the Senior Agent, the Collateral Agent, The Bank of the West, as a co-lead arranger under the Senior Credit Agreement, The PrivateBank and Trust Company, as a co-lead arranger under the Senior Credit Agreement, and the holders, as the same may be replaced, amended, restated, supplemented or otherwise modified from time to time.

 

“Inventory” means, on any date of determination and on a Consolidated basis in accordance with GAAP, without duplication, all inventory (as such term is used in the UCC), goods and merchandise now owned and hereafter acquired by any Note Party, wherever located, to be furnished under any contract of service or held for sale or lease, all returned goods, raw materials, other materials and supplies of any kind, nature or description which are or will be used or consumed in the business of any Note Party or used in connection with the packing, shipping, advertising, selling or finishing of such goods, merchandise and such other personal property, and all documents of title or other documents representing any of them.

 

“Investment” means, with respect to any Person, any investment in another Person, whether by acquisition of any debt or Capital Security, by making any loan or advance, by becoming obligated with respect to a Contingent Liability in respect of obligations of such other Person (other than travel and similar advances to employees in the ordinary course of business) or by making an Acquisition; provided that, for purposes of clarification, a Construction Partnership shall not constitute an Investment hereunder.

 

“Issuance Fee” is defined in Section 2.2(h)(ii).

 

“Issuance Period” is defined in Section 2.2(b).

 

“Issuing Bank” means The PrivateBank or The Bank of the West, in their respective capacities as the issuer of Letters of Credit (as defined in the Senior Credit Agreement) under the Senior Credit Agreement, or any Affiliate of either that may from time to time issue Letters of Credit, or any other financial institution that either may cause to issue Letters of Credit for the account of the Company, and their successors and assigns in such capacity.

 

B-12

 

“Joint Venture” means (i) any joint venture entity, whether a company, unincorporated firm, association, partnership or any other entity which, in each case, is not a Subsidiary of the Company or any of the Subsidiaries but in which the Company or a Subsidiary has a direct or indirect Investment in the Capital Securities issued by such joint venture entity and/or joint or shared Control with one or more other Persons (other than the Company or any Subsidiary) and (ii) any asset or group of assets in which the Company or any Subsidiary thereof has a joint or shared ownership interest and/or control with one or more other Persons (other than the Company or any Subsidiary).

 

“Lien” means, 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).

 

“Make-Whole Amount” is defined in Section 8.6.

 

“Material” means material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of the Company and its Subsidiaries taken as a whole.

 

“Material Adverse Effect” (a) a material adverse change in, or a material adverse effect upon, the financial condition, operations, assets, business, properties or prospects of the Note Parties taken as a whole, (b) a material impairment of the ability of any Note Party to perform any their respective obligations under any Note Document or (c) a material adverse change in or impairment of any substantial portion of the Collateral under the Security Documents or the legality, validity, binding effect or enforceability against the Note Parties taken as a whole.

 

“Maturity Date”, in respect of any Note, is defined in the same manner as the term Final Maturity Date in the first paragraph of such Note.

 

“Modified Ratable Portion” means, with respect to any prepayment of the Notes required by Section 8.3(b) in respect of any event described in Section 8.3(c) through Section 8.3(e), 100% of the Net Cash Proceeds of such event, as applicable; provided, that for so long as there are any financial obligations outstanding under the Senior Credit Documents and the Senior Credit Agreement requires a prepayment of such obligations thereunder in connection with any event described in Section 8.3(c) through Section 8.3(e), and in any event subject to the terms and provisions of the Intercreditor Agreement , the Modified Ratable Portion shall be the portion of all Net Cash Proceeds, as applicable, of the applicable event, as the case may be, equal to the percentage equivalent of a fraction, (i) the numerator of which is the aggregate outstanding principal amount of all Notes then outstanding and (ii) the denominator of which is the sum of (a) the aggregate outstanding principal amount of all Notes then outstanding plus (b) the aggregate principal amount of all loans, undrawn letters of credit and letter of credit reimbursement obligations under the Senior Credit Agreement then outstanding.

 

B-13

 

“Moody’s” means Moody’s Investors Services, Inc., including the NCO/Moody’s Commercial Division, and its successors.

 

 “Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).

 

“NAIC” means the National Association of Insurance Commissioners or any successor thereto.

 

“Net Cash Proceeds” means:

 

(a)           with respect to any Disposition, the aggregate cash proceeds (including cash proceeds received pursuant to policies of insurance or by way of deferred payment of principal pursuant to a note, installment receivable or otherwise, but only as and when received) received by any Note Party pursuant to such Disposition net of (i) the direct costs relating to such sale, transfer or other disposition (including sales commissions and legal, accounting and investment banking fees), (ii) taxes paid or reasonably estimated by the Company to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements) and (iii) amounts required to be applied to the repayment of any Indebtedness secured by a Lien (other than Liens arising under the Security Documents) on the property subject to such Disposition;

 

(b)           with respect to any issuance of Capital Securities, the aggregate cash proceeds received by any Note Party pursuant to such issuance, net of the direct costs relating to such issuance (including sales and underwriters’ commissions); and

 

(c)           with respect to any issuance of any Indebtedness, the aggregate cash proceeds received by any Note Party pursuant to such issuance, net of the direct costs of such issuance (including up-front, underwriters’ and placement fees).

 

“Note Documents” means this Agreement, the Notes, the Guaranty Agreement, the Security Documents, the Intercreditor Agreement, the Perfection Certificate, the Subordination Agreements and all other instruments, certificates and other documents now or hereafter executed and delivered by or on behalf of a Note Party pursuant to or in connection with any of the foregoing or any of the transactions contemplated hereby, and any and all amendments, supplements and other modifications to any of the foregoing.

 

“Note Obligations” means all of the monetary obligations owed by the Company or any Guarantor to any holder of Notes under the Note Agreement, the Notes, the Guaranty Agreement, the Security Documents or any other Note Document, and related agreements, documents, and instruments, including, without limitation (but for certainty without duplication), (a) the outstanding principal amount of, accrued and unpaid interest on, and any unpaid Make-Whole Amount due with respect to, the Notes, and (b) any other unpaid amounts (including amounts in respect of fees, expenses, indemnification and reimbursement) due from the Company or any Guarantor under any of the Note Agreement, the Notes, the Guaranty Agreement, the Security Documents or any other Note Document.

 

B-14

 

“Note Parties” means, collectively, the Company and the Guarantors.

 

“Notes” is defined in Section 1.2.

 

“OFAC” is defined in Section 5.16(a).

 

“OFAC Listed Person” is defined in Section 5.16(a).

 

“OFAC Sanctions Program” means any economic or trade sanction that OFAC is responsible for administering and enforcing. A list of OFAC Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

 

 “Officer’s Certificate” means 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” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.

 

“Pension Plan” means a “pension plan”, as such term is defined in section 3(2) of ERISA, which is subject to Title IV of ERISA or the minimum funding standards of ERISA (other than a Multiemployer Pension Plan), and as to which the Company or any member of the Controlled Group may have any liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA.

 

“Perfection Certificate” means (i) a certificate dated as of the date hereof, duly executed by the Note Parties and in form and substance satisfactory to each Purchaser and the Collateral Agent, describing the Note Parties’ properties owned or leased as of the date hereof, and certifying to the other matters contained therein and (ii) each other certificate, duly executed by each Person required to become a Guarantor from time to time, in form and substance satisfactory to the Required Holders and the Collateral Agent, describing such additional Guarantor’s properties owned or leased as of the date thereof, and certifying to the other matters contained therein.

 

“Permitted Acquisition” means any Acquisition by the Company and/or any other Note Party where:

 

(A) the business or division acquired are for use, or the Person acquired is engaged, in the construction and engineering businesses engaged in by the Note Parties on the date hereof or otherwise as required to preserve compliance with Section 10.7;

 

(B) immediately before such Acquisition, and as a consequence of such Acquisition, no Default or Event of Default shall exist;

 

B-15

 

(C) immediately after giving effect to such Acquisition, the Company is in compliance, on a Pro Forma Basis, with the financial covenants set forth in Section 10.11 herein;

 

(D) immediately after giving effect to such Acquisition, Indebtedness of the Company and its Subsidiaries to Consolidated EBITDA, on a Pro Forma Basis, is less than 1.75x;

 

(E) in the case of the Acquisition of any Person, the board of directors or similar governing body of such Person has approved such Acquisition;

 

(F) promptly following such Acquisition, the holders of the Notes and the Collateral Agent shall have received complete execution copies of each material document, instrument and agreement to be executed in connection with such Acquisition together with all lien search reports and lien release letters and other documents as the Required Holders may require to evidence the termination of Liens on the assets or business to be acquired;

 

(G) not less than ten Business Days prior to such Acquisition, the holders of the Notes shall have received an acquisition summary with respect to the Person and/or business or division to be acquired, such summary to include a reasonably detailed description thereof (including financial information) and operating results (including financial statements for the most recent 12 month period for which they are available and as otherwise available), the terms and conditions, including economic terms, of the proposed Acquisition, and Company’s calculation of Consolidated EBITDA, on a Pro Forma Basis, and a balance sheet, calculated on a Pro Forma Basis, relating thereto;

 

(H) the Required Holders shall have approved the Company’s computation of Consolidated EBITDA, as calculated on a Pro Forma Basis;

 

(I) consents have been obtained in favor of Collateral Agent and the holders of the Notes to the collateral assignment of rights and indemnities under the related acquisition documents and opinions of counsel for the Note Parties and (if delivered to the Note Parties) the selling party in favor of the Collateral Agent and the holders of the Notes have been delivered;

 

(J) the provisions of Section 9.13 have been satisfied;

 

(K) simultaneously with the closing of such Acquisition, the target company (if such Acquisition is structured as a purchase of Capital Securities) or the Note Party (if such Acquisition is structured as a purchase of assets or a merger and a Note Party is the surviving entity) executes and delivers to the Collateral Agent and the holders of the Notes the Security Agreement and such documents necessary to grant to the Collateral Agent a Lien in all of the assets (subject to any exceptions in the applicable Security Document) of such target company or surviving company, and their respective Subsidiaries, each in form and substance and with such perfection and priority as is satisfactory to the Collateral Agent and the Required Holders and, in the event of an Acquisition structured as a purchase of Capital Securities, the issuer, unless such issuer is a CFC, of such Capital Securities becomes a party to the Guaranty Agreement as a Guarantor thereunder, in accordance with the terms thereof;

 

B-16

 

(L) if the Acquisition is structured as a merger involving the Company, the Company is the surviving entity, or if the Acquisition is structured as a merger involving a Guarantor, a Guarantor is the surviving entity;  and

 

(M) the holders of the Notes shall have received a summary of sources and uses of funds for any Acquisition at the time of the consummation of such Acquisition.

 

 “Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority.

 

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject to Title I 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.

 

 “Pro Forma Basis” means, with respect to any event, that the Company is in compliance on a pro forma basis with the applicable covenant, calculation or requirement herein recomputed as if the event with respect to which compliance on a Pro Forma Basis is being tested had occurred on the first day of the four consecutive Fiscal Quarter period, taken as a single period, most recently ended on or prior to such date for which financial statements have been delivered pursuant to Section 7.1.  For purposes of clarification, such calculation shall be made without any adjustment for projected cost savings or other synergies unless otherwise approved by the Required Holders in writing.

 

“property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.

 

“Prudential” is defined in the addressee line to this Agreement.

 

“Prudential Affiliate” means any Affiliate of Prudential.

 

“PTE” means a Prohibited Transaction Exemption issued by the Department of Labor and is defined in Section 6.2(a).

 

“Purchaser” or “Purchasers” means each of the purchasers that has executed and delivered this Agreement to the Company and such Purchaser’s successors and assigns (so long as any such assignment complies with Section 13.2), provided, however, that any Purchaser of a Note that ceases to be the registered holder or a beneficial owner (through a nominee) of such Note as the result of a transfer thereof pursuant to Section 13.2 shall cease to be included within the meaning of “Purchaser” of such Note for the purposes of this Agreement upon such transfer. “Qualified Institutional Buyer” means any Person who is a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.

 

B-17

 

“QPAM Exemption” is defined in Section 6.2(e)

 

“Related Fund” means, with respect to any holder of any Note, any fund or entity that (i) invests in Securities or bank loans, and (ii) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

 

“Request for Purchase” is defined in Section 2.2(d).

 

“Required Holders” means, at any time, the holders of at least 50.1% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).

 

“Rescheduled Closing Day” is defined in Section 3.3.

 

“Responsible Officer” means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement.

 

“S&P” means Standard and Poor’s Ratings Group and its successors.

 

“SEC” means the Securities and Exchange Commission of the United States, or any successor thereto.

 

“Secured Obligations” shall have the meaning assigned to such term in the Intercreditor Agreement.

 

“Secured Parties” shall have the meaning assigned to the term “Creditors” in the Intercreditor Agreement.

 

“Securities” or “Security” has the meaning specified in section 2(1) of the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“Security Agreement” shall mean the Guaranty and Collateral Agreement, dated as of even date herewith and executed and delivered by the Company and each other Note Party set forth on the signature pages thereto in favor of the Collateral Agent and substantially in the form of Exhibit B-3 attached hereto, as the same may be amended, restated, supplemented or otherwise modified from time to time (including, without limitation, by any joinder to the Security Agreement (in the form contemplated thereby)), pursuant to which such Subsidiary shall become a Grantor thereunder and shall agree to be bound by the terms and provisions thereof in accordance with Section 9.7.

 

B-18

 

“Security Documents” means, collectively, the Security Agreement, each Perfection Certificate, each control agreement and any other agreement or instrument pursuant to which the Company, any other Note party or any other Person grants or purports to grant collateral to the Collateral Agent for the benefit of the Secured Parties or otherwise relates to such Collateral.

 

“Senior Agent” means The PrivateBank and Trust Company in its capacity as administrative agent under the Senior Credit Agreement, together with its successors and assigns in such capacity.

 

“Senior Credit Agreement” means that certain Credit Agreement dated as of the date hereof by and among the Company, the lenders from time to time party thereto and the Senior Agent, as the same may be amended, restated, supplemented, replaced, refinanced or otherwise modified from time to time.

 

“Senior Credit Documents” means the Senior Credit Agreement, the Notes, the Letters of Credit, the Master Letter of Credit Agreement, the L/C Applications, the Agent Fee Letter (each of the foregoing, other than Senior Credit Agreement, as defined in the Senior Credit Agreement), the Security Documents, the Subordination Agreements, the Intercreditor Agreement and all documents, instruments and agreements delivered in connection with the foregoing.

 

“Senior Credit Obligations” means the “Obligations” as defined in the Credit Agreement.

 

“Senior Debt” means, as of any date of determination, all Indebtedness (other than Subordinated Debt) of the Company and its Subsidiaries.

 

 “Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.

 

“Senior Lenders” means the financial institutions from time to time party to the Senior Credit Agreement.

 

“Series” is defined in Section 1.2.

 

“Series A Closing” is defined in Section 3.1.

 

“Series A Closing Day” is defined in Section 3.1.

 

“Series A Note” is defined in Section 1.1.

 

“Series A Purchaser” is defined in the addressee line to this Agreement.

 

B-19

 

“Shelf Closing” means, with respect to any Series of Shelf Notes, the closing of the sale and purchase of such Series of Shelf Notes.

 

“Shelf Notes” is defined in Section 1.2.

 

“Source” is defined in Section 6.2.

 

“Structuring Fee” is defined in Section 2.2(h)(i).

 

“Subordinated Debt” means any Indebtedness of the Company or any Subsidiary which has subordination terms, covenants, pricing and other terms which have been approved in writing by the Required Holders and is (i) in form materially similar to Exhibit B-4 hereto or (ii) is otherwise approved in writing by the Required Holders.

 

“Subordination Agreement (Rockford)” means the agreement or agreements existing on the date hereof (and as in effect on the date hereof) and entered into for the purpose of subordinating Indebtedness owed by any of the Company or its Subsidiaries arising under the Rockford Note (as defined in the most recent, as of the date hereof, 10-Q of the Company filed with the SEC) to obligations owed by the Company and/or its Subsidiaries to The PrivateBank and Trust Company, as the lender in respect of the Loan and Security Agreement dated September 30, 2012.

 

“Subordination Agreements” means (i) the Subordination Agreement (Rockford) and (ii) each subordination agreement executed by a holder of Subordinated Debt in favor of the Secured Parties from time to time after the Closing Date in form and substance and on terms and conditions satisfactory to the Required Holders.

 

“Subsidiary” means, as to any Person, any other Person in which such first Person or one or more of its Subsidiaries or such first 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 second Person, and any partnership or Joint Venture if more than a 50% interest in the profits or capital thereof is owned by such first Person or one or more of its Subsidiaries or such first 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); provided that, for purposes of clarification, no Construction Partnership shall constitute a Subsidiary hereunder.  Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Company.

 

To the extent the Company is in compliance with Section 9.17, Onquest Heaters, Inc. shall not constitute a “Subsidiary” hereunder.

 

“Substitute Purchaser” is defined in Section 21.

 

“SVO” means the Securities Valuation Office of the NAIC or any successor to such Office.

 

B-20

 

“Tangible Assets” means, on any date of determination and on a Consolidated basis in accordance with GAAP, all assets excluding Intangible Assets.

 

“UCC” means the Uniform Commercial Code as from time to time in effect in the State of Illinois; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the Collateral Agent’s security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Illinois, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions; provided, further, that if the UCC is amended after the date hereof, such amendment will not be given effect for the purposes of this Agreement if and to the extent the result of such amendment would be to limit or eliminate any item of Collateral.

 

“Unencumbered Fixed Assets” means Fixed Assets not subject to any Lien other than Liens on real property described in the proviso to the first sentence of Section 10.11(d).

 

“Unfinanced Capital Expenditures” means, for any period, 65% of Consolidated Capital Expenditures during such period, minus sales of Fixed Assets during such period net of repayments of Indebtedness of the Company and its Subsidiaries during such period, minus, as of the date of calculation, outstanding Indebtedness incurred by the Company and/or its Subsidiaries with a final maturity exceeding 12 months from the date of issuance thereof, which Indebtedness financed such Consolidated Capital Expenditures, in each case, determined in accordance with GAAP.

 

“USA PATRIOT Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“U.S. Economic Sanctions” is defined in Section 5.16.

 

“Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred percent 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-21

 

Exhibit 1-A

 

[FORM OF SERIES A NOTE]

 

PRIMORIS SERVICES CORPORATION

 

[  ]% SENIOR SECURED NOTE, SERIES A, DUE [  ]

 

No. [          ]

PPN  74164F A*4

ORIGINAL PRINCIPAL AMOUNT:

ORIGINAL ISSUE DATE:  December [  ], 2012

INTEREST RATE:  [  ]

INTEREST PAYMENT DATES:  Quarterly, in arrears, on the first day of each of [  ] beginning [  ]

FINAL MATURITY DATE:  December [  ], 2022

PRINCIPAL PREPAYMENT DATES AND AMOUNTS:  Annually in the principal amount of $7,142,857.14, beginning [  ], 2016, and on the [  ] day of December of each year thereafter through and including [  ], 2021

 

For Value Received, the undersigned, PRIMORIS SERVICES CORPORATION, (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, payable on the Principal Prepayment Dates and in the amounts specified above, and on the Final Maturity Date specified above in an amount equal to the unpaid balance of the principal hereof, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the Interest Rate per annum specified above, payable on each Interest Payment Date specified above and on the Final Maturity Date specified above, commencing with the Interest Payment Date 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 of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make-Whole Amount, at a rate per annum (the “Default Rate”) from time to time equal to the greater of (i) 2% over the Interest Rate specified above or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A., in New York, New York as its “base” or “prime” rate, payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand).

 

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 JPMorgan Chase Bank, N.A. in New York, New York, or at such other place in the State of New York 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 Secured Notes (herein called the “Notes”) issued pursuant to the Note Purchase and Private Shelf Agreement, dated as of [  ] (as from time to time amended, the “Note Purchase Agreement”), among the Company, Prudential and the respective Purchasers named therein and is entitled to the benefits thereof.  Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in 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 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 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.

 

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.

 

This Note is guaranteed by the Guarantors pursuant to the Guaranty Agreement, and this Note is secured by the Security Documents.

 

If an Event of Default occurs and is continuing, 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 Company and the holder of this Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

 

	
 
    	
PRIMORIS   SERVICES CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

Exhibit 1-B

 

[FORM OF SHELF NOTE]

 

PRIMORIS SERVICES CORPORATION

 

[  ]% SENIOR SECURED NOTE, SERIES [  ], DUE [  ]

 

No. [          ]

PPN[                            ]

ORIGINAL PRINCIPAL AMOUNT:

ORIGINAL ISSUE DATE:  [  ]

INTEREST RATE:  [  ]

INTEREST PAYMENT DATES:                                                                 [  ]

FINAL MATURITY DATE:  [  ]

PRINCIPAL PREPAYMENT DATES AND AMOUNTS:

 

For Value Received, the undersigned, PRIMORIS SERVICES CORPORATION, (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 the Final Maturity Date specified above (or so much thereof as shall not have been prepaid),]  [, payable on the Principal Prepayment Dates and in the amounts specified above], and on the Final Maturity Date specified above in an amount equal to the unpaid balance of the principal hereof, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the Interest Rate per annum specified above, payable on each Interest Payment Date specified above and on the Final Maturity Date specified above, commencing with the Interest Payment Date 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 of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make-Whole Amount, at a rate per annum (the “Default Rate”) from time to time equal to the greater of (i) 2% over the Interest Rate specified above or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A., in New York, New York as its “base” or “prime” rate, payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand).

 

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 JPMorgan Chase Bank, N.A. in New York, New York, or at such other place in the State of New York 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 Secured Notes (herein called the “Notes”) issued pursuant to the Note Purchase and Private Shelf Agreement, dated as of [  ] (as from time to time amended, the “Note Purchase Agreement”), among the Company, 

 

 

Prudential and the respective Purchasers named therein and is entitled to the benefits thereof.  Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in 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 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 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.

 

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.

 

This Note is guaranteed by the Guarantors pursuant to the Guaranty Agreement, and this Note is secured by the Security Documents.

 

If an Event of Default occurs and is continuing, 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 Company and the holder of this Note shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

 

	
 
    	
PRIMORIS   SERVICES CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

Exhibit 2.2

 

[FORM OF REQUEST FOR PURCHASE]

 

PRIMORIS SERVICES CORPORATION

 

Reference is made to the Note Purchase and Private Shelf Agreement, dated as of [  ] (as from time to time amended, restated or otherwise modified, the “Shelf Agreement”), between the Company, on the one hand, and Prudential and the respective Purchasers named therein and is entitled to the benefits thereof, on the other hand.  Capitalized terms used and not otherwise defined herein shall have the respective meanings specified in the Agreement.

 

Pursuant to Section 2.2(d) of the Shelf Agreement, the Company hereby makes the following Request for Purchase:

 

	
1.                                      Aggregate   principal amount of the Shelf Notes covered hereby (the “Notes”)  
    	
 
    	
$
    	
 
    	
(1)
    

 

2.                                      Individual specifications of the Notes:

 

	
Principal
   Amount
    	
 
    	
Final
   Maturity
   Date
    	
 
    	
Principal
   Prepayment
   Dates and
   Amounts
    	
 
    	
Interest
   Payment
   Period
    	
 
    
	
 
    	
 
    	

    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
[      ] in arrears
    	
 
    

 

3.                                      Use of proceeds of the Notes:

 

4.                                      Proposed day for the closing of the purchase and sale of the Notes:

 

5.                                      The purchase price of the Notes is to be transferred to:

 

	
Name and Address
    	
 
    	
 
    
	
and ABA Routing
    	
 
    	
Number of
    
	
Number of Bank
    	
 
    	
Account
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

(1)                                 Minimum principal amount of $10,000,000.

 

 

6.                                      The Company certifies that (a) the representations and warranties contained in Section 5 of the Agreement [and the other Note Documents] are true on and as of the date of this Request for Purchase and (b) there exists on the date of this Request for Purchase no Event of Default or Default.

 

7.                                      The Issuance Fee to be paid pursuant to the Agreement will be paid by the Company on the Closing Day.

 

[8.                                  Attached hereto as Exhibit A is an amendment and restatement of Schedule[s] [  ] to the Agreement.  The Company hereby certifies that such Schedule[s] are true, correct and complete as of the date hereof.]

 

Dated:

 

	
 
    	
PRIMORIS   SERVICES CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

Exhibit 2.2(f)

 

[FORM OF CONFIRMATION OF ACCEPTANCE]

 

Reference is made to the Note Purchase and Private Shelf Agreement, dated as of [  ] (as from time to time amended, restated or otherwise modified, the “Shelf Agreement”), between the Company, on the one hand, and Prudential Investment Management, Inc. (“Prudential”), each Prudential Affiliate which becomes party thereto and the other holders from time to time of the Notes, on the other hand.  All terms used herein that are defined in the Agreement have the respective meanings specified in the Shelf Agreement.

 

Prudential or the Prudential Affiliate which is named below as a Purchaser of Shelf Notes hereby confirms the representations as to such Shelf Notes set forth in Section 6 of the Agreement, and agrees to be bound by the provisions of the Agreement applicable to the Purchasers or holders of the Notes.

 

Pursuant to Section 2.2(f) of the Agreement, an Acceptance with respect to the following Accepted Notes is hereby confirmed:

 

I.                                        Accepted Notes:  Aggregate principal amount $                 

 

(A)                               (a)         Name of Purchaser:

(b)         Principal amount:

(c)                                  Final maturity date:

(d)         Principal prepayment dates and amounts:

(e)                                  Interest rate:

(f)                                     Interest payment period:  [              ] in arrears

(g)          Payment and notice instructions:  As set forth on attached Purchaser Schedule

 

(B)                               (a)                                 Name of Purchaser:

(b)         Principal amount:

(c)                                  Final maturity date:

(d)         Principal prepayment dates and amounts:

 

(e)          Interest rate:

(f)           Interest payment period:  [              ] in arrears

(g)          Payment and notice instructions:  As set forth on attached Purchaser Schedule

 

[(C), (D).... same information as above.]

 

II.                                   Closing Day:

 

 

III.                              Issuance Fee:

 

 

	
 
    	
PRIMORIS   SERVICES CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Dated:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
PRUDENTIAL   INVESTMENT MANAGEMENT, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Vice President
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[PRUDENTIAL AFFILIATE]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Vice President
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[ATTACH PURCHASER SCHEDULES
    	
 
    

 

 

[FORM OF COMPLIANCE CERTIFICATE]

 

Date:                            

 

[Address for each holder of Notes]

 

 

Ladies and Gentlemen:

 

Please refer to that certain Note Purchase and Private Shelf Agreement dated as of December 28, 2012 (as in effect on the date hereof, the “Note Agreement”) between Primoris Services Corporation, a Delaware corporation (the “Company”) and the Purchasers party thereto from time to time.  Capitalized terms used but not otherwise defined herein are used herein as defined in the Note Agreement.

 

The undersigned hereby delivers this certificate pursuant to Section 7.2 of the Note Agreement and certifies to each holder of any Notes in his capacity as the [Chief Financial Officer] of the Company, as follows:

 

(i) Enclosed herewith is a copy of the [annual audited/quarterly unaudited] financial statements of the Company as at                                  (the “Measurement Date” and the period of four consecutive fiscal quarters most recently ended as of the Measurement Date, taken as a single period, the “Measurement Period”), which statements fairly present in all material respects the financial condition and results of operations of the companies being reported on as of the Measurement Date [(subject to changes resulting from year-end adjustments)]. (2)

 

(ii) I reviewed the relevant terms of the Note Agreement and I made, or caused to be made, under my supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the Measurement Period covered by the statements dated the Measurement Date and such review did not 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), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.]

 

(iii) As of the Measurement Date, the Company is in compliance with the covenants set forth in Section 10 of the Note Agreement.

 

(iv) Schedule 1 attached hereto contains a list of all Subordinated Debt of the Note Parties.

 

(v) The computations and amounts set forth herein in Schedule 1 correspond to the ratios and/or financial restrictions contained in Section 10.6 and 10.11 of the Note Agreement and such computations are true and correct as of the Measurement Date.

 

(2)  In the event that the Company or any Subsidiary has made an election to measure any financial liability using fair value (which election is being disregarded for purposes of determining compliance with this Agreement pursuant to Section 22.2) as to the period covered by any such financial statement, such Senior Financial Officer’s certificate as to such period shall include a reconciliation from GAAP with respect to such election.

 

 

IN WITNESS WHEREOF, the Company has caused this Compliance Certificate to be executed and delivered by it’s authorized officer on [Date].

 

 

	
 
    	
PRIMORIS SERVICES   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

Schedule 1

 

[List all Subordinated Debt]

 

 

Exhibit 7.2

 

A.                                    Consolidated Tangible Assets (Section 10.6)

 

	
1.                                      Consolidated Tangible Assets for the   Fiscal Year immediately Preceding the Measurement Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
2.                                      Net Cash Proceeds from Dispositions made   during the Fiscal Year in which the Measurement Date occurs:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
3.                                      line (2) divided by line (1)
    	
 
    	
 
    	
 
    

 

B.                                    Section 10.11(a) - Consolidated Tangible Net Worth

 

	
1.                                      Consolidated Tangible Net Worth
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Minimum required:
    	
 
    	
 
    	
 
    
	
a.                                      On   December 31, 2012 and for each of the first three Fiscal Quarters of   2013, $100,000,000 plus 25% of Consolidated Net Income for the fourth Fiscal   Quarter of 2012 (but without reduction for any net loss)   ($                                        )
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
b.                                      For each   Fiscal Quarter (commencing December 31, 2013) thereafter:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
1.                   Previous   Fiscal Year’s threshold requirement:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
2.                   25% of   Consolidated Net Income for the previous Fiscal Year:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
3.                   Minimum   Consolidated Tangible Net Worth (B(1).b.1 plus B(1).b.2):
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    

 

 

	
C.                                    Calculation   of Consolidated EBIT
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
1.                                      Consolidated   operating earnings before interest and taxes
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
2.                                      income (or   less loss) from Persons in which the Company or any of its Subsidiaries holds   an ownership interest in any Capital Securities issued by such Person and   which Person is not consolidated with the Company, calculated in accordance   with GAAP
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
3.                                      sum of   (1) and (2) or remainder of (2) minus (1)
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
4.                                      income (or   plus loss) attributable to any non-controlling interest
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
5.                                      Remainder of   (3) minus (4)
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
C.                                    Calculation   of Consolidated EBITDA
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
1.                                      Consolidated   EBIT (item C(4))
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
2.                                      Consolidated   depreciation
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
3.                                      Consolidated   amortization
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
4.                                      Consolidated   other noncash charges
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
5.                                      Sum of   (1) through (4)
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
D.                                    Section 10.11(b) -   Fixed Charge Coverage Ratio
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
1.                                      Consolidated   EBITDA (item C(5))
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
2.                                      Unfinanced   Capital Expenditures
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
3.                                      tax expense
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
4.                                      dividends
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
5.                                      distributions
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
6.                                      share   buybacks
    	
 
    	
$
    	
 
    

 

 

	
7.                                      sum of   (2) through (6)
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
8.                                      remainder of   (1) minus (7)
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
9.                                      Consolidated   Interest Expense
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
10.                               required   payments of principal of Funded Debt (Company and Subsidiaries)
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
11.                               Sum of   (9) and (10)
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
12.                               Ratio of   (8) to (11)
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
13.                               Minimum   Required
    	
 
    	
1.25 to 1
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
E.                                    Section 10.11(c) -   Maximum Senior Debt to EBITDA Ratio
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
1.                                      (excluding,   to the extent otherwise constituting Senior Debt, Earn-Outs)
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
2.                                      Consolidated   EBITDA 
    	
 
    	
$
    	
 
    
	
(from Item C(5) above)
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
3.                                      Ratio of   (1) to (2)
    	
 
    	
       to   1
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
4.                                      Maximum   allowed
    	
 
    	
2.25 to 1
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
F.                                     Section 10.11(d) -   Unencumbered Fixed Assets*
    	
 
    	
 
    	
 
    

 

	
Describe Assets
    	
 
    	
Value
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total Value
    	
 
    	
 
    	
 
    
	
Minimum Required Value
    	
 
    	
$
    	
45,000,000
    	
 
    

 

*Include source of valuations for individual assets, or groups of related assets, in excess of $                 million.

 

 

SCHEDULE OF ADDRESSEES

 

Private Bank
 120 South LaSalle Street
 2nd Floor
 Chicago, IL 60603
 Attn:  John O’Connell

 

Bank of the West
 15165 Ventura Boulevard
 Suite 445
 Sherman Oaks, CA 91403
 Attn:  David Alterman

 

Iberia Bank
 601 Poydras Street
 New Orleans, LA 70130
 Attn:  Edgar Santa Cruz

 

Prudential Investment Management, Inc.

c/o Prudential Capital Group

2200 Ross Ave., Suite 4200E

Dallas, TX  75201

 

The Prudential Insurance Company of America

c/o Prudential Capital Group

2200 Ross Ave., Suite 4200E

Dallas, TX  75201

 

Physicians Mutual Insurance Company

c/o Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

2200 Ross Ave., Suite 4200E

Dallas, TX  75201

 

Globe Life and Accident Insurance Company

c/o Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

2200 Ross Ave., Suite 4200E

Dallas, TX  75201

 

 

SCHEDULE OF SUBSIDIARIES

 

	
Onquest, Inc.
    
	
 
    
	
Cardinal   Contractors, Inc.
    
	
 
    
	
GML   Coatings, LLC
    
	
 
    
	
Primoris   Energy Services Corporation DBA Sprint Pipeline
    
	
 
    
	
Saxon   Construction, Inc.
    
	
 
    
	
James   Construction Group, L.L.C.
    
	
 
    
	
BTEX   Materials, LLC
    
	
 
    
	
Miller   Springs Materials, L.L.C.
    
	
 
    
	
Q3   Contracting, Inc.
    
	
 
    
	
ARB, Inc.
    
	
 
    
	
Rockford   Corporation
    
	
 
    
	
ARB   Structures, Inc.
    
	
 
    
	
Juniper   Rock Corporation
    
	
 
    
	
Primoris   Renewables, LLC
    
	
 
    
	
Stellaris   LLC
    
	
 
    
	
All   Day Electric Company, Inc.
    
	
 
    
	
Alaska   Continental Pipeline, Inc.
    
	
 
    
	
Calidus,   LLC
    

 

 

Exhibit 4.4(a)

 

SCHEDULE OF UCC-1 FINANCING STATEMENTS

 

	
 
    	
 
    	
Filing Office*
    
	
Primoris   Services Corporation
    	
 
    	
Delaware
    
	
 
    	
 
    	
 
    
	
Onquest, Inc.
    	
 
    	
California
    
	
 
    	
 
    	
 
    
	
Cardinal   Contractors, Inc.
    	
 
    	
Florida
    
	
 
    	
 
    	
 
    
	
GML   Coatings, LLC
    	
 
    	
Florida
    
	
 
    	
 
    	
 
    
	
Primoris   Energy Services Corporation
    	
 
    	
Texas
    
	
 
    	
 
    	
 
    
	
Primoris   Energy Services Corporation DBA Sprint Pipeline Services
    	
 
    	
Texas
    
	
 
    	
 
    	
 
    
	
Saxon   Construction, Inc.
    	
 
    	
Texas
    
	
 
    	
 
    	
 
    
	
James   Construction Group, L.L.C.
    	
 
    	
Florida
    
	
 
    	
 
    	
 
    
	
BTEX   Materials, LLC
    	
 
    	
Louisiana
    
	
 
    	
 
    	
 
    
	
Miller   Springs Materials, L.L.C.
    	
 
    	
Texas
    
	
 
    	
 
    	
 
    
	
Q3   Contracting, Inc.
    	
 
    	
Minnesota
    
	
 
    	
 
    	
 
    
	
ARB, Inc.
    	
 
    	
California
    
	
 
    	
 
    	
 
    
	
Rockford   Corporation
    	
 
    	
Oregon
    
	
 
    	
 
    	
 
    
	
ARB   Structures, Inc.
    	
 
    	
California
    
	
 
    	
 
    	
 
    
	
Juniper   Rock Corporation
    	
 
    	
California
    
	
 
    	
 
    	
 
    
	
Primoris   Renewables, LLC
    	
 
    	
California
    
	
 
    	
 
    	
 
    
	
Stellaris   LLC
    	
 
    	
Nevada
    
	
 
    	
 
    	
 
    
	
All   Day Electric Company, Inc.
    	
 
    	
California
    
	
 
    	
 
    	
 
    
	
Alaska   Continental Pipeline, Inc.
    	
 
    	
Delaware
    
	
 
    	
 
    	
 
    
	
Calidus,   LLC
    	
 
    	
Nevada
    

 

*Filing Office — In the case of Florida, the Florida Secured Transactions Registry; in the case of Louisiana, the Office of the Clerk of Court of East Baton Rouge Parish; in the case of each other state, the office of the Secretary of State of such state.

 

 

Exhibit B-1

	
 
    

 

 

GUARANTY AGREEMENT

 

Dated as of December 28, 2012

of

ARB, INC.

ARB STRUCTURES, INC.

ALASKA CONTINENTAL PIPELINE, INC.

ALL DAY ELECTRIC COMPANY, INC.

CARDINAL CONTRACTORS, INC.

GML COATINGS, LLC

JAMES CONSTRUCTION GROUP, L.L.C.

JUNIPER ROCK CORPORATION

ONQUEST, INC.

PRIMORIS RENEWABLES, LLC

ROCKFORD CORPORATION

STELLARIS LLC

Q3 CONTRACTING, INC.

PRIMORIS ENERGY SERVICES CORPORATION

CALIDUS, LLC

SAXON CONSTRUCTION, INC.

BTEX MATERIALS, LLC

MILLER SPRINGS MATERIALS, L.L.C.,

 

and
 THE OTHER GUARANTORS PARTY HERETO

FROM TIME TO TIME

	
 
    

 

 

TABLE OF CONTENTS

 

	
SECTION
    	
 
    	
HEADING
    	
 
    	
PAGE
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 1.
    	
 
    	
GUARANTY
    	
 
    	
1
    
	
SECTION 2.
    	
 
    	
OBLIGATIONS ABSOLUTE
    	
 
    	
3
    
	
SECTION 3.
    	
 
    	
WAIVER
    	
 
    	
4
    
	
SECTION 4.
    	
 
    	
OBLIGATIONS UNIMPAIRED
    	
 
    	
4
    
	
SECTION 5.
    	
 
    	
SUBROGATION AND SUBORDINATION
    	
 
    	
5
    
	
SECTION 6.
    	
 
    	
REINSTATEMENT OF GUARANTY
    	
 
    	
6
    
	
SECTION 7.
    	
 
    	
RANK OF GUARANTY
    	
 
    	
6
    
	
SECTION 8.
    	
 
    	
MAINTENANCE OF EXISTENCE
    	
 
    	
6
    
	
SECTION 9.
    	
 
    	
REPRESENTATIONS AND WARRANTIES OF EACH GUARANTOR
    	
 
    	
7
    
	
Section 9.1.
    	
 
    	
Organization; Power and Authority
    	
 
    	
7
    
	
Section 9.2.
    	
 
    	
Authorization, Etc.
    	
 
    	
7
    
	
Section 9.3.
    	
 
    	
Governmental Authorizations, Etc.
    	
 
    	
7
    
	
Section 9.4.
    	
 
    	
Information Regarding the Company
    	
 
    	
7
    
	
Section 9.5.
    	
 
    	
Compliance With Laws, Other Instruments, Etc.
    	
 
    	
8
    
	
SECTION 10.
    	
 
    	
TERM OF GUARANTY AGREEMENT
    	
 
    	
8
    
	
SECTION 11.
    	
 
    	
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE   AGREEMENT
    	
 
    	
8
    
	
SECTION 12.
    	
 
    	
AMENDMENT AND WAIVER
    	
 
    	
8
    
	
Section 12.1.
    	
 
    	
Requirements
    	
 
    	
8
    
	
Section 12.2.
    	
 
    	
Solicitation of Holders of Notes
    	
 
    	
9
    
	
Section 12.3.
    	
 
    	
Binding Effect
    	
 
    	
9
    
	
Section 12.4.
    	
 
    	
Notes Held by Company, Etc.
    	
 
    	
9
    
	
SECTION 13.
    	
 
    	
NOTICES
    	
 
    	
9
    
	
SECTION 14.
    	
 
    	
MISCELLANEOUS
    	
 
    	
10
    
	
Section 14.1.
    	
 
    	
Successors and Assigns; Joinder
    	
 
    	
10
    
	
Section 14.2.
    	
 
    	
Severability
    	
 
    	
10
    
	
Section 14.3.
    	
 
    	
Construction
    	
 
    	
10
    
	
Section 14.4.
    	
 
    	
Further Assurances
    	
 
    	
10
    
	
Section 14.5.
    	
 
    	
Governing Law
    	
 
    	
11
    
	
Section 14.6.
    	
 
    	
Counterparts
    	
 
    	
11
    
	
Section 14.7.
    	
 
    	
Jurisdiction and Process; Waiver of Jury Trial
    	
 
    	
11
    
	
Section 14.8.
    	
 
    	
Reproduction of Documents
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Exhibit A
    	
—
    	
Form of Guaranty Joinder
    	
 
    	
 
    

 

i

 

GUARANTY AGREEMENT

 

THIS GUARANTY AGREEMENT, dated as of December 28, 2012 (this “Guaranty Agreement”), is made by each of the undersigned (each a “Guarantor” and, together with each of the signatories hereto and any other entities from time to time parties hereto pursuant to Section 14.1 hereof, the “Guarantors”), in favor of the Purchasers (as defined below) and the other holders from time to time of the Notes (as defined below).  The Purchasers and such other holders are herein collectively called the “holders” and individually a “holder.”

 

PRELIMINARY STATEMENTS:

 

I.             PRIMORIS SERVICES CORPORATION, a Delaware corporation (the “Company”), is entering into a Note Purchase and Private Shelf Agreement dated the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Note Agreement”) with Prudential Investment Management, Inc. and the other Persons listed on the signature pages thereto (the “Purchasers”) simultaneously with the delivery of this Guaranty Agreement.  Capitalized terms used herein have the meanings specified in the Note Agreement unless otherwise defined herein.

 

II.            The Company has authorized the issue and sale, pursuant to the Note Agreement, of 3.65% Senior Secured Notes, Series A, due December 28, 2022 in the aggregate principal amount of $50,000,000 (as amended, restated, supplemented or otherwise modified from time to time, together with any notes issued in substitution therefor, the “Series A  Notes”).  The Company has also authorized the issuance of additional senior secured promissory notes in an aggregate principal amount set forth in the Note Agreement (the “Shelf Notes”).  The Series A Note(s), the Shelf Notes and the other Notes (as defined in the Note Agreement) shall be collectively referred to as the “Notes”.

 

III.          It is a condition to the agreement of the Purchasers to purchase (x) the Series A Notes on the date hereof and (y) from time to time, each other Note issued by the Company in accordance with the Note Agreement that this Guaranty Agreement shall have been executed and delivered by the Guarantors and shall be in full force and effect.

 

IV.          Each Guarantor will receive direct and indirect benefits from the financing arrangements contemplated by the Note Agreement.  The board of directors (or similar governing body) of each Guarantor has determined that the incurrence of such obligations is in the best interests of such Guarantor.

 

NOW THEREFORE, in order to induce, and in consideration of, the execution and delivery of the Note Agreement, the purchase of the Series A Notes and, from time to time, the purchase of each other Note issued by the Company in accordance with the Note Agreement, each Guarantor hereby covenants and agrees with, and represents and warrants to each of the holders as follows:

 

Section 23.            GUARANTY.

 

Each Guarantor hereby irrevocably, unconditionally and jointly and severally with the other Guarantors guarantees to each holder, the due and punctual payment in full of (a) the 

 

1

 

principal of, Make-Whole Amount, if any, and interest on (including, without limitation, interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), and any other amounts due under, the Notes when and as the same shall become due and payable (whether at stated maturity or by required or optional prepayment or by acceleration or otherwise) and (b) any other sums which may become due under the terms and provisions of the Notes, the Note Agreement, the other Note Documents or any other instrument referred to therein, (all such obligations described in clauses (a) and (b) above are herein called the “Guaranteed Obligations”).  The guaranty in the preceding sentence is an absolute, present and continuing guaranty of payment and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Company or any other guarantor of the Notes (including, without limitation, any other Guarantor hereunder) or upon any other action, occurrence or circumstance whatsoever.  In the event that the Company shall fail so to pay any of such Guaranteed Obligations, each Guarantor agrees to pay the same when due to the holders entitled thereto, without demand, presentment, protest or notice of any kind, in lawful money of the United States of America, pursuant to the requirements for payment specified in the Notes, the Note Agreement, or the other Note Documents.  Each default in payment of any of the Guaranteed Obligations shall give rise to a separate cause of action hereunder and separate suits may be brought hereunder as each cause of action arises.  Each Guarantor agrees that the Notes issued in connection with the Note Agreement may (but need not) make reference to this Guaranty Agreement.

 

Each Guarantor agrees to pay and to indemnify and save each holder harmless from and against any damage, loss, cost or expense (including attorneys’ fees) which such holder may incur or be subject to as a consequence, direct or indirect, of (x) any breach by such Guarantor, by any other Guarantor or by the Company of any warranty, covenant, term or condition in, or the occurrence of any default under, this Guaranty Agreement, the Notes, the Note Agreement, the other Note Documents or any other instrument referred to therein, together with all expenses resulting from the compromise or defense of any claims or liabilities arising as a result of any such breach or default, (y) any legal action commenced to challenge the validity or enforceability of this Guaranty Agreement, the Notes, the Note Agreement, the other Note Documents or any other instrument referred to therein and (z) enforcing or defending (or determining whether or how to enforce or defend) the provisions of this Guaranty Agreement.

 

Each Guarantor hereby acknowledges and agrees that such Guarantor’s liability hereunder is joint and several with the other Guarantors and any other Person(s) who may guarantee the obligations and Indebtedness under and in respect of the Notes, the Note Agreement, or the other Note Documents.

 

Notwithstanding the foregoing provisions or any other provision of this Guaranty Agreement, the Purchasers (by their acceptance of this Guaranty Agreement, and on behalf of themselves and their successors and assigns) and each Guarantor hereby agrees that if at any time the Guaranteed Obligations exceed the Maximum Guaranteed Amount determined as of such time with regard to such Guarantor, then this Guaranty Agreement shall be automatically amended to reduce the Guaranteed Obligations to the Maximum Guaranteed Amount.  Such amendment shall not require the written consent of any Guarantor or any holder and shall be deemed to have been automatically consented to by each Guarantor and each holder.  Each

 

2

 

Guarantor agrees that the Guaranteed Obligations may at any time exceed the Maximum Guaranteed Amount without affecting or impairing the obligation of such Guarantor.  “Maximum Guaranteed Amount” means as of the date of determination with respect to a Guarantor, the lesser of (a) the amount of the Guaranteed Obligations outstanding on such date and (b) the maximum amount that would not render such Guarantor’s liability under this Guaranty Agreement subject to avoidance under Section 548 of the United States Bankruptcy Code (or any successor provision) or any comparable provision of applicable state law.

 

Section 24.            OBLIGATIONS ABSOLUTE.

 

The obligations of each Guarantor hereunder shall be primary, absolute, irrevocable and unconditional, irrespective of the validity or enforceability of the Notes, the Note Agreement, the other Note Documents or any other instrument referred to therein, shall not be subject to any counterclaim, setoff, deduction or defense based upon any claim such Guarantor may have against the Company or any holder or otherwise, and shall remain in full force and effect until the payment in full in cash of all of the Guaranteed Obligations (subject to reinstatement as set forth in Section 6), without regard to, and shall not be released, discharged or in any way affected by, any circumstance or condition whatsoever (whether or not such Guarantor shall have any knowledge or notice thereof), including, without limitation: (a) any amendment to, modification of, supplement to or restatement of the Notes, the Note Agreement, the other Note Documents or any other instrument referred to therein (it being agreed that the obligations of each Guarantor hereunder shall apply to the Notes, the Note Agreement, the other Note Documents or any such other instrument as so amended, modified, supplemented or restated) or any assignment or transfer of any thereof or of any interest therein, or any furnishing, acceptance or release of any security for the Notes or the addition, substitution or release of any other Guarantor or any other entity or other Person primarily or secondarily liable in respect of the Guaranteed Obligations; (b) any waiver, consent, extension, indulgence or other action or inaction under or in respect of the Notes, the Note Agreement, the other Note Documents or any other instrument referred to therein; (c) any bankruptcy, insolvency, arrangement, reorganization, readjustment, composition, liquidation or similar proceeding with respect to the Company or its property; (d) any merger, amalgamation or consolidation of any Guarantor or of the Company into or with any other Person or any sale, lease or transfer of any or all of the assets of any Guarantor or of the Company to any Person; (e) any failure on the part of the Company for any reason to comply with or perform any of the terms of any other agreement with any Guarantor; (f) any failure on the part of any holder to obtain, maintain, register or otherwise perfect any security; or (g) any other event or circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor (whether or not similar to the foregoing), and in any event however material or prejudicial it may be to any Guarantor or to any subrogation, contribution or reimbursement rights any Guarantor may otherwise have.  Each Guarantor covenants that its obligations hereunder shall not be discharged except by indefeasible payment in full in cash of all of the Guaranteed Obligations and all other obligations hereunder.

 

Without limiting the generality of the foregoing, to the fullest extent permitted by law, each Guarantor waives any rights and defenses which are or may become available to such Guarantor by reason of California Civil Code §§2787 through 2855, 2899 and 3433 and California Code of Civil Procedure §§580a, 580b, 580d and 726.  Accordingly, each Guarantor waives all rights and defenses that such Guarantor may have because the Company’s debt is

 

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secured by real property.  This means, among other things:  (A) the holders may collect from such Guarantor without first foreclosing on any real or personal property Collateral pledged by the Company; and (B) if the Collateral Agent forecloses on any real property Collateral pledged by the Company:  (1) the amount of the debt may be reduced only by the price for which that Collateral is sold at the foreclosure sale, even if the Collateral is worth more than the sale price, and (2) the holders may collect from such Guarantor even if the Collateral Agent, by foreclosing on the real property Collateral, has destroyed any right such Guarantor may have to collect from the Company.  This is an unconditional and irrevocable waiver of any rights and defenses any Guarantor may have because the Company’s debt is secured by real property.  These rights and defenses include, but are not limited to, any rights of defenses based upon §§580a, 580b, 580d or 726 of the California Code of Civil Procedure.  Further, each Guarantor waives any right or defense it may have at law or equity, including California Code of Civil Procedure §580a, to a fair market value hearing or action to determine a deficiency judgment after a foreclosure.  As provided below, this Guaranty Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.  The foregoing is included solely out of an abundance of caution, and shall not be construed to mean that any of the above referenced provisions of California law are in any way applicable to this Guaranty Agreementor the Guaranteed Obligations.

 

Section 25.                                   WAIVER.

 

Each Guarantor unconditionally waives to the fullest extent permitted by law, (a) notice of acceptance hereof, of any action taken or omitted in reliance hereon and of any default by the Company in the payment of any amounts due under the Notes, the Note Agreement, the other Note Documents or any other instrument referred to therein, and of any of the matters referred to in Section 2 hereof, (b) all notices which may be required by statute, rule of law or otherwise to preserve any of the rights of any holder against such Guarantor, including, without limitation, presentment to or demand for payment from the Company or any Guarantor with respect to any Note, notice to the Company or to any Guarantor of default or protest for nonpayment or dishonor and the filing of claims with a court in the event of the bankruptcy of the Company, (c) any right to require any holder to enforce, assert or exercise any right, power or remedy including, without limitation, any right, power or remedy conferred in the Note Agreement, the other Note Documents or the Notes, (d) any requirement for diligence on the part of any holder and (e) any other act or omission or thing or delay in doing any other act or thing which might in any manner or to any extent vary the risk of such Guarantor or otherwise operate as a discharge of such Guarantor or in any manner lessen the obligations of such Guarantor hereunder.

 

Section 26.                                   OBLIGATIONS UNIMPAIRED.

 

Each Guarantor authorizes the holders, without notice or demand to such Guarantor or any other Guarantor and without affecting its obligations hereunder, from time to time:  (a) to renew, compromise, extend, accelerate or otherwise change the time for payment of, all or any part of the Notes, the Note Agreement, the other Note Documents or any other instrument referred to therein; (b) to change any of the representations, covenants, events of default or any other terms or conditions of or pertaining to the Notes, the Note Agreement, the other Note Documents or any other instrument referred to therein, including, without limitation, decreases or increases in amounts of principal, rates of interest, the Make-Whole Amount or any other 

 

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obligation; (c) to take and hold security for the payment of the Notes, the Note Agreement, the other Note Documents or any other instrument referred to therein, for the performance of this Guaranty Agreement or otherwise for the Indebtedness guaranteed hereby and to exchange, enforce, waive, subordinate and release any such security; (d) to apply any such security and to direct the order or manner of sale thereof as the holders in their sole discretion may determine; (e) to obtain additional or substitute endorsers or guarantors or release any other Guarantor or any other Person or entity primarily or secondarily liable  in respect of the Guaranteed Obligations; (f) to exercise or refrain from exercising any rights against the Company, any Guarantor or any other Person; and (g) to apply any sums, by whomsoever paid or however realized, to the payment of the Guaranteed Obligations and all other obligations owed hereunder.  The holders shall have no obligation to proceed against any additional or substitute endorsers or guarantors or to pursue or exhaust any security provided by the Company, such Guarantor or any other Guarantor or any other Person or to pursue any other remedy available to the holders.

 

If an event permitting the acceleration of the maturity of the principal amount of any Notes shall exist and such acceleration shall at such time be prevented or the right of any holder to receive any payment on account of the Guaranteed Obligations shall at such time be delayed or otherwise affected by reason of the pendency against the Company, any Guarantor or any other guarantors of a case or proceeding under a bankruptcy or insolvency law, such Guarantor agrees that, for purposes of this Guaranty Agreement and its obligations hereunder, the maturity of such principal amount shall be deemed to have been accelerated with the same effect as if the holder thereof had accelerated the same in accordance with the terms of the Note Agreement, and such Guarantor shall forthwith pay such accelerated Guaranteed Obligations.

 

Section 27.                                   SUBROGATION AND SUBORDINATION.

 

(a)                                Each Guarantor will not exercise any rights which it may have acquired by way of subrogation under this Guaranty Agreement, by any payment made hereunder or otherwise, or accept any payment on account of such subrogation rights, or any rights of reimbursement, contribution or indemnity or any rights or recourse to any security for the Notes or this Guaranty Agreement unless and until all of the Guaranteed Obligations shall have been paid in full in cash.

 

(b)                                Each Guarantor hereby subordinates the payment of all Indebtedness and other obligations of the Company or any other guarantor of the Guaranteed Obligations owing to such Guarantor, whether now existing or hereafter arising, including, without limitation, all rights and claims described in clause (a) of this Section 5, to the payment in full in cash of all of the Guaranteed Obligations.  If the Required Holders so request, any such Indebtedness or other obligations shall be enforced and performance received by such Guarantor as trustee for the holders and the proceeds thereof shall be paid over to the holders promptly, in the form received (together with any necessary endorsements) to be applied to the Guaranteed Obligations, whether matured or unmatured, as may be directed by the Required Holders, but without reducing or affecting in any manner the liability of any Guarantor under this Guaranty Agreement.

 

(c)                                 If any amount or other payment is made to or accepted by any Guarantor in violation of any of the preceding clauses (a) and (b) of this Section 5, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the holders and shall be paid over to the holders promptly, in the form received (together with any necessary endorsements) to be applied to the Guaranteed Obligations, whether matured or unmatured, as may be directed by the Required Holders, but without reducing or affecting in any manner the liability of such Guarantor under this Guaranty Agreement.

 

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(d)                                Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Note Agreement and that its agreements set forth in this Guaranty Agreement (including this Section 5) are knowingly made in contemplation of such benefits.

 

(e)                                 Each Guarantor hereby agrees that, to the extent that a Guarantor shall have paid an amount hereunder to any holder that is greater than the net value of the benefits received, directly or indirectly, by such paying Guarantor as a result of the issuance and sale of the Notes (such net value, its “Proportionate Share”), such paying Guarantor shall, subject to Section 5(a) and 5(b), be entitled to contribution from any Guarantor that has not paid its Proportionate Share of the Guaranteed Obligations.  Any amount payable as a contribution under this Section 5(e) shall be determined as of the date on which the related payment is made by such Guarantor seeking contribution and each Guarantor acknowledges that the right to contribution hereunder shall constitute an asset of such Guarantor to which such contribution is owed.  Notwithstanding the foregoing, the provisions of this Section 5(e) shall in no respect limit the obligations and liabilities of any Guarantor to the holders of the Notes hereunder or under the Notes, the Note Agreement, the other Note Documents or any other document, instrument or agreement executed in connection therewith, and each Guarantor shall remain jointly and severally liable for the full payment and performance of the Guaranteed Obligations.

 

Section 28.                                   REINSTATEMENT OF GUARANTY.

 

This Guaranty Agreement shall continue to be effective, or be reinstated, as the case may be, if and to the extent at any time payment, in whole or in part, of any of the sums due to any holder on account of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by a holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any other guarantors, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the Company or any other guarantors or any part of its or their property, or otherwise, all as though such payments had not been made.

 

Section 29.                                   RANK OF GUARANTY.

 

All payment obligations of each Guarantor under this Guaranty Agreement in respect of the Notes and this Guaranty Agreement shall be maintained (i) at a rank pari passu with all payment obligations of such Guarantor under this Guaranty Agreement and the Notes guaranteed thereby, without any preference among themselves and (ii) not less than pari passu in respect of all other secured Indebtedness (actual or contingent) of such Guarantor.

 

Section 30.                                   MAINTENANCE OF EXISTENCE.

 

So long as any of the Notes are outstanding and, in the event that no Notes are outstanding, for so long as the Company may request the purchase of any Shelf Notes under the Note Agreement, each Guarantor agrees that, unless the Required Holders otherwise consent in writing, subject to Section 10.3 of the Note Agreement, each Guarantor will at all times preserve and keep in full force and effect its existence.

 

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Section 31.                                   REPRESENTATIONS AND WARRANTIES OF EACH GUARANTOR.

 

Each Guarantor represents and warrants to each holder as follows:

 

Section 31.1                            Organization; Power and Authority.  Such Guarantor is a corporation, limited partnership or limited liability company, as applicable, duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and is duly qualified as a foreign corporation, limited partnership or limited liability company, as applicable, 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.  Such Guarantor has the corporate, limited partnership or limited liability company, as applicable, 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 Agreement and to perform the provisions hereof.

 

Section 31.2                            Authorization, Etc.  This Guaranty Agreement has been duly authorized by all necessary corporate, limited partnership or limited liability company, as applicable, action on the part of such Guarantor, and this Guaranty Agreement 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 (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 31.3                            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 such Guarantor of this Guaranty Agreement.

 

Section 31.4                            Information Regarding the Company.  Such Guarantor now has and will continue to have independent means of obtaining information concerning the affairs, operations, financial condition and business of the Company.  No holder shall have any duty or responsibility to provide such Guarantor with any credit or other information concerning the affairs, financial condition or business of the Company which may come into possession of the holders.  Such Guarantor has executed and delivered this Guaranty Agreement without reliance upon any representation by the holders including, without limitation, with respect to (a) the due execution, validity, effectiveness or enforceability of any instrument, document or agreement evidencing or relating to any of the Guaranteed Obligations or any loan or other financial accommodation made or granted to the Company, (b) the validity, genuineness, enforceability, existence, value or sufficiency of any property securing any of the Guaranteed Obligations or the creation, perfection or priority of any lien or security interest in such property or (c) the existence, number, financial condition or creditworthiness of other guarantors or sureties, if any, with respect to any of the Guaranteed Obligations.

 

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Section 31.5                            Compliance With Laws, Other Instruments, Etc.  The execution, delivery and performance by each Guarantor of this Guaranty Agreement and the other Note Documents will not (a) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien (other than the Liens arising under any of the other Note Documents) 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, organizational documents, 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, (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 such Guarantor or any of its Subsidiaries or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to such Guarantor or any of its Subsidiaries.

 

Section 32.                                   TERM OF GUARANTY AGREEMENT.

 

This Guaranty Agreement and all guarantees, covenants and agreements of the Guarantors contained herein shall continue in full force and effect and shall not be discharged until such time as all of the Guaranteed Obligations and all other obligations hereunder shall be indefeasibly paid in full in cash, and shall be subject to reinstatement pursuant to Section 6.

 

Section 33.                                   SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

 

All representations and warranties contained herein shall survive the execution and delivery of this Guaranty Agreement and may be relied upon by any subsequent holder, regardless of any investigation made at any time by or on behalf of any Purchaser or any other holder.  All statements contained in any certificate or other instrument delivered by or on behalf of a Guarantor pursuant to this Guaranty Agreement shall be deemed representations and warranties of such Guarantor under this Guaranty Agreement.  Subject to the preceding sentence, this Guaranty Agreement embodies the entire agreement and understanding between each holder and the Guarantors and supersedes all prior agreements and understandings relating to the subject matter hereof.

 

Section 34.                                   AMENDMENT AND WAIVER.

 

Section 34.1                            Requirements.  Except as otherwise provided in the fourth paragraph of Section 1 of this Guaranty Agreement, this Guaranty Agreement 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 no amendment or waiver (a) of any of the first three paragraphs of Section 1 or any of the provisions of Sections 2, 3, 4, 5, 6, 7, 10 or 12 hereof, or any defined term (as it is used therein), or (b) which results in the limitation of the liability of any Guarantor hereunder (except to the extent provided in the fourth paragraph of Section 1 of this Guaranty Agreement) will be effective as to any holder unless consented to by such holder in writing.

 

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Section 34.2                            Solicitation of Holders of Notes.

 

(a)                                Solicitation.  Each Guarantor will provide each holder of any Notes (irrespective of the amount of Notes then owned by it) with reasonably sufficient information, reasonably 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.  Each Guarantor will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 12.2 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 of Notes.

 

(b)                                Payment.  The Guarantors 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 or provide other credit support, 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 or other credit support concurrently provided, on the same terms, ratably to each holder even if such holder did not consent to such waiver or amendment.

 

Section 34.3                            Binding Effect.  Any amendment or waiver consented to as provided in this Section 12 applies equally to all holders and is binding upon them and upon each future holder and upon each Guarantor without regard to whether any Note has been marked to indicate such amendment or waiver.  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 the holder nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder.  As used herein, the term “this Guaranty Agreement” and references thereto shall mean this Guaranty Agreement as it may be amended, modified, supplemented or restated from time to time.

 

Section 34.4                            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 Guaranty Agreement, or have directed the taking of any action provided herein 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 any Guarantor, the Company or any of their respective Affiliates shall be deemed not to be outstanding.

 

Section 35.                                   NOTICES.

 

All notices and communications provided for hereunder shall be in writing and sent (a) by facsimile 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:

 

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(a)                                 if to any Guarantor, to such Guarantor at c/o PRIMORIS SERVICES CORPORATION, 26000 Commercentre Dr., Lake Forest, CA, 92630, to the attention of John M. Perisich, or such other address as such Guarantor shall have specified to the holders in writing, or

 

(b)                                 if to any holder, to such holder at the addresses specified for such communications set forth in Schedule A to the Note Agreement, or such other address as such holder shall have specified to the Guarantors in writing.

 

Section 36.                                   MISCELLANEOUS.

 

Section 36.1                            Successors and Assigns; Joinder.  All covenants and other agreements contained in this Guaranty Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns whether so expressed or not.  It is agreed and understood that any Person may become a Guarantor hereunder by executing a Guaranty Joinder substantially in the form of Exhibit A attached hereto and delivering the same to the holders.  Any such Person shall thereafter be a “Guarantor” for all purposes under this Guaranty Agreement.

 

Section 36.2                            Severability.  Any provision of this Guaranty 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 36.3                            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 express contrary provision) be deemed to excuse compliance with any other covenant.  Whether 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.  The section and subsection headings in this Guaranty Agreement are for convenience of reference only and shall neither be deemed to be a part of this Guaranty Agreement nor modify, define, expand or limit any of the terms or provisions hereof.  All references herein to numbered sections, unless otherwise indicated, are to sections of this Guaranty Agreement.  Words and definitions in the singular shall be read and construed as though in the plural and vice versa, and words in the masculine, neuter or feminine gender shall be read and construed as though in either of the other genders where the context so requires.

 

Section 36.4                            Further Assurances.  At any time or from time to time upon the request of the Required Holders, each Guarantor, and any of its Subsidiaries, shall promptly execute, acknowledge and deliver all such further documents and do such other acts as the Required Holders may reasonably request in order to effect fully the purposes of the other Note Documents and this Guaranty Agreement.

 

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Section 36.5                            Governing Law.  This Guaranty 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 New York, excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

 

Section 36.6                            Counterparts.  This Guaranty 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 36.7                            Jurisdiction and Process; Waiver of Jury Trial.

 

(a)                                Each Guarantor irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Guaranty Agreement.  To the fullest extent permitted by applicable law, each Guarantor irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

(b)                                Each Guarantor consents to process being served by or on behalf of any holder of a Note in any suit, action or proceeding of the nature referred to in Section 14.7(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 13 or at such other address of which such holder shall then have been notified pursuant to Section 13.  Each Guarantor agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it.  Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

 

(c)                                 Nothing in this Section 14.7 shall affect the right of any holder to serve process in any manner permitted by law, or limit any right that the holders may have to bring proceedings against any Guarantor in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

 

(d)                                THE GUARANTORS AND EACH HOLDER OF ANY NOTES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS GUARANTY AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH.

 

Section 36.8                            Reproduction of Documents.  This Guaranty Agreement may be reproduced by any holder by any photographic, photostatic, electronic, digital, or other similar process and such holder may destroy any original document so reproduced.  Each Guarantor agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall 

 

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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 holder in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.  This Section 14.8 shall not prohibit any Guarantor or any other holder of any 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.

 

[Remainder of Page Intentionally Blank; Signature Pages Follow]

 

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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty Agreement to be duly executed and delivered as of the date and year first above written.

 

	
PRIMORIS   RENEWABLES, LLC
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
ARB, INC.
    	
 
    	
ALL DAY ELECTRIC COMPANY, INC.
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Title:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
ARB STRUCTURES, INC.
    	
 
    	
ALASKA CONTINENTAL PIPELINE,   INC.
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Title:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
CARDINAL CONTRACTORS, INC.
    	
 
    	
CALIDUS, LLC
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Title:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
JUNIPER ROCK CORPORATION
    	
 
    	
BTEX MATERIALS, LLC
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Title:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
ONQUEST, INC.
    	
 
    	
MILLER SPRINGS MATERIALS,   L.L.C.
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Title:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
STELLARIS LLC
    	
 
    	
GML COATINGS, LLC
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Title:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
JAMES CONSTRUCTION GROUP,   L.L.C.
    	
 
    	
SAXON CONSTRUCTION, INC.
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Title:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
ROCKFORD CORPORATION
    	
 
    	
Q3 CONTRACTING, INC.
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Title:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
PRIMORIS ENERGY SERVICES   CORPORATION
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    

 

Signature Page to Guaranty Agreement

 

 

EXHIBIT A

 

GUARANTY JOINDER

 

THIS GUARANTY JOINDER (this “Guaranty Joinder”), dated as of [                                   , 20    ] is made by [                              ], a [                              ] (the “Additional Guarantor”), in favor of the holders from time to time of the Notes issued pursuant to the Note Agreement described below.

 

PRELIMINARY STATEMENTS:

 

I.                                        PRIMORIS SERVICES CORPORATION, a Delaware corporation (the “Company”), has authorized the issue and sale, pursuant to the Note Purchase and Private Shelf Agreement dated as of December 28, 2012 (as amended, restated supplemented or otherwise modified from time to time, the “Note Agreement”), of 3.65% Senior Secured Notes, Series A, due December 28, 2022, in the aggregate principal amount of $50,000,000 (as amended, restated, supplemented or otherwise modified from time to time, together with any notes issued in substitution therefor, the “Series A Notes”).  The Company has also authorized the issuance of additional senior secured promissory notes in an aggregate principal amount set forth in the Note Agreement (the “Shelf Notes”).  The Series A Notes, the Shelf Notes and the other Notes (as defined in the Note Agreement) shall be collectively referred to as the “Notes”.

 

II.                                   The Company is required pursuant to the Note Agreement to cause the Additional Guarantor to deliver this Guaranty Joinder in order to cause the Additional Guarantor to become a Guarantor under the Guaranty Agreement dated as of December 28, 2012 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Guaranty Agreement”) executed by certain Subsidiaries of the Company (together with each entity that from time to time becomes a party thereto by executing a Guaranty Joinder pursuant to Section 14.1 thereof, collectively, the “Guarantors”) in favor of each holder from time to time of any of the Notes.

 

III.                              The Additional Guarantor has received and will receive substantial direct and indirect benefits from the Company’s compliance with the terms and conditions of the Note Agreement, the other Note Documents and the Notes issued thereunder.

 

IV.                               Capitalized terms used and not otherwise defined herein have the definitions set forth in the Note Agreement.

 

NOW THEREFORE, in consideration of the funds advanced to the Company by the Purchasers under the Note Agreement and to enable the Company to comply with the terms of the Note Agreement, the Additional Guarantor hereby covenants, represents and warrants to the holders as follows:

 

The Additional Guarantor hereby becomes a Guarantor (as defined in the Guaranty Agreement) for all purposes of the Guaranty Agreement.  Without limiting the foregoing, the Additional Guarantor hereby (a) jointly and severally with the other Guarantors under the Guaranty Agreement, guarantees to the holders, from time to time, of the Notes the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) and the full and prompt 

 

A-1

 

performance and observance of all Guaranteed Obligations (as defined in Section 1 of the Guaranty Agreement) in the same manner and to the same extent as is provided in the Guaranty Agreement, (b) accepts and agrees to perform and observe all of the covenants set forth therein, (c) waives the rights set forth in Section 3 of the Guaranty Agreement, (d) agrees to perform and observe the covenants contained in Section 8 of the Guaranty Agreement, (e) makes the representations and warranties set forth in Section 9 of the Guaranty Agreement and (f) waives the rights, submits to jurisdiction, and waives service of process as described in Section 14.7 of the Guaranty Agreement.

 

Notice of acceptance of this Guaranty Joinder and of the Guaranty Agreement, as supplemented hereby, is hereby waived by the Additional Guarantor.

 

The address for notices and other communications to be delivered to the Additional Guarantor pursuant to Section 13 of the Guaranty Agreement is set forth below.

 

IN WITNESS WHEREOF, the Additional Guarantor has caused this Guaranty Joinder to be duly executed and delivered as of the date and year first above written.

 

	
 
    	
[NAME   OF GUARANTOR]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Notice   Address for such Guarantor[s]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    

 

A-2

 

Exhibit B-4

 

FORM OF SUBORDINATION AGREEMENT

 

Date:                              , 20       

 

Subordination Agreement

 

Primoris Services Corporation, a Delaware corporation (“Primoris”) has received loans, credit and other financial accommodations from The PrivateBank as Administrative Agent for itself and other lenders and from Prudential Investment Management, Inc. which is acting as agent for various noteholders (all such loans and accommodations are “Superior Indebtedness”, as described below, and such creditors’ agent or representative are herein called the “Senior Creditors”).

 

The undersigned is a creditor (the “Subordinate Creditor”) of Primoris or one of its subsidiaries (the “Borrower”).  In consideration of loans made or to be made, credit given or to be given, or other financial accommodations afforded or to be afforded to Primoris, on such terms as may be agreed upon between the Senior Creditors (the indebtedness of Borrower to which is the “Superior Indebtedness”) and Primoris, the Subordinate Creditor agrees that all monetary obligations of the Borrower to the Subordinate Creditor except for (i) wages earned and (ii) other payments (such as reimbursements and appropriate bonuses) to be made in the ordinary course of the Borrower’s business (collectively, the “Subordinated Indebtedness”) now existing or hereafter arising and howsoever evidenced or acquired (the aggregate principal amount of such Subordinated Indebtedness as of the date hereof being that amount outstanding pursuant to that certain Promissory Note, in form attached hereto as EXHIBIT A, in the face amount of                                      and 00/100 Dollars ($                        ) (the “Promissory Note”) of the Borrower payable to the Subordinate Creditor) shall be and remain junior and subordinate to the Senior Indebtedness whether now existing or hereafter arising, whether direct or indirect, secured or unsecured, absolute or contingent, joint and several, and howsoever owned, or acquired and whether the Borrower is or is not in bankruptcy, receivership, liquidation or any similar insolvency proceeding.

 

Addresses for notice purposes are set forth on the signature page.

 

Without limiting the generality of the foregoing, the Subordinate Creditor further agrees as follows:

 

1(a).                       Except as provided in Section 1(c), so long as there is any default (whether with respect to payment or otherwise), or default would result therefrom, on any Superior Indebtedness no payment of principal or interest (notwithstanding the expressed maturity or any time for the payment of principal on the Promissory Note) shall be made on the Promissory Note except with the Senior Creditors’ prior written consent and the Subordinate Creditor will take no steps, whether by suit or otherwise to compel or enforce the collection of the Promissory Note, nor will the Subordinate Creditor use the Promissory Note by way of counterclaim, set off, recoupment or otherwise as to diminish, discharge or otherwise satisfy in whole or in part any indebtedness or liability of the Subordinate Creditor to the Borrower.

 

1(b).                       The Subordinate Creditor shall not be entitled to accelerate outstanding obligations payable by the Borrower under the Promissory Note until 180 days after the date that the default giving rise to such right to accelerate was triggered and notice thereof was delivered to the Senior Creditors.

 

 

1(c).                        The Borrower may, however, pay scheduled principal (including scheduled prepayments of principal) and interest on the Promissory Note without obtaining written consent of the Senior Creditors, so long as no event of default on Superior Indebtedness has occurred, or will occur as a result of such payment, and Subordinate Creditor need not give the Senior Creditors notice of such payments.

 

2.                                      The Senior Creditors need not at any time give the Subordinate Creditor notice of any kind of the creation or existence of any Superior Indebtedness, nor of the amount or terms thereof, all such notice being hereby expressly waived.  Also, the Senior Creditors may at any time from time to time, without the consent of or notice to the Subordinate Creditor, without incurring responsibility to the Subordinate Creditor, and without impairing or releasing the obligation of the Subordinate Creditor under this agreement (i) renew, refund, refinance or extend the maturity of any Superior Indebtedness, or any part thereof, or otherwise revise, amend or alter the terms and conditions thereof, (ii) sell, exchange, release or otherwise deal with any property by whomsoever at any time pledged, mortgaged or otherwise hypothecated or subjected to a lien to secure any Superior Indebtedness, and (iii) exercise or refrain from exercising any rights against the Borrower and others, including any guarantors or the Subordinate Creditor.

 

3.                                      The Subordinate Creditor without prior written consent of the Senior Creditors will not sell, assign, transfer, pledge or hypothecate any Subordinated Indebtedness, or any part thereof, or agree to discharge or forgiveness of the same so long as there remains any Superior Indebtedness except subject to and in accordance with the terms hereof and upon the agreement of the transferee or assignee to abide by and be bound by the terms hereof.

 

4.                                      Upon receipt of notice of a default under the Superior Indebtedness or, regardless of notice, upon the bankruptcy, reorganization, receivership or liquidation of the Borrower, then until the Superior Indebtedness has been paid in full the Subordinate Creditor shall not be entitled to, and shall not accept any payment or distribution with respect to the Subordinated Indebtedness and will turn over to the Agent for the benefit of the Senior Creditors, in the form received, any such payment or other distribution the Subordinate Creditor does receive.

 

5.                                      The Subordinate Creditor will cause all Subordinated Indebtedness to be at all times evidenced by the Promissory Note or notes of the Borrower and will cause all such notes to bear thereon a legend substantially as follows:

 

“The indebtedness evidenced by this Note is subordinate to any and all indebtedness, obligations and liabilities of the maker hereof to certain of the Borrower’s secured lenders and their successors and assigns in the manner and to the extent set forth in that certain Subordination Agreement dated                           , 20      , to which reference is hereby made for a more full statement thereof.  The holder has agreed thereby without said lenders’ written consent not to sell, assign, transfer, pledge or hypothecate this Note.”

 

 

6.                                      This Subordination Agreement shall be continuing and binding until terminated in writing by the Senior Creditors.

 

 

	
 
    	
 
    
	
 
    	
(“Subordinate   Creditor”)
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
				

 

 

	
The   PrivateBank and Trust Company
    	
 
    
	
as Administrative Agent, Collateral Agent
    	
 
    
	
and Lender
    	
 
    
	
120   South LaSalle Street
    	
 
    
	
2nd   Floor
    	
 
    
	
Chicago,   Illinois 60603
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Prudential   Investment Management, Inc.
    	
 
    
	
c/o   Prudential Capital Group
    	
 
    
	
2200   Ross Avenue, Suite 4200E
    	
 
    
	
Dallas,   Texas 75201
    	
 
    

 

 

Primoris Services Corporation  hereby acknowledges receipt of a copy of the above Subordination Agreement and agrees to be bound by the terms and provisions thereof, to make no payment or distribution contrary to the terms thereof and to do every other act and thing necessary or appropriate to be done or performed by it in order to carry out the terms of the Subordination Agreement.

 

 

	
Dated:                                                        ,
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Section 37.          Primoris Services   Corporation
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Its:

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