<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from __________ to ____________
Commission file number 0-24639
RailWorks Corporation
(Exact name of registrant as specified in its governing instrument)
<TABLE>
<S> <C>
Delaware 58-2382378
(State of Organization) (IRS Employer Identification No.)
1104 Kenilworth Drive, Suite 301, Baltimore, Maryland 21204
(Address of principal executive office) (Zip Code)
</TABLE>
(Registrant's telephone number, including area code) (410) 512-0500
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
14,255,706 shares of Common Stock were outstanding as of November 5,
1999.
- --------------------------------------------------------------------------------
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RailWorks Corporation
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements:
Consolidated Balance Sheets as of September 30, 1999
(unaudited) and December 31, 1998
Consolidated Statements of Income for the three months
ended September 30, 1999 (unaudited) and 1998 (unaudited)
Consolidated Statements of Income for the nine months ended
September 30, 1999 (unaudited) and 1998 (unaudited)
Consolidated Statements of Stockholders' Equity for the nine months
ended September 30, 1999 (unaudited) and 1998 (unaudited)
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1999 (unaudited) and 1998 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations:
Introduction
Historical Results of Operations
Liquidity and Capital Resources
Year 2000
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
PART II - OTHER INFORMATION
Items 1 through 6
Signatures
2
<PAGE> 3
Item 1 - Consolidated Financial Statements
RailWorks Corporation
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(in thousands)
<TABLE>
<CAPTION>
(unaudited)
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash ............................................................................ $ 5,318 $ 2,846
Accounts receivable, net of allowance for doubtful accounts of $491 and
$442 at September 30, 1999 and December 31, 1998, respectively ................ 134,359 77,181
Costs and estimated earnings in excess of
billings on uncompleted contracts ............................................. 52,662 24,792
Inventories:
Raw materials ................................................................. 13,031 7,535
Finished goods ................................................................ 4,815 1,550
Deferred tax asset .............................................................. 951 870
Other current assets ............................................................ 5,757 3,401
---------- ----------
Total current assets ............................................. 216,893 118,175
---------- ----------
PROPERTY, PLANT AND EQUIPMENT ....................................................... 75,201 14,514
LESS - ACCUMULATED DEPRECIATION AND AMORTIZATION ............................... 9,192 1,122
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, Net ................................................. 66,009 13,392
---------- ----------
OTHER ASSETS:
Excess of cost over acquired net assets, net of amortization .................. 183,337 93,845
Deferred tax asset ............................................................ 85 85
Loans to officers ............................................................. 6,764 959
Other ......................................................................... 8,321 2,180
---------- ----------
Total other assets ............................................... 198,507 97,069
---------- ----------
Total ...................... $ 481,409 $ 228,636
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ............................................ $ 11,784 $ 931
Accounts payable and accrued liabilities ........................................ 54,252 35,218
Accrued interest payable ........................................................ 9,707 218
Accrued payroll and related withholdings ........................................ 3,656 3,777
Billings in excess of costs and estimated earnings on uncompleted contracts ..... 13,434 5,958
Other current liabilities ....................................................... 14,296 4,682
---------- ----------
Total current liabilities ....................................... 107,129 50,784
---------- ----------
LONG-TERM DEBT ..................................................................... 229,510 50,573
EXCESS OF ACQUIRED NET ASSETS OVER COST, net of amortization ....................... 8,491 8,662
OTHER LIABILITIES .................................................................. 10,003 8,609
---------- ----------
Total long-term liabilities ..................................... 248,004 67,844
---------- ----------
Total liabilities ...................................... 355,133 118,628
---------- ----------
STOCKHOLDERS' EQUITY:
Series A, convertible preferred stock, $1.00 par value, authorized
10,000,000 shares, 13,700 shares issued and outstanding .................... 14 14
Common stock, $0.01 par value, authorized 100,000,000 shares,
13,955,706 issued and outstanding at September 30, 1999,
13,703,530 issued and outstanding at December 31, 1998 .................... 139 137
Additional paid-in capital ...................................................... 123,973 121,296
Accumulated other comprehensive income........................................... 123 --
Retained earnings (deficit) ..................................................... 2,027 (11,439)
---------- ----------
Total stockholders' equity ............................. 126,276 110,008
---------- ----------
Total ...................... $ 481,409 $ 228,636
========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
3
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RailWorks Corporation
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(in thousands, except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1999 1998
------------ ------------
<S> <C> <C>
Revenues.............................................................. $ 137,425 $ 53,077
Contract costs ....................................................... 105,970 44,755
------------ ------------
Gross profit ......................................................... 31,455 8,322
Selling, general and administrative expenses ......................... 12,082 4,677
Non-recurring expenses ............................................... -- 19,965
Transaction fees ..................................................... -- 1,281
Depreciation and amortization expense ................................ 1,802 803
------------ ------------
Operating income (loss) .............................................. 17,571 (18,404)
Interest expense ..................................................... 5,913 651
Interest and other (income) expense, net ............................. (651) (269)
------------ ------------
Income (loss) before income taxes .................................... 12,309 (18,786)
Provision for income taxes ........................................... 4,616 250
------------ ------------
Net income (loss) .................................................... $ 7,693 $ (19,036)
============ ============
Basic earnings (loss) per share ...................................... $ .55 $ (1.72)
============ ============
Diluted earnings (loss) per share .................................... $ .50 $ (1.72)
============ ============
Weighted average shares used in computing basic earnings
(loss) per share .................................................. 13,939,220 11,035,687
============ ============
Weighted average shares used in computing diluted earnings
(loss) per share .................................................. 15,311,523 11,035,687
============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
4
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RailWorks Corporation
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(in thousands, except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues .................................................................. $ 325,908 $ 139,457
Contract costs ............................................................ 258,043 121,898
------------ ------------
Gross profit .............................................................. 67,865 17,559
Selling, general and administrative expenses .............................. 31,290 11,563
Non-recurring expenses .................................................... -- 19,965
Transaction fees .......................................................... -- 1,281
Depreciation and amortization expense ..................................... 4,372 745
------------ ------------
Operating income (loss) ................................................... 32,203 (15,995)
Interest expense .......................................................... 12,370 1,508
Interest and other (income) expense, net .................................. (1,713) (556)
Income (loss) before income taxes ......................................... 21,546 (16,947)
Provision for income taxes ................................................ 8,080 967
------------ ------------
Net income (loss) ......................................................... $ 13,466 $ (17,914)
============ ============
Basic earnings (loss) per share ........................................... $ .97 $ (3.17)
============ ============
Diluted earnings (loss) per share ......................................... $ .88 $ (3.17)
============ ============
Weighted average shares used in computing basic earnings
(loss) per share ....................................................... 13,867,599 5,651,896
============ ============
Weighted average shares used in computing diluted earnings
(loss) per share ....................................................... 15,244,892 5,651,896
============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
5
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RailWorks Corporation
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Nine Months Ended September 30, 1999
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK PREFERRED STOCK ADDITIONAL OTHER RETAINED
--------------- --------------- PAID-IN COMPREHENSIVE EARNINGS COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT CAPITAL INCOME (DEFICIT) INCOME
------ ------ ------ ------ ------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1999 ................. 13,704 $ 137 14 $ 14 $ 121,296 $ -- $(11,439) $ --
Issuance of common stock for acquisitions 252 2 -- -- 2,698 -- -- --
Stock option compensation ................ -- -- -- -- 37 -- --
Stock issuance costs ..................... -- -- -- -- (58) -- -- --
Foreign currency translation adjustment .. -- -- -- -- -- 123 -- 123
Net income ............................... -- -- -- -- -- -- 13,466 13,466
------ ------ ------ ------ --------- -------- -------- --------
BALANCE, SEPTEMBER 30, 1999 ............. 13,956 $ 139 14 $ 14 $ 123,973 $ 123 $ 2,027 $ 13,589
====== ====== ====== ====== ========= ======== ======== ========
</TABLE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Nine Months Ended September 30, 1998
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK PREFERRED STOCK ADDITIONAL OTHER RETAINED
--------------- --------------- PAID-IN COMPREHENSIVE EARNINGS COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT CAPITAL INCOME (DEFICIT) INCOME
------ ------ ------ ------ ------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1998 ............... 2,960 $ 30 -- $ -- $ -- $ -- $ 1,406 $ --
Issuance of common stock for Founding
Companies ............................ 5,908 59 -- -- 54,023 -- -- --
Non-cash compensation charge ........... 1,206 12 -- -- 14,861 -- -- --
Initial public offering, net of
underwriting discount and offering
expenses ............................ 5,000 50 -- -- 52,437 -- -- --
Net loss ............................... -- -- -- -- -- -- (17,914) (17,914)
------ ------ ------ ------ -------- ------- -------- --------
BALANCE, SEPTEMBER 30, 1998 ........... 15,074 $ 151 -- $ -- $121,321 $ -- $(16,508) $(17,914)
====== ====== ====== ====== ======== ======= ======== ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
6
<PAGE> 7
RailWorks Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................................................... $ 13,466 $ (17,914)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization ................................................ 9,241 745
Non-cash compensation charge ................................................. -- 14,873
Deferred taxes ............................................................... (81) --
Gain on sale of equipment .................................................... (25) (3)
Change in assets and liabilities:
Accounts receivable and costs and estimated earnings in excess of
billings on uncompleted contracts ....................................... (31,230) (6,679)
Inventory ................................................................... 571 183
Other current assets ........................................................ 1,922 (667)
Accounts payable and accrued liabilities .................................... (11,453) 4,730
Accrued interest payable .................................................... 9,489 (238)
Accrued payroll and related withholdings .................................... (1,240) (343)
Billings in excess of costs and estimated earnings on
uncompleted contracts ................................................. (4,052) (3,920)
Other current liabilities ................................................... (2,892) (2,225)
Other assets ................................................................ 1,728 (120)
Other liabilities ........................................................... (9,969) 5,073
---------- ----------
Net cash used in operating activities .................................. (24,525) (6,505)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment ............................................. 2,062 3
Purchase of equipment and leasehold improvements ............................ (11,810) (914)
Loans to officers ........................................................... (5,805) --
Acquisition of subsidiaries, net of cash acquired ........................... (89,180) (51,139)
---------- ----------
Net cash used in investing activities .................................. (104,733) (52,050)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings on revolving line of credit ...................... (19,300) 38,300
Payment of loan origination fees ............................................. (532) (1,520)
Proceeds from issuance of common stock, net .................................. -- 52,487
Proceeds from long-term borrowings ........................................... 28,576 11,025
Debt issuance costs .......................................................... (5,150) --
Proceeds from issuance of senior subordinated notes .......................... 173,938 --
Repayment of long-term borrowings ............................................ (45,925) (39,652)
---------- ----------
Net cash provided by financing activities .............................. 131,607 60,640
---------- ----------
EXCHANGE RATE EFFECT ON CASH .................... ................................... 123 --
NET INCREASE IN CASH ................................................................ 2,349 2,085
CASH, beginning of period ........................................................... 2,846 1,120
---------- ----------
CASH, end of period ................................................................. $ 5,318 $ 3,205
========== ==========
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest .......................................... $ 4,698 $ 1,269
========== ==========
Cash paid during the period for income taxes ...................................... $ 5,769 $ 118
========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
7
<PAGE> 8
NON-CASH OPERATING, INVESTING AND FINANCING ACTIVITIES:
In January 1999, the Company issued 100,000 shares of common stock as
partial consideration for 100% of the outstanding common stock in the FCM Rail,
Ltd. acquisition. In April 1999, the Company issued 93,842 shares of common
stock as partial consideration for 100% of the outstanding common stock in the
McCord Treated Wood, Inc. and Birmingham Wood, Inc. acquisitions. In July 1999,
the Company issued 58,334 shares of common stock as additional consideration
for the November 1998 acquisition of Armcore Railroad Contractors, Inc.
During the first quarter of 1999, the Company issued an aggregate
amount of $9,000,000 in promissory notes and deferred payments as partial
consideration for the Midwest Railroad Construction & Maintenance Corporation of
Wyoming, FCM Rail, Ltd., F&V Metro Contracting Corp. and Affiliates and Gantrex
Group acquisitions. During the second quarter of 1999, the Company also issued
an aggregate amount of $1,500,000 and $2,500,000 in promissory notes and
deferred payments as partial consideration for the Pacific Northern Rail
Contractors, Inc. and M-Track Enterprises, Inc. acquisitions, respectively.
During the third quarter of 1999, the Company issued an aggregate amount of
$3,000,000 in promissory notes as partial consideration for the Wood Waste
Energy, Inc. acquisition.
See Accompanying Notes to Consolidated Financial Statements.
8
<PAGE> 9
RailWorks Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included in the accompanying unaudited
consolidated financial statements. Operating results for the nine months ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999.
NOTE 2 - ORGANIZATION
RailWorks Corporation ("RailWorks" or the "Company") was incorporated in
Delaware on March 20, 1998 and was initially capitalized on such date through
the sale of 10 shares of Common Stock for an aggregate purchase price of $100.
RailWorks seeks to become a leading nationwide provider of rail system
services, including construction and rehabilitation, repair and maintenance,
and related products. RailWorks' strategy is to provide a full range of rail
related services and products on a national basis and offer integrated rail
system solutions. To accomplish this objective, RailWorks acquired, effective
August 4, 1998, (the "Acquisitions") fourteen U.S. businesses (the "Founding
Companies"), completed an initial public offering (the "Offering") of five
million shares of its Common Stock on the same date (taken together the
"Consolidation") and, subsequent to the Consolidation, acquired, through merger
or purchase similar companies to expand its operations. RailWorks and the
Founding Companies merged together upon consummation of the Offering.
For accounting and financial statement purposes, Comstock Holdings, Inc.
(one of the Founding Companies) ("Comstock" or the "Accounting Acquirer") has
been identified as the accounting acquirer consistent with Staff Accounting
Bulletin ("SAB") No. 97 of the Securities and Exchange Commission. The
historical financial statements of RailWorks prior to August 4, 1998, are those
of Comstock. The acquisitions of the remaining Founding Companies and
subsequent acquired companies have been accounted for as purchases in
accordance with Accounting Principles Board ("APB") Statement No. 16 "Business
Combinations". Each purchase price has been allocated to the assets and the
liabilities assumed based upon the estimated fair values at the date of
acquisition.
On November 4, 1998, the Company acquired substantially all of the net
assets of Sheldon Electric, Inc. ("Sheldon"). Also, on November 4, 1998, the
Company acquired all of the outstanding stock of Armcore Railroad Contractors,
Inc. ("Armcore"), an Indiana corporation, located in Frankfort, Indiana. During
1999, the Company recorded an additional $4,300,000 in goodwill related to the
settlement of contingent purchase price payments and the resolution of the
uncertainties related to the fair value of contracts acquired.
On January 7, 1999, the Company acquired all of the outstanding stock of
MidWest Railroad Construction & Maintenance Corporation of Wyoming ("MidWest")
which specializes in construction, repair and maintenance of railroad tracks in
various western states. On January 26, 1999, the Company acquired all of the
outstanding stock of Gantrex Group ("Gantrex") which manufactures and supplies
crane rail fastening systems including pad manufacturing, extrusion and
continuous vulcanizing capabilities. On January 29, 1999, the Company acquired
all of the outstanding stock of FCM Rail, Ltd. ("FCM") which provides
customized leasing services to users of on track rail equipment. In March 1999,
the Company acquired all of the outstanding stock of F&V Metro Contracting
Corp. and Affiliates ("F&V") which performs electrical and mechanical
installations for transit and transportation agencies in the metropolitan New
York City area. The combined purchase price for these first quarter 1999
acquisitions was $36,000,000 in cash, $9,000,000 of promissory notes payable
and deferred payments, and 100,000 shares of RailWorks Common Stock at an
aggregate value of $1,000,000, plus the potential to receive earnouts if
targeted revenue and profit goals are achieved over the next five years. The
fair market value of assets purchased was $12,055,000 and the preliminary
goodwill was approximately $33,945,000. Subsequent to the initial recording of
goodwill, an additional $6,552,000 of goodwill has been recorded through
September 30, 1999 relating to these first quarter 1999 acquisitions. Such
adjustments reflect the settlement of contingent purchase price payments and
the resolution of the uncertainties related to the fair value of contracts
acquired.
On April 12, 1999, the Company acquired all of the outstanding stock of
McCord Treated Wood, Inc. and Birmingham Wood, Inc. ("McCord") which supply
creosote treated wooden cross ties throughout the Southeastern United States.
On April 30, 1999, the Company
9
<PAGE> 10
acquired all of the outstanding stock of M-Track Enterprises, Inc. ("M-Track")
which specializes in rail transit construction, repair and maintenance of track
in the metropolitan New York City area. In May 1999, the Company acquired all
of the outstanding stock of Pacific Northern Rail Contractors, Inc. ("PNR")
which specializes in construction, repair and maintenance of railroad tracks
throughout Canada. On June 3, 1999, the Company acquired all the outstanding
stock of Neosho, Incorporated ("Neosho") which provides track and transit
construction, repair and maintenance to public and private industrial customers
nationally. On June 30, 1999, the Company acquired all of the outstanding stock
of Earl Campbell Construction Company, Inc. ("Campbell") which specializes in
construction, repair and maintenance of railroad tracks in various Southern
states. The combined purchase price for these second quarter 1999 acquisitions
was $49,535,000 in cash, $4,000,000 of promissory notes payable and deferred
payments and 93,842 shares of common stock at an aggregate value of $1,000,000
plus the potential to receive earn-outs if targeted revenue and profit goals
are achieved over the next five years. The fair market value of assets
purchased for the second quarter 1999 acquisitions was approximately
$16,262,000 and the preliminary goodwill recorded was approximately
$38,273,000. Subsequent to the initial recording of goodwill, an additional
$2,208,000 of goodwill has been recorded through September 30, 1999 relating to
these third quarter 1999 acquisitions. Such adjustments represent the
resolution of litigation which was pending at the time of acquisition.
On August 4, 1999, the Company acquired all of the outstanding stock of
Wood Waste Energy, Inc. ("Wood Waste") which collects used cross ties along the
railroad rights of way and processes them into fuel which is sold to industrial
customers. The purchase price for this acquisition was $5,000,000 in cash and a
$3,000,000 promissory note, plus the potential to receive earn-outs if targeted
revenue and profit goals are achieved for the years ended December 31, 2000 and
2001. The fair market value of assets purchased was approximately $1,078,000
and the preliminary goodwill recorded was approximately $6,922,000.
Assets acquired and liabilities assumed are recorded at their fair values
at the time of acquisition. The excess of the purchase price over the net fair
value is allocated to goodwill. The estimated fair values of acquired assets
and liabilities are subject to adjustment pending finalization of, among other
things, certain fixed asset appraisals and the quantification of contract and/or
litigation uncertainties based on information which was not available at the
time of acquisition but subsequently obtained. Goodwill is adjusted as these
items are resolved as well as when, and if, additional contingent purchase
price is paid. The Company evaluates periodically whether events and
circumstances indicate that any goodwill is impaired.
NOTE 3 - SENIOR SUBORDINATED NOTES
On September 30, 1999, the Company sold $50 million of its 11.5% senior
subordinated notes (the "Notes"). The Notes were sold in a private placement
pursuant to Rule 144A under the Securities Act of 1933. The Company has filed a
registration statement on Form S-4, pursuant to which it will offer to exchange
registered notes that are substantially identical to the Notes for the Notes.
The net proceeds from the offering were used to repay approximately $48 million
of indebtedness under the senior revolving credit facility. The notes have an
interest rate of 11.5%, payable semi-annually and are due in 2009 with no
interim amortization requirements.
NOTE 4 - EARNINGS PER SHARE
The following is the computation of basic and diluted earnings per share for
the three months ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net income (loss) ..................................... $ 7,693,000 $(19,036,000)
============ ============
Shares used for calculating basic EPS ................. 13,939,220 11,035,687
Dilutive effect of:
Stock options ............................... 2,303 --
Convertible preferred shares ................ 1,370,000 *
------------ ------------
Shares used for calculating diluted EPS ............... 15,311,523 11,035,687
============ ============
Basic EPS ........................................ $ .55 $ (1.72)
Diluted EPS ...................................... $ .50 $ (1.72)
</TABLE>
*There were no convertible preferred shares issued and outstanding during the
three months ended September 30, 1998.
10
<PAGE> 11
The following is the computation of basic and diluted earnings per share for
the nine months ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net income (loss) ..................................... $ 13,466,000 $(17,914,000)
============ ============
Shares used for calculating basic EPS ................. 13,867,599 5,651,896
Dilutive effect of:
Stock options ............................... 7,293 --
Convertible preferred shares ................ 1,370,000 *
------------ ------------
Shares used for calculating diluted EPS ............... 15,244,892 5,651,896
============ ============
Basic EPS ........................................ $ .97 $ (3.17)
============ ============
Diluted EPS ...................................... $ .88 $ (3.17)
============ ============
</TABLE>
*There were no convertible preferred shares issued and outstanding during the
nine months ended September 30, 1998.
NOTE 5 - SEGMENT REPORTING
During 1998, the Company adopted SFAS No. 131 "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS No. 131"). In accordance with
SFAS No. 131, the Company has three reportable segments: (1) transit services,
(2) rail construction, rehabilitation, repair and maintenance services and (3)
rail products and supplies. The transit services segment provides transit
construction and rehabilitation services, as well as installation of signaling,
communications and electrical systems. The rail construction services segment
provides design, engineering, construction, rehabilitation and repair and
maintenance of track systems. The rail products and supplies segment provides a
broad range of rail related products, including treated wood ties. RailWorks
evaluates performance based on profit or loss from operations before income
taxes, interest income and expense, and non-recurring gains and losses. Each of
the segments follow a uniform set of accounting policies.
The following table sets forth operational and financial condition data as
of and for the three months ended September 30, 1999 for analysis by reportable
segment (in thousands).
<TABLE>
<CAPTION>
TRANSIT RAIL PRODUCTS RAIL OTHER/
SERVICES AND SUPPLIES CONSTRUCTION CORPORATE TOTAL
-------- ------------ ------------ --------- -----
<S> <C> <C> <C> <C> <C>
Revenues from external
customers ........................... $ 65,554 $ 15,451 $ 60,489 $ -- $ 141,494
Inter-segmental revenue .............. 1,020 1,557 1,492 -- 4,069
Depreciation/amortization ............ 133 1,067 1,532 1,365 4,097
Segment operating profit (loss) ...... 11,849 3,247 6,377 (3,901) 17,572
Segment assets ....................... 109,268 36,178 83,385 356,255 585,086
</TABLE>
The Company's reconciliation of segment totals to enterprise values are as
follows (in thousands):
<TABLE>
<S> <C>
REVENUES:
Total revenues for reportable segments ........................... $ 141,494
Elimination of inter-segment revenues ............................ (4,069)
---------
Consolidated revenues ............................................ $ 137,425
=========
ASSETS:
Total assets for reportable segments ............................. $ 585,086
Elimination of intercompany receivables/payables ................. (6,121)
Elimination of investments in subsidiaries ....................... (97,556)
---------
Consolidated assets .............................................. $ 481,409
=========
</TABLE>
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The following table sets forth operational and financial condition data as
of and for the three months ended September 30, 1998 for analysis by reportable
segment (in thousands).
<TABLE>
<CAPTION>
TRANSIT RAIL PRODUCTS RAIL OTHER/
SERVICES AND SUPPLIES CONSTRUCTION CORPORATE TOTAL
-------- ------------ ------------ --------- -----
<S> <C> <C> <C> <C> <C>
Revenues from external
customers ........................... $ 33,206 $ 5,630 $ 14,491 $ -- $ 53,327
Inter-segmental revenue .............. 0 250 0 -- 250
Depreciation/amortization ............ (7) 76 256 478 803
Segment operating profit (loss) ...... 1,477 775 1,304 (21,960) (18,404)
Segment assets ....................... 50,546 8,715 24,729 146,366 230,356
</TABLE>
The Company's reconciliation of segment totals to enterprise values are as
follows (in thousands):
<TABLE>
<S> <C>
REVENUES:
Total revenues for reportable segments ........................... $ 53,327
Elimination of inter-segment revenues ............................ (250)
---------
Consolidated revenues ............................................ $ 53,077
=========
ASSETS:
Total assets for reportable segments ............................. $ 230,356
Elimination of investments in subsidiaries ....................... (18,658)
---------
Consolidated assets .............................................. $ 211,698
=========
</TABLE>
The following table sets forth operational and financial condition data as
of and for the nine months ended September 30, 1999 for analysis by reportable
segment (in thousands).
<TABLE>
<CAPTION>
TRANSIT RAIL PRODUCTS RAIL OTHER/
SERVICES AND SUPPLIES CONSTRUCTION CORPORATE TOTAL
-------- ------------ ------------ --------- -----
<S> <C> <C> <C> <C> <C>
Revenues from external
customers .......................... $ 183,462 $ 37,504 $ 114,576 $ -- $ 335,542
Inter-segmental revenue ............... 2,706 3,254 3,674 -- 9,634
Depreciation/amortization ............ 222 2,255 3,266 3,498 9,241
Segment operating profit (loss) ...... 18,630 7,619 13,684 (7,729) 32,204
Segment assets ....................... 109,268 36,178 83,385 356,255 585,086
</TABLE>
12
<PAGE> 13
The Company's reconciliation of segment totals to enterprise values are as
follows (in thousands):
<TABLE>
<S> <C>
REVENUES:
Total revenues for reportable segments ........................... $ 335,542
Elimination of inter-segment revenues ............................ (9,634)
---------
Consolidated revenues ............................................ $ 325,908
=========
ASSETS:
Total assets for reportable segments ............................. $ 585,086
Elimination of inter-company receivables/payables ................ (6,121)
Elimination of investments in subsidiaries ....................... (97,556)
---------
Consolidated assets .............................................. $ 481,409
=========
</TABLE>
The following table sets forth operational and financial condition data as
of and for the nine months ended September 30, 1998 for analysis by reportable
segment (in thousands).
<TABLE>
<CAPTION>
TRANSIT RAIL PRODUCTS RAIL OTHER/
SERVICES AND SUPPLIES CONSTRUCTION CORPORATE TOTAL
-------- ------------ ------------ --------- -----
<S> <C> <C> <C> <C> <C>
Revenues from external
Customers .......................... $ 119,586 $ 5,630 $ 14,491 $ -- $ 139,707
Inter-segmental revenue ............... 0 250 0 -- 250
Depreciation/amortization ............ (65) 76 256 478 745
Segment operating profit (loss) ...... 3,886 775 1,304 (21,960) (15,995)
Segment assets ....................... 50,546 8,715 24,729 146,366 230,356
</TABLE>
The Company's reconciliation of segment totals to enterprise values are as
follows (in thousands):
<TABLE>
<S> <C>
REVENUES:
Total revenues for reportable segments ........................... $ 139,707
Elimination of inter-segment revenues ............................ (250)
---------
Consolidated revenues ............................................ $ 139,457
=========
ASSETS:
Total assets for reportable segments ............................. $ 230,356
Elimination of investments in subsidiaries ....................... (18,658)
---------
Consolidated assets .............................................. $ 211,698
=========
</TABLE>
NOTE 6 - CAPITAL STOCK AND STOCK OPTIONS
During the three months ended September 30, 1999, the Company issued
58,334 shares of common stock in lieu of all future additional purchase price
payments relating to the Armcore acquisition.
On August 13, 1998, the Company approved the 1998 Stock Incentive Plan
(the "Plan"), which provides for the granting or awarding of stock options and
stock appreciation rights to non-employee directors, officers and other key
employees (including officers of the Subsidiaries) and consultants. The Plan
reserves for issuance 2,000,000 shares of common stock. In general, the terms
of the option awards (including vesting schedules) will be established by the
Compensation Committee of the Company's board of directors.
During the three months ended September 30, 1999 the Company issued
options to purchase an aggregate of 172,500 shares of common stock to seven
employees of RailWorks. The exercise price of the options was the market price
of the stock on the date of grant.
13
<PAGE> 14
The options expire ten years after the date of grant. Also during the quarter,
the Company issued options to purchase 10,000 shares of common stock to a newly
appointed outside director of RailWorks. The exercise price of the options was
the market price of the stock on the date of grant. The options expire ten
years after the date of grant.
NOTE 7 - FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTOR AND NON-GUARANTOR
SUBSIDIARIES
The Company conducts a significant portion of its business through its
subsidiaries. All of the Company's domestic subsidiaries have fully and
unconditionally guaranteed the Notes ("Subsidiary Guarantors"). The Company's
non-U.S. subsidiaries have not guaranteed the Notes (the "Non-Guarantor
Subsidiaries"). The Notes are effectively subordinated in right of payment to
all indebtedness and other liabilities (including trade payables) of the
Non-Guarantor Subsidiaries.
Set forth below are condensed consolidating financial statements for the
Company, the Subsidiary Guarantors and the Non-Guarantor Subsidiaries as of
September 30, 1999 and for the three and nine months ended September 30, 1999.
The Company has not presented statements of operations for the three or nine
months ended September 30, 1998 or a statement of cash flows for the nine months
ended September 30, 1998 because during such periods all of the Company's
subsidiaries had fully and unconditionally guaranteed the Notes. The equity
method has been used by the Company with respect to investments in subsidiaries.
Separate financial statements for the Subsidiary Guarantors are not presented
based on management's determination that they do not provide additional
information that is material to investors.
14
<PAGE> 15
RAILWORKS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1999
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
RAILWORKS
CORPORATION NON-
(PARENT GUARANTOR GUARANTOR
COMPANY ONLY) SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ ------------ ------------
ASSETS:
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash ......................................... $ 1,546 $ 1,450 $ 2,322 $ -- $ 5,318
Accounts receivable, net ..................... -- 129,560 10,920 (6,121)(a) 134,359
Costs and estimated earnings in excess
of billings on uncompleted contracts ... -- 52,662 -- -- 52,662
Inventories:
Raw Materials .......................... -- 10,278 2,753 -- 13,031
Finished goods ......................... -- 3,393 1,422 -- 4,815
Deferred tax asset ........................... -- 951 -- -- 951
Due (to) from Parent Company ................. 64,377 (59,504) (4,873) -- --
Other current assets ......................... 71 5,570 116 -- 5,757
---------- ---------- ---------- ---------- ----------
Total current assets ............. 65,994 144,360 12,660 (6,121) 216,893
---------- ---------- ---------- ---------- ----------
INVESTMENT IN SUBSIDIARIES ....................... 270,148 -- -- (270,148)(b) --
---------- ---------- ---------- ---------- ----------
PROPERTY, PLANT AND EQUIPMENT .................... 188 70,611 4,402 -- 75,201
LESS ACCUMULATED DEPRECIATION
AND AMORTIZATION ...................... 32 8,752 408 -- 9,192
---------- ---------- ---------- ---------- ----------
PROPERTY, PLANT AND
EQUIPMENT, NET .............................. 156 61,859 3,994 -- 66,009
---------- ---------- ---------- ---------- ----------
OTHER ASSETS:
Excess of cost over acquired net
assets, net of amortization ............ -- 163,593 19,744 -- 183,337
Deferred tax asset .......................... -- 85 -- -- 85
Loans to officers ........................... 6,764 -- -- -- 6,764
Other ....................................... 6,532 1,717 72 -- 8,321
---------- ---------- ---------- ---------- ----------
Total other assets .............. 13,296 165,395 19,816 -- 198,507
---------- ---------- ---------- ---------- ----------
Total ..................... $ 349,594 $ 371,614 $ 36,470 $ (276,269) $ 481,409
========== ========== ========== ========== ==========
</TABLE>
(a) Elimination of inter-company receivables/payables.
(b) Elimination of investment in subsidiaries.
15
<PAGE> 16
RAILWORKS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1999
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
RAILWORKS
CORPORATION NON-
(PARENT GUARANTOR GUARANTOR
COMPANY ONLY) SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Current maturities of long-term debt ............ $ 5,750 $ 6,034 $ -- $ -- $ 11,784
Accounts payable and accrued
liabilities ................................. 3,500 52,780 4,093 (6,121)(a) 54,252
Accrued interest payable ........................ 9,707 -- -- -- 9,707
Accrued payroll and related
withholdings ................................ 18 3,495 143 -- 3,656
Billings in excess of costs and estimated
earnings on uncompleted contracts ........... -- 11,617 1,817 -- 13,434
Other current liabilities ....................... 2,251 10,486 1,559 -- 14,296
---------- ---------- ---------- ---------- ----------
Total current liabilities ................... 21,226 84,412 7,612 (6,121) 107,129
---------- ---------- ---------- ---------- ----------
LONG TERM DEBT .................................... 210,688 16,722 2,100 -- 229,510
EXCESS OF ACQUIRED NET
ASSETS OVER COST .................................. -- 8,491 -- -- 8,491
OTHER LIABILITIES ................................. 4,026 5,730 247 -- 10,003
---------- ---------- ---------- ---------- ----------
Total long-term liabilities ................. 214,714 30,943 2,347 -- 248,004
---------- ---------- ---------- ---------- ----------
Total liabilities ........................ 235,940 115,355 9,959 (6,121) 355,133
---------- ---------- ---------- ---------- ----------
STOCKHOLDERS' EQUITY:
Series A, convertible preferred stock ........... 14 -- -- -- 14
Common stock .................................... 109 2,116 122 (2,208)(b) 139
Additional paid-in capital ...................... 123,973 214,022 23,892 (237,914)(b) 123,973
Accumulated other comprehensive income .......... -- -- 123 -- 123
Retained earnings (deficit) ..................... (10,442) 40,121 2,374 (30,026)(b) 2,027
---------- ---------- ---------- ---------- ----------
Total stockholders' equity (deficit) .... 113,654 256,259 26,511 (270,148) 126,276
---------- ---------- ---------- ---------- ----------
Total ................................. $ 349,594 $ 371,614 $ 36,470 $ (276,269) $ 481,409
========== ========== ========== ========== ==========
</TABLE>
(a) Elimination of inter-company receivables/payables.
(b) Elimination of investment in subsidiaries.
16
<PAGE> 17
RAILWORKS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
RAILWORKS
CORPORATION NON-
(PARENT GUARANTOR GUARANTOR
COMPANY ONLY) SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net Sales ................................... $ -- $ 128,671 $ 12,823 $ (4,069)(a) $ 137,425
Cost of sales ............................... -- 101,331 8,708 (4,069)(a) 105,970
---------- ---------- ---------- ---------- ----------
Gross profit ................................ -- 27,340 4,115 -- 31,455
Selling, general and administrative
Expenses ................................ 3,765 8,534 1,585 -- 13,884
---------- ---------- ---------- ---------- ----------
Income (loss) from operations ............... (3,765) 18,806 2,530 -- 17,571
Equity in earnings of subsidiaries .......... 12,094 -- -- (12,094)(b) --
Interest expense ............................ 5,297 561 55 -- 5,913
Other (income), net ......................... (1,200) 607 (58) -- (651)
---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes ........... 4,232 17,638 2,533 (12,094) 12,309
Income taxes ................................ -- 3,231 1,385 -- 4,616
---------- ---------- ---------- ---------- ----------
Net income (loss) ........................... $ 4,232 $ 14,407 $ 1,148 $ (12,094) $ 7,693
========== ========== ========== ========== ==========
</TABLE>
(a) Elimination of inter-company revenue.
(b) Elimination of equity in earnings subsidiaries.
17
<PAGE> 18
RAILWORKS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
RAILWORKS
CORPORATION NON-
(PARENT GUARANTOR GUARANTOR
COMPANY ONLY) SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net Sales ................................... $ -- $ 309,993 $ 25,548 $ (9,633)(a) $ 325,908
Cost of sales ............................... -- 251,024 16,652 (9,633)(a) 258,043
---------- ---------- ---------- ---------- ----------
Gross profit ................................ -- 58,969 8,896 -- 67,865
Selling, general and administrative
Expenses ................................ 7,286 24,268 4,108 -- 35,662
---------- ---------- ---------- ---------- ----------
Income (loss) from operations ............... (7,286) 34,701 4,788 -- 32,203
Equity in earnings of subsidiaries .......... 24,494 -- -- (24,494)(b) --
Interest expense ............................ 11,152 1,096 122 -- 12,370
Other (income), net ......................... (1,365) (275) (73) -- (1,713)
---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes ........... 7,421 33,880 4,739 (24,494) 21,546
Income taxes ................................ -- 5,714 2,366 -- 8,080
---------- ---------- ---------- ---------- ----------
Net income (loss) ........................... $ 7,421 $ 28,166 $ 2,373 $ (24,494) $ 13,466
========== ========== ========== ========== ==========
</TABLE>
(c) Elimination of inter-company revenue.
(d) Elimination of equity in earnings subsidiaries.
18
<PAGE> 19
RAILWORKS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
RAILWORKS
CORPORATION NON-
(PARENT GUARANTOR GUARANTOR
COMPANY ONLY) SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) ......................................... $ 7,421 $ 28,166 $ 2,373 $ (24,494)(a) $ 13,466
Adjustments to reconcile net income (loss)to net cash
(used in) provided by operating activities:
Depreciation and amortization ......................... 28 8,504 709 -- 9,241
Equity in earnings of subsidiaries .................... (24,494) -- -- 24,494(a) --
Deferred income taxes ................................. -- (81) -- -- (81)
Gain on sale of equipment ............................. -- (16) (9) -- (25)
Changes in operating assets and liabilities:
Accounts receivable and costs and estimated
earnings in excess of billings on uncompleted
contracts ......................................... -- (26,378) (4,852) -- (31,230)
Inventory ........................................... -- 226 345 -- 571
Other current assets ................................ 1,077 754 91 -- 1,922
Accounts payable and accrued liabilities ............ (172) (12,548) 1,267 -- (11,453)
Accrued interest payable ............................ 9,489 -- -- -- 9,489
Accrued payroll and related withholdings ............ 17 (1,204) (53) -- (1,240)
Billings in excess of costs and estimated earnings on
uncompleted contracts ............................ -- (5,869) 1,817 -- (4,052)
Other current liabilities ........................... 1,823 (5,523) 808 -- (2,892)
Other assets ........................................ 557 1,185 (14) -- 1,728
Other liabilities ................................... (739) (7,380) (1,850) -- (9,969)
Due (to) from Parent ................................ (41,915) 37,042 4,873 -- --
--------- --------- ---------- --------- ---------
Net cash (used in) provided by operating
Activities .................................... (46,908) 16,878 5,505 -- (24,525)
--------- --------- ---------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment ........................... -- 2,005 57 -- 2,062
Purchase of equipment and leasehold improvements .......... (103) (10,908) (799) -- (11,810)
Loans to officers ......................................... (5,805) -- -- -- (5,805)
Acquisitions of subsidiaries, net of cash acquire ......... (94,594) -- -- 5,414(b) (89,180)
--------- --------- ---------- --------- ---------
Net cash (used in) provided by investing
activities .................................... (100,502) (8,903) (742) 5,414 (104,733)
--------- --------- ---------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayment)borrowings on revolving line of c ......... (19,300) -- -- -- (19,300)
Payment of loan origination fees .......................... (532) -- -- -- (532)
Proceeds from long-term borrowings ........................ -- 26,476 2,100 -- 288,576
Debt issuance costs ....................................... (5,150) -- -- -- (5,150)
Proceeds from issuance of Senior Subordinated Not ......... 173,938 -- -- -- 173,938
Repayment of long-term borrowings ......................... -- (40,992) (4,933) -- (45,925)
--------- --------- ---------- --------- ---------
Net cash (used in) provided by financing
Activities ................................... 148,956 (14,516) (2,833) -- 131,607
--------- --------- ---------- --------- ---------
EXCHANGE RATE EFFECT ON CASH ............................... -- -- 123 -- 123
NET INCREASE IN CASH ....................................... 1,546 (6,541) 1,930 5,414 2,349
CASH, Beginning of period .................................. -- 7,992 268 (5,414)(b) 2,846
--------- --------- ---------- --------- ---------
CASH, End of period ........................................ $ 1,546 $ 1,451 $ 2,321 $ -- $ 5,318
========= ========= ========== ========= =========
</TABLE>
(a) Elimination of equity in earnings of subsidiary.
(b) Elimination of cash acquired.
19
<PAGE> 20
NOTE 8 - SUBSEQUENT EVENTS
ACQUISITION
On October 22, 1999, the Company acquired all of the outstanding stock of
W. T. Byler Corporation ("Byler") which provides railroad construction and
maintenance, grading, excavation, soil stabilization, concrete paving, asphalt
paving and underground utilities construction to public and private industrial
customers located throughout Texas and the other Gulf coast states.
TERM LOAN
On October 29, 1999, the Company secured a $30 million term loan (the
"Term Loan"). The Term Loan was established in conjunction with the Company's
current revolving credit facility (the "Credit Facility") utilizing identical
collateral. The Term Loan is due and payable in twenty (20) consecutive
quarterly installments ranging from $75,000 to $7.2 million through October 29,
2004. The proceeds of the Term Loan were utilized to pay down the existing
Credit Facility. The interest rate is variable based upon the bank's Base Rate
plus 2% per annum.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
INTRODUCTION
RailWorks Corporation was incorporated on March 20, 1998. Concurrently
with the consummation of the Company's initial public offering (the "Offering")
on August 4, 1998, the Company acquired 14 companies (the "Founding Companies")
each of which has been operating as a separate independent entity providing
rail construction, rehabilitation, repair and maintenance and related products.
For accounting and financial statement purposes, Comstock Holdings, Inc.
("Comstock" one of the Founding Companies) has been identified as the
accounting acquirer consistent with Staff Accounting Bulletin ("SAB") No. 97 of
the Securities and Exchange Commission because its owners received the largest
portion, 34.6%, of the shares of Common Stock issued to the owners of the
Founding Companies in the consolidation. The historical financial statements
prior to August 4, 1998 are those of Comstock. The Balance Sheet as of
September 30, 1999, includes all companies acquired through that date. The
Results of Operations for the three and nine months ended September 30, 1999
and 1998, and the Statement of Cash Flows for the nine months ended September
30, 1999 and 1998, include the results of Comstock for the entire period plus
all other acquired companies from their date of acquisition.
This Quarterly Report on Form 10-Q contains forward-looking statements
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 ("Forward-Looking Statements"), which involve
risks and uncertainties. The Company's actual results may differ significantly
from the results discussed in the Forward-Looking Statements. Factors that
might cause such a difference include the risks described under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998. Such factors may also cause substantial volatility in the
market price of the Company's Common Stock.
The following are some of the factors that could cause the Company's
actual results to differ materially from the expected results described in the
Company's forward looking statements:
- Our operating companies do not have a combined operating
history and, we may be unsuccessful integrating their
decentralized operations.
- We may be unable to complete and finance acquisitions and, if
completed, we may be unable to successfully integrate such
acquisitions.
20
<PAGE> 21
- We may be unable to sustain historical growth rates.
- We may not be able to retain certain customers on which we
have been dependent on in the past.
- We may be adversely impacted by competition, including
competition for customers and new competitors entering the
market.
- Many of our contracts are public sector contracts, which are
subject to the availability of public funds, which in turn
depends upon lengthy and complex budgetary procedures.
- The rail industry is cyclical and the demand for rail system
services and products fluctuates in conjunction with overall
economic conditions.
- Since our workforce is unionized, we may be subject to
unfavorable terms and conditions in future labor agreements.
- We may not be able to attract, train and retain highly
qualified key personnel.
HISTORICAL RESULTS OF OPERATIONS
Three Months Ended September 30, 1999 Compared to Three Months Ended September
30, 1998.
Revenue. Revenue increased $84.3 million, or 158.9%, from $53.1 million
for the three months ended September 30, 1998 to $137.4 million for the three
months ended September 30, 1999. The increase was due to the fact that the 1998
data is that of Comstock alone for one month and all fourteen original Founding
Companies for the other two months in the quarter. The 1999 data includes the
Founding Companies as well as twelve additional companies acquired since the
Offering.
Transit services revenue increased $31.3 million, or 94.3%, from $33.2
million for the three months ended September 30, 1998 to $64.5 million for the
three months ended September 30, 1999. The increase was due to the fact that
the 1998 data is that of Comstock alone for one month and Comstock and one
other Founding Company for the other two months in the quarter. The 1999 data
includes two Founding Companies as well as three additional companies acquired
since the Offering.
Rail products and supplies revenue increased $8.5 million, or 157.4%, from
$5.4 million for the three months ended September 30, 1998 to $13.9 million for
the three months ended September 30, 1999. The increase was due to the fact
that the 1998 data is that of three Founding Companies for the other two months
in the quarter. The 1999 data includes three Founding Companies as well as four
additional companies acquired since the Offering.
Rail construction revenue increased $44.5 million, or 306.9%, from $14.5
million for the three months ended September 30, 1998 to $59.0 million for the
three months ended September 30, 1999. The increase was due to the fact that
the 1998 data is that of nine Founding Companies for the other two months in
the quarter. The 1999 data includes eight Founding Companies as well as five
additional companies acquired since the Offering.
Gross Profit. Gross profit increased $23.2 million or 279.5% from $8.3
million for the three months ended September 30, 1998 to $31.5 million for the
three months ended September 30, 1999. The increase was due to the fact that
the 1998 data is that of Comstock alone for one month and all fourteen original
Founding Companies for the other two months in the quarter. The 1999 data
includes the Founding Companies as well as twelve additional companies acquired
since the Offering. The gross profit percentage increased from 15.7% for the
three months ended September 30, 1998 to 22.9% for the three months ended
September 30, 1999. This increase was the result of higher profitability
associated with the mix and type of work performed during the third quarter of
1999 by the consolidated group as compared to historical consolidated group
margins.
Transit services gross profit increased $11.1 million or 246.7% from $4.5
million for the three months ended September 30, 1998 to $15.6 million for the
three months ended September 30, 1999. The increase was due to the fact that
the 1998 data is that of Comstock alone
21
<PAGE> 22
for one month and Comstock and one other Founding Company for the other two
months in the quarter. The 1999 data includes two Founding Companies as well as
three additional companies acquired since the Offering. The gross profit
percentage increased from 13.6% for the three months ended September 30, 1998
to 24.2% for the three months ended September 30, 1999. This increase was the
result of higher profitability associated with the mix and type of work
performed during the third quarter of 1999 by the consolidated group as
compared to historical consolidated group margins.
Rail products and supplies gross profit increased $4.2 million, or 381.2%,
from $1.1 million for the three months ended September 30, 1998 to $5.3 million
for the three months ended September 30, 1999. The increase was due to the fact
that the 1998 data is that of three Founding Companies for the other two months
in the quarter. The 1999 data includes three Founding Companies as well as four
additional companies acquired since the Offering. The gross profit percentage
increased from 20.4% for the three months ended September 30, 1998 to 38.1% for
the three months ended September 30, 1999. This increase was the result of
higher profitability associated with the mix and type of work performed during
the third quarter of 1999 by the consolidated group as compared to historical
consolidated group margins.
Rail construction gross profit increased $7.9 million, or 292.6%, from
$2.7 million for the three months ended September 30, 1998 to $10.6 million for
the three months ended September 30, 1999. The increase was due to the fact
that the 1998 data is that of nine Founding Companies for the other two months
in the quarter. The 1999 data includes eight Founding Companies as well as five
additional companies acquired since the Offering. The gross profit percentage
decreased from 18.6% for the three months ended September 30, 1998 to 18.0% for
the three months ended September 30, 1999. This decrease was the result of
lower profitability associated with the mix and type of work performed during
the third quarter of 1999 by the consolidated group as compared to historical
consolidated group margins.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $7.4 million or 157.4%, from $4.7 million for
the three months ended September 30, 1998 to $12.1 million for the three months
ended September 30, 1999. The increase is due to the fact that the 1998 data is
that of Comstock alone for one month and all fourteen original Founding
Companies for the other two months in the quarter. The 1999 data includes the
Founding Companies as well as twelve additional companies acquired since the
Offering. Also recorded during the three months ended September 30, 1998 were
one time non-recurring expenses of $20.0 million and IPO transaction fees of
$1.3 million. There were no similar items recorded during the three months
ended September 30, 1999. As a percentage of revenue, selling, general and
administrative expenses remained flat at 8.8% for the three months ended
September 30, 1999 and 1998.
Transit services selling, general and administrative expenses increased
$700,000 or 23.3%, from $3.0 million for the three months ended September 30,
1998 to $3.7 million for the three months ended September 30, 1999. The
increase was due to the fact that the 1998 data is that of Comstock alone for
one month and Comstock and one other Founding Company for the other two months
in the quarter. The 1999 data includes two Founding Companies as well as three
additional companies acquired since the Offering. As a percentage of segment
revenue, selling, general and administrative expenses decreased from 9.0% for
the three months ended September 30, 1998 to 5.7% for the three months ended
September 30, 1999. This percentage decrease was a result of acquired companies
having lower overhead selling, general and administrative cost structures than
Comstock.
Rail products and supplies selling, general and administrative expenses
increased $1.7 million, or 615.9%, from $276,000 for the three months ended
September 30, 1998 to $2.0 million for the three months ended September 30,
1999. The increase was due to the fact that the 1998 data is that of three
Founding Companies for the other two months in the quarter. The 1999 data
includes three Founding Companies as well as four additional companies acquired
since the Offering. As a percentage of segment revenue, selling, general and
administrative expenses increased from 5.6% for the three months ended
September 30, 1998 to 14.4% for the three months ended September 30, 1999. This
percentage increase was a result of acquired companies having higher overhead
selling, general and administrative cost structures than the Founding
Companies.
Rail construction selling, general and administrative expenses increased
$3.0 million, or 250.0%, from $1.2 million for the three months ended September
30, 1998 to $4.2 million for the three months ended September 30, 1999. The
increase was due to the fact that the 1998 data is that of nine Founding
Companies for the other two months in the quarter. The 1999 data includes eight
Founding Companies as well as five additional companies acquired since the
Offering. As a percentage of segment revenue, selling, general and
administrative expenses decreased from 8.3% for the three months ended
September 30, 1998 to 7.1% for the three months ended September 30, 1999. This
percentage increase was a result of acquired companies having lower overhead
selling, general and administrative cost structures than the Founding
Companies.
Corporate selling, general and administrative expenses increased $2.0
million, or 1,000.0%, from $200,000 for the three months ended September 30,
1998 to $2.2 million for the three months ended September 30, 1999. The
increase was due to the fact that the 1998 data is that of an overhead
structure to support all fourteen Founding Companies for two months in the
period. The 1999 data is that of an
22
<PAGE> 23
overhead structure to support all fourteen Founding Companies as well as twelve
additional companies acquired since the Offering. As a percentage of total
revenue, selling, general and administrative expenses increased from .4% for
the three months ended September 30, 1998 to 1.6% for the three months ended
September 30, 1999. The increase was due to the fact that the 1998 data is that
of an overhead structure to support all fourteen Founding Companies for two
months in the period. The 1999 data is that of an overhead structure to support
all fourteen Founding Companies as well as twelve additional companies acquired
since the Offering.
Net Income. Net income increased $26.7 million, from a loss of $19.0
million for the three months ended September 30, 1998 to a profit of $7.7
million for the three months ended September 30, 1999, as a result of the items
mentioned above.
Nine Months Ended September 30, 1999 Compared to Nine Months Ended September
30, 1998.
Revenue. Revenue increased $186.4 million, or 133.6%, from $139.5 million
for the nine months ended September 30, 1998 to $325.9 million for the nine
months ended September 30, 1999. The increase was due to the fact that the 1998
data is that of Comstock alone for seven months and all fourteen original
Founding Companies for the other two months in the period. The 1999 data
includes the Founding Companies as well as twelve additional companies acquired
since the Offering for the entire nine month period.
Transit service revenue increased $61.2 million, or 51.2%, from $119.6
million for the nine months ended September 30, 1998 to $180.8 million for the
nine months ended September 30, 1999. The increase was due to the fact that the
1998 data is that of Comstock alone for seven months and Comstock and one other
Founding Company for the other two months in the period. The 1999 data includes
two Founding Companies as well as three additional companies acquired since the
Offering for the entire nine month period.
Rail products and supplies revenue increased $28.8 million, or 533.3%,
from $5.4 million for the three months ended September 30, 1998 to $34.2
million for the three months ended September 30, 1999. The increase was due to
the fact that the 1998 data is that of three Founding Companies for two months
in the period. The 1999 data includes three Founding Companies as well as four
additional companies acquired since the Offering for the entire nine month
period.
Rail construction revenue increased $96.4 million, or 664.8%, from $14.5
million for the three months ended September 30, 1998 to $110.9 million for the
three months ended September 30, 1999. The increase was due to the fact that
the 1998 data is that of nine Founding Companies for two months in the period.
The 1999 data includes eight Founding Companies as well as five additional
companies acquired since the Offering for the entire nine month period.
Gross Profit. Gross profit increased $50.3 million or 285.5% from $17.6
million for the nine months ended September 30, 1998 to $67.9 million for the
nine months ended September 30, 1999. The increase was due to the fact that the
1998 data is that of Comstock alone for seven months and all fourteen original
Founding Companies for the other two months in the period. The 1999 data
includes the Founding Companies as well as twelve additional companies acquired
since the Offering for the entire nine month period. The gross profit
percentage increased from 12.6% for the nine months ended September 30, 1998 to
20.8% for the nine months ended September 30, 1999. This increase was the
result of higher profitability associated with the mix and type of work
performed during 1999 by the consolidated group as compared to historical
Comstock margins.
Transit services gross profit increased $10.9 million or 77.9% from $14.0
million for the nine months ended September 30, 1998 to $24.9 million for the
nine months ended September 30, 1999. The increase was due to the fact that the
1998 data is that of Comstock alone for seven months and Comstock and one other
Founding Company for the other two months in the period. The 1999 data includes
two Founding Companies as well as three additional companies acquired since the
Offering for the entire nine month period. The gross profit percentage
increased from 11.7% for the nine months ended September 30, 1998 to 13.8% for
the nine months ended September 30, 1999. This increase was the result of
higher profitability associated with the mix and type of work performed during
1999 by the consolidated group as compared to historical consolidated Founding
Company margins.
Rail products and supplies gross profit increased $12.0 million, or
1,090.9%, from $1.1 million for the nine months ended September 30, 1998 to
$13.1 million for the nine months ended September 30, 1999. The increase was
due to the fact that the 1998 data is that of three Founding Companies for two
months in the period. The 1999 data includes three Founding Companies as well
as four additional companies acquired since the Offering for the entire nine
month period. The gross profit percentage increased from 20.4% for the nine
months ended September 30, 1998 to 38.3% for the nine months ended September
30, 1999. This increase was the result of higher profitability associated with
the mix and type of work performed during 1999 by the consolidated group as
compared to historical consolidated Founding Company margins.
23
<PAGE> 24
Rail construction gross profit increased $27.4 million, or 1,096.0%, from
$2.5 million for the nine months ended September 30, 1998 to $29.9 million for
the nine months ended September 30, 1999. The increase was due to the fact that
the 1998 data is that of nine Founding Companies for two months in the period.
The 1999 data includes eight Founding Companies as well as five additional
companies acquired since the Offering for the entire nine month period. The
gross profit percentage increased from 17.2% for the nine months ended
September 30, 1998 to 27.0% for the nine months ended September 30, 1999. This
increase was the result of higher profitability associated with the mix and
type of work performed during 1999 by the consolidated group as compared to
historical consolidated Founding Company margins.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $19.7 million or 169.8%, from $11.6 million
for the nine months ended September 30, 1998 to $31.3 million for the nine
months ended September 30, 1999. The increase is due to the fact that the 1998
data is that of Comstock alone for seven months and all original Founding
Companies for the other two months in the period. The 1999 data includes the
Founding Companies as well as twelve additional companies acquired since the
Offering for the entire nine month period. Also recorded during the nine months
ended September 30, 1998 were one time non-recurring expenses of $20.0 million
and IPO transaction fees of $1.3 million. There were no similar items recorded
during the nine months ended September 30, 1999. As a percentage of revenue,
selling, general and administrative expenses increased from 8.3% for the nine
months ended September 30, 1998 to 9.6% for the nine months ended September 30,
1999. This percentage increase was a result of acquired companies having higher
overhead selling, general and administrative cost structures than Comstock.
Transit services selling, general and administrative expenses increased
$1.8 million or 18.4%, from $9.8 million for the nine months ended September
30, 1998 to $11.6 million for the nine months ended September 30, 1999. The
increase was due to the fact that the 1998 data is that of Comstock alone for
seven months and Comstock and one other Founding Company for the other two
months in the period. The 1999 data includes two Founding Companies as well as
three additional companies acquired since the Offering for the entire nine
month period. As a percentage of segment revenue, selling, general and
administrative expenses decreased from 8.2% for the nine months ended September
30, 1998 to 6.4% for the nine months ended September 30, 1999. This percentage
decrease was a result of acquired companies having lower overhead selling,
general and administrative cost structures than Comstock.
Rail products and supplies selling, general and administrative expenses
increased $5.1 million, or 1,700.0%, from $276,000 for the nine months ended
September 30, 1998 to $5.4 million for the nine months ended September 30,
1999. The increase was due to the fact that the 1998 data is that of three
Founding Companies for two months in the period. The 1999 data includes three
Founding Companies as well as four additional companies acquired since the
Offering for the entire nine month period. As a percentage of segment revenue,
selling, general and administrative expenses increased from 5.6% for the nine
months ended September 30, 1998 to 15.8% for the nine months ended September
30, 1999. This percentage increase was a result of acquired companies having
higher overhead selling, general and administrative cost structures than the
Founding Companies.
Rail construction selling, general and administrative expenses increased
$8.1 million, or 675.0%, from $1.2 million for the nine months ended September
30, 1998 to $9.3 million for the nine months ended September 30, 1999. The
increase was due to the fact that the 1998 data is that of nine Founding
Companies for two months in the period. The 1999 data includes eight Founding
Companies as well as five additional companies acquired since the Offering for
the entire nine month period. As a percentage of segment revenue, selling,
general and administrative expenses increased from 8.3% for the nine months
ended September 30, 1998 to 8.4% for the nine months ended September 30, 1999.
This percentage increase was a result of acquired companies having higher
overhead selling, general and administrative cost structures than the Founding
Companies.
Corporate selling, general and administrative expenses increased $4.7
million, or 1,566.7%, from $300,000 for the nine months ended September 30,
1998 to $5.0 million for the nine months ended September 30, 1999. The increase
was due to the fact that the 1998 data is that of an overhead structure to
support all fourteen Founding Companies for two months in the period. The 1999
data is that of an overhead structure to support all fourteen Founding
Companies as well as twelve additional companies acquired since the Offering
for the entire nine month period. As a percentage of total revenue, selling,
general and administrative expenses increased from .2% for the nine months
ended September 30, 1998 to 1.5% for the nine months ended September 30, 1999.
The increase was due to the fact that the 1998 data is that of an overhead
structure to support all fourteen Founding Companies. The 1999 data is that of
an overhead structure to support all fourteen Founding Companies as well as
twelve additional companies acquired since the Offering.
Net Income. Net income increased $31.4 million, from a loss of $17.9
million for the nine months ended September 30, 1998 to a profit of $13.5
million for the nine months ended September 30, 1999, as a result of the items
mentioned above.
24
<PAGE> 25
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999 RailWorks had working capital of approximately
$109.8 million, a $42.4 million increase from December 31, 1998 when working
capital was $67.4 million. Net cash used in operating activities was
approximately $24.5 million for the nine months ended September 30, 1999. Net
cash used in investing activities was approximately $104.7 million for the nine
months ended September 30,1999 which included $89.2 million of cash for
acquisitions. Net cash provided by financing activities for the nine months
ended September 30, 1999 was approximately $131.6 million, which included
$173.9 million from the issuance of Notes. Also included in financing
activities was $28.6 million from the issuance of long-term borrowings, offset
by debt repayment of approximately $45.9 million from long-term borrowings and
net repayments of $19.3 million on the RailWorks Credit Facility.
As of October 31, 1999, RailWorks had borrowings outstanding of $64.0
million pursuant to the Credit Facility and $2.7 million on the Swingline. The
Company has $36.2 million remaining in available borrowings under the Credit
Facility. Availability of borrowings will be subject to a borrowing base
formula. The Credit Facility is secured by a first lien on all of the capital
stock of RailWorks' subsidiaries and on all accounts receivable of RailWorks
and its domestic subsidiaries. The credit agreement (the "Credit Agreement")
governing the Credit Facility contains a negative pledge on all other assets of
RailWorks and its subsidiaries and other usual and customary covenants and
events of default for transactions of the type contemplated by the Credit
Facility.
The Company believes that funds generated from operations, together with
existing cash and borrowings under the amended and expanded Credit Facility,
will be sufficient to finance its current operations, planned capital
expenditures, pending acquisitions and internal growth for the foreseeable
future. If the Company were to make a significant acquisition for cash, it may
be necessary for the Company to obtain additional debt or equity financing.
RailWorks may also finance future acquisitions with shares of common stock.
YEAR 2000
The Company has developed a plan to address year 2000 issues. The plan
addresses three main areas: (a) information systems; (b) embedded chips; and
(c) supply chain readiness (including customers as well as inventory and
non-inventory suppliers). To oversee the process, the Company has established a
committee comprised of accounting and information systems personnel who are
reporting regularly to the board of directors and the Audit Committee.
The evaluation of the Company's state of readiness relating to its year
2000 issues is a continual process emphasizing a constant awareness of computer
systems and business relationships that maybe sensitive to year 2000 issues.
Management has categorized the activities necessary to solve the year 2000
issues into the identification and assessment phase, the remediation phase, and
the testing and contingency planning phase. The identification and assessment
phase includes conducting a comprehensive inventory and evaluation of all of
the Company's IT systems and non-IT electronic equipment (collectively referred
to as computer programs) to identify those computer programs that contain date
sensitive features. Those computer programs that contain such features are then
further evaluated and categorized as either mission critical or non-mission
critical based upon their relative importance to the uninterrupted continuation
of the Company's daily operations. Mission critical computer programs gain top
priority when allocating the available resources to solve year 2000 issues.
To date, the Company has substantially completed the identification,
assessment, remediation, and testing of its internal information systems and
other equipment with date sensitive operating controls, such as manufacturing
equipment, HVAC, security and other similar systems.
The Company has also been in communication with hardware and software
vendors with whom the Company transacts business, third parties with whom the
Company exchanges information electronically, major or sole source suppliers,
government agencies, and major customers. The focus of these communications is
to determine the state of readiness of each of these third parties with respect
to their own year 2000 issues and how their progress may impact the Company.
The majority of responses received from third party inquiries indicate that they
are working on their year 2000 issues, but the responses do not provide
specific details. Follow-up action related to material third party inquiries
and responses is expected to continue in 1999 as these material third parties
progress in their own year 2000 readiness projects. The Company has no means of
ensuring that third parties with whom it deals will be year 2000 compliant or
that the information obtained from such third parties regarding year 2000
compliance will prove to be accurate.
While the Company's management anticipates that all computer systems have
been assessed, remedied and tested, there can be no assurance that all will be
completely error free and that such programs will be compliant by such dates.
We rely on third party software, equipment and services to conduct our
business. While the Company believes it has made reasonable efforts to address
this issue, it has no
25
<PAGE> 26
means of ensuring that third parties with whom it deals will be year 2000
compliant or that the information obtained from such third parties regarding
year 2000 compliance will prove to be accurate.
At this stage of the process, the Company believes that it is difficult
to specifically identify the most reasonably likely worst case year 2000
scenario. The failure to correct a material year 2000 problem or the inability
of any key customer, key supplier or a governmental agency to make the
necessary computer system changes on a timely basis, the inaccuracy of
responses received from these third parties, and the potential shortage of
skilled human resources to install and test upgraded software and equipment
could result in interruptions to Company operations or business activities. Due
to the general uncertainty inherent in the year 2000 issue, particularly as it
relates to the readiness of the Company's key customers and suppliers, and of
governmental agencies, the Company cannot ascertain at this time whether the
consequences of the year 2000 failures will have a material impact on the
Company's results of operations, liquidity or financial condition. Insurance
coverage available at this time is limited to business interruption resulting
from fire, explosion, or related perils which are caused by a year 2000 system
failure.
Based upon the Company's current estimates, incremental out-of-pocket
costs of its year 2000 program are expected to not exceed $50,000. As of
September 30, 1999, approximately $40,000 of these funds had been spent. These
costs are expected to include limited use of third party consultants,
remediation of existing computer software and/or replacement. These costs do
not include internal management time and the deferral of other projects, the
effects of which are not expected to be material to the Company's results of
operations or financial condition.
The Company's year 2000 efforts are ongoing and its overall plan, as well
as the consideration of contingency plans, will continue to evolve, as new
information becomes available. While the Company anticipates continuity of its
business activities, that continuity will be dependent upon its ability, and
the ability of third parties upon whom the Company relies on directly or
indirectly, to be year 2000 compliant.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is subject to market risk associated principally with changes
in interest rates. Interest rate exposure has been principally limited to the
$30.0 million of long-term debt under the Company's revolving credit agreement
outstanding at September 30, 1999. All of that debt is priced at interest rates
that float with market rates. A 50 basis point movement in the interest rate on
the floating rate debt would have resulted in an approximate $150,000
annualized increase or decrease in interest expense and cash flows. The
remaining debt is fixed rate debt. The Company will from time to time enter
into interest rate swaps on its debt, when it believes there is a clear
financial advantage for doing so. The Company does not use derivative financial
or commodity instruments for trading purposes and the use of such instrument is
subject to strict approval levels by senior officers. Typically, the use of
such derivative instruments is, in the aggregate, not material to the company's
financial position, results of operations and cash flows. At September 30, 1999
there were no swaps outstanding.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
(i) Changes in Securities
None.
(ii) Use of Proceeds
None.
(iii) Recent Sales of Unregistered Securities
26
<PAGE> 27
During the three months ended September 30, 1999, 58,334 shares of
unregistered Common Stock were issued to the owners of Armcore,
Inc., as partial consideration for 100% of the outstanding stock
in that acquisition. The stock was issued in reliance on the
exemption from registration under Section 4(2) of the Securities
Act of 1933.
During the three months ended September 30, 1999 the Company
issued options to purchase 172,500 shares of common stock to seven
employees of RailWorks. The exercise price of the options was the
market price of the stock on the date of grant. The options expire
ten years after the date of grant. Also during the quarter, the
Company issued options to purchase 10,000 shares of common stock
to the newly appointed outside director of RailWorks. The exercise
price of the options was the market price of the stock on the date
of grant. The options expire ten years after the date of grant.
Item 3. Default Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
Peter A. Pasch resigned as director effective August, 1999.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit List:
<TABLE>
<S> <C>
4.1 -- Form of Supplemental Indenture adding Subsidiary Guarantors.
10.1 -- Amended and Restated Credit Agreement dated August 5, 1999 among RailWorks Corporation
and of its Subsidiaries, the Lenders named therein, Bank of America, N.A., as Domestic
Administrative Agent, Bank of America Canada, as Canadian Administrative Agent and
First Union National Bank, as Documentation Agent.
10.2 -- Amendment No. 1 to the Amended and Restated Credit Agreement dated as of September 29, 1999
by and among RailWorks Corporation and Certain of its Subsidiaries, the Lenders named
therein, Bank of America, N.A., as Domestic Administrative Agent and Bank of America
Canada, as Canadian Administrative Agent.
10.3 -- Amended and Restated Employment Agreement, dated August 4, 1999 between Michael R. Azarela
and RailWorks Corporation.
10.4 -- Amended and Restated Employment Agreement, dated August 4, 1999 between John G. Larkin and
RailWorks Corporation.
10.5 -- Amendment to RailWorks Corporation 1998 Stock Incentive Plan effective January 1, 1999.
27.1 Financial Data Schedule (for SEC filing purposes only)
</TABLE>
b) The Company filed a Current Report on Form 8-K on
November 5, 1999 reporting the consummation of the
acquisition of W. T. Byler, Inc.
27
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RailWorks Corporation
/s/ Michael R. Azarela
-----------------------------------
By: Michael R. Azarela
Executive Vice President and
Chief Financial Officer
Date: November 12, 1999
28
<PAGE> 29
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGE
- ------ ------- -------------
<S> <C> <C>
4.1 -- Form of Supplemental Indenture adding Subsidiary
Guarantors.
10.1 -- Amended and Restated Credit Agreement dated August 5,
1999 among RailWorks Corporation and Certain of its
Subsidiaries, the Lenders named therein, Bank of America,
N.A., as Domestic Administrative Agent, Bank of America
Canada, as Canadian Administrative Agent and First Union
National Bank, as Documentation Agent.
10.2 -- Amendment No. 1 to the Amended and Restated Credit
Agreement dated as of September 29, 1999 by and among
RailWorks Corporation and Certain of its Subsidiaries, the
Lenders named therein, Bank of America, N.A., as Domestic
Administrative Agent and Bank of America Canada, as
Canadian Administrative Agent.
10.3 -- Amended and Restated Employment Agreement, dated
August 4, 1999 between Michael R. Azarela and RailWorks
Corporation.
10.4 -- Amended and Restated Employment Agreement, dated August
4, 1999 between John G. Larkin and RailWorks Corporation.
10.5 -- Amendment to RailWorks Corporation 1998 Stock Incentive
Plan effective January 1, 1999.
27.1 Financial Data Schedule (for SEC filing purposes only)
</TABLE>
29
<PAGE> 1
EXHIBIT 4.1
---------------------------------------------------------
SUPPLEMENTAL INDENTURE
Dated as of _________, ____
to the
INDENTURE
among
RAILWORKS CORPORATION,
the GUARANTORS named therein
and
FIRST UNION NATIONAL BANK, as Trustee
Dated as of April 7, 1999
---------------------------------------------------------
<PAGE> 2
SUPPLEMENTAL INDENTURE, dated as of ________, ____ (the "Supplemental
Indenture"), among RailWorks Corporation, a Delaware corporation (the
"Company"), each of the Guarantors named herein, as guarantors (the
"Guarantors"), and First Union National Bank, as trustee (the "Trustee"), to the
Indenture (the "Indenture") dated as of April 7, 1999 among the Company, the
Guarantors and the Trustee. All capitalized terms used herein and not otherwise
defined have the meanings assigned to them in the Indenture.
WHEREAS, subsequent to the date of the Indenture, the Company has
acquired a domestic Restricted Subsidiary having total assets with a book value
in excess of $________ (the "Acquired Subsidiary");
WHEREAS, pursuant to Section 4.19 of the Indenture, the Company and the
Acquired Subsidiary are required to execute and deliver to the Trustee a
supplemental indenture pursuant to which the Acquired Subsidiary shall
unconditionally guarantee on a senior subordinated basis all of the Company's
obligations under the Notes and the Indenture on the terms set forth in the
Indenture; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Company, the
Guarantors and the Trustee together may amend or supplement the Indenture
without the consent of the Holders of the Notes to make provisions with respect
to matters arising under the Indenture so long as the changes do not adversely
affect the rights of the Holders in any material respect;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Guarantee of Company's Obligations Under the Notes and the
Indenture
The Acquired Subsidiary hereby fully and unconditionally, jointly and
severally with all other Guarantors, guarantees, on an unsecured senior
subordinated basis subject to Article Twelve of the Indenture, all of the
Company's obligations under the Notes and the Indenture on the terms set forth
in the Indenture. The Acquired Subsidiary hereby agrees that it shall be a
"Guarantor" for all purposes under the Indenture.
2. No Other Changes.
Except as expressly supplemented hereby, all of the terms and
provisions of the Indenture shall continue in full force and effect. All
references to "Indenture" in the Indenture shall be understood to refer to the
Indenture, as supplemented by this Supplemental Indenture.
3. Ratification of Indenture.
The Indenture, as supplemented by this Supplemental Indenture, is in
all respects ratified and confirmed, and this Supplemental Indenture shall be
deemed part of the Indenture in the manner and to the extent herein and therein
provided.
<PAGE> 3
4. Governing Law.
THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL
INDENTURE.
5. Severability.
In case any one or more of the provisions in this Supplemental
Indenture shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
6. Counterparts.
All parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together shall
represent the same agreement.
2
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, all as of the date first written above.
RAILWORKS CORPORATION
By:
-----------------------------------------------
Name: Michael Azarela
Title: Executive Vice President
GUARANTORS:
ALPHA-KEYSTONE ENGINEERING, INC.,
as guarantor
By:
-----------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
ARMCORE ACQUISITION CORP.,
as guarantor
By:
-----------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
ARMCORE RAILROAD CONTRACTORS, INC.
as guarantor
By:
-----------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
ANNEX RAILROAD BUILDERS, INC.,
as guarantor
By:
-----------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
S-1
<PAGE> 5
BIRMINGHAM WOOD, INC.,
as guarantor
By:
-----------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
COMSTOCK HOLDINGS, INC.,
as guarantor
By:
-----------------------------------------------
Name: C. William Moore
Title: President
L.K. COMSTOCK & COMPANY, INC.,
as guarantor
By:
-----------------------------------------------
Name: C. William Moore
Title: Vice Chairman
COMTRAK CONSTRUCTION, INC.,
as guarantor
By:
-----------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
CONDON BROTHERS, INC.,
as guarantor
By:
-----------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
S-2
<PAGE> 6
CPI CONCRETE PRODUCTS INCORPORATED,
as guarantor
By:
------------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
EARL CAMPBELL CONSTRUCTION COMPANY, INC.,
as guarantor
By:
------------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
FCM RAIL, LTD., as guarantor
By:
------------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
F&V METRO RW, INC., as guarantor
By:
------------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
RWKS TRANSIT, INC.,
as guarantor
By:
------------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
S-3
<PAGE> 7
GANTREX RW, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
GANTREX CORPORATION,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
GANTREX SYSTEMS, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
H.P. MCGINLEY INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
IMPULSE ENTERPRISES OF NEW YORK, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
S-4
<PAGE> 8
KENNEDY RAILROAD BUILDERS, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
M-TRACK ENTERPRISES, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
McCORD TREATED WOOD, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
MERIT RAILROAD CONTRACTORS, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
MIDWEST CONSTRUCTION SERVICES, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
S-5
<PAGE> 9
MID WEST RW, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
MID WEST RAILROAD CONSTRUCTION &
MAINTENANCE CORPORATION OF
WYOMING, as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
MINNESOTA RAILROAD SERVICE, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
NEOSHO INCORPORATED,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
NEOSHO CONSTRUCTION COMPANY, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
S-6
<PAGE> 10
NEOSHO INTERNATIONAL, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
NEOSHO ASIA, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
NEOSHO CENTRAL AMERICA, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
NEOSHO CONTRACTORS, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
NEW ENGLAND RAILROAD CONSTRUCTION
CO., INC., as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
S-7
<PAGE> 11
NORTHERN RAIL SERVICE AND SUPPLY
COMPANY, INC., as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
PARSONS RAILWAY SHOPS, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
R. & M. B. RAIL CO., INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
RAILCORP, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
RAILROAD SERVICE, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
S-8
<PAGE> 12
RAILROAD SPECIALTIES, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
RAILWORKS CANADA, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
SHELDON ELECTRIC, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
SOUTHERN INDIANA WOOD
PRESERVING CO., INC., as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
U.S. TRACKWORKS, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
S-9
<PAGE> 13
U.S. RAILWAY SUPPLY, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
V & R ELECTRICAL CONTRACTORS, INC.
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
WM. A. SMITH CONSTRUCTION CO. INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
WM. A. SMITH RERAILING SERVICES, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
WOOD WASTE ENERGY, INC.,
as guarantor
By:
---------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
S-10
<PAGE> 14
W.T. BYLER, INC.,
as guarantor
By:
----------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President
ACQUIRED SUBSIDIARY:
[NAME OF ACQUIRED SUBSIDIARY]
By:
----------------------------------------------
Name:
Title:
TRUSTEE:
FIRST UNION NATIONAL BANK,
as Trustee
By:
----------------------------------------------
Name:
Title:
S-11
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 5, 1999
among
RAILWORKS CORPORATION
and
CERTAIN OF ITS SUBSIDIARIES,
THE LENDERS NAMED HEREIN,
BANK OF AMERICA, N.A.,
as Domestic Administrative Agent,
BANK OF AMERICA CANADA,
as Canadian Administrative Agent
AND
FIRST UNION NATIONAL BANK,
as Documentation Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1 DEFINITIONS.................................................................................1
1.1 Definitions..............................................................................1
1.2 Computation of Time Periods.............................................................33
1.3 Accounting Terms; Certain Calculations..................................................33
SECTION 2 CREDIT FACILITIES..........................................................................34
2.1 Commitments.............................................................................34
2.2 Method of Borrowing.....................................................................40
2.3 Interest................................................................................42
2.4 Repayment...............................................................................42
2.5 Notes...................................................................................43
2.6 Additional Provisions relating to Letters of Credit.....................................43
2.7 Additional Provisions relating to Swingline Loans.......................................47
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES.............................................53
3.1 Default Rate............................................................................53
3.2 Extension and Conversion................................................................54
3.3 Prepayments.............................................................................54
3.4 Termination and Reduction of Commitments................................................55
3.5 Fees....................................................................................56
3.6 Capital Adequacy........................................................................57
3.7 Inability To Determine Interest Rate....................................................58
3.8 Illegality..............................................................................59
3.9 Requirements of Law.....................................................................59
3.10 Taxes..................................................................................60
3.11 Indemnity..............................................................................62
3.12 Certain Limitations....................................................................63
3.15 Pro Rata Treatment.....................................................................64
3.16 Sharing of Payments....................................................................65
3.17 Payments, Computations, Etc............................................................67
3.18 Evidence of Debt.......................................................................69
SECTION 4 GUARANTY...................................................................................70
4.1 The Guarantee...........................................................................70
4.2 Obligations Unconditional...............................................................71
4.3 Reinstatement...........................................................................72
4.4 Certain Additional Waivers..............................................................73
4.5 Remedies................................................................................73
4.6 Rights of Contribution..................................................................73
4.7 Continuing Guarantee....................................................................74
SECTION 5 CONDITIONS.................................................................................74
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
5.1 Conditions to Closing...................................................................74
5.2 Conditions to All Extensions of Credit..................................................76
SECTION 6 REPRESENTATIONS AND WARRANTIES.............................................................77
6.1 Financial Condition.....................................................................77
6.2 No Changes or Restricted Payments.......................................................77
6.3 Organization; Existence; Compliance with Law............................................78
6.4 Power; Authorization; Enforceable Obligations...........................................78
6.5 No Legal Bar............................................................................78
6.6 No Material Litigation..................................................................79
6.7 No Default..............................................................................79
6.8 Ownership of Property; Liens............................................................79
6.9 Intellectual Property...................................................................79
6.10 No Burdensome Restrictions.............................................................80
6.11 Taxes..................................................................................80
6.12 ERISA..................................................................................80
6.13 Governmental Regulations, Etc..........................................................81
6.14 Subsidiaries...........................................................................82
6.15 Purpose of Extensions of Credit........................................................82
6.16 Environmental Matters..................................................................82
6.17 Year 2000 Compliance...................................................................83
6.18 Canadian Pension Plans.................................................................83
SECTION 7 AFFIRMATIVE COVENANTS......................................................................84
7.1 Financial Statements....................................................................84
7.2 Certificates; Other Information.........................................................85
7.3 Notices.................................................................................86
7.4 Payment of Obligations..................................................................88
7.5 Conduct of Business and Maintenance of Existence........................................88
7.6 Maintenance of Property; Insurance......................................................88
7.7 Inspection of Property; Books and Records; Discussions..................................89
7.8 Environmental Laws......................................................................89
7.9 Financial Covenants.....................................................................90
7.10 Administrative Fees....................................................................90
7.11 Additional Guaranties and Stock Pledges................................................90
7.12 Ownership of Subsidiaries..............................................................93
7.13 Use of Proceeds........................................................................93
SECTION 8 NEGATIVE COVENANTS.........................................................................94
8.1 Indebtedness............................................................................94
8.2 Liens...................................................................................96
8.3 Consolidation, Merger, Amalgamation Divestiture, etc....................................96
8.4 Acquisitions............................................................................97
8.5 Investments.............................................................................98
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
8.6 Ownership of Equity Interests...........................................................98
8.7 Fiscal Year.............................................................................98
8.8 Restricted Payments.....................................................................98
8.9 Sale Leasebacks.........................................................................98
8.10 No Further Negative Pledges............................................................98
SECTION 9 EVENTS OF DEFAULT.........................................................................100
9.1 Events of Default......................................................................100
9.2 Acceleration; Remedies.................................................................103
9.3 Conversion and Redenomination of Certain Loans; Purchase of Risk Participation.........104
SECTION 10 AGENCY PROVISIONS........................................................................105
10.1 Appointment...........................................................................105
10.2 Delegation of Duties..................................................................106
10.3 Exculpatory Provisions................................................................106
10.4 Reliance on Communications............................................................106
10.5 Notice of Default.....................................................................107
10.6 Non-Reliance on Administrative Agent and Other Lenders................................107
10.7 Indemnification.......................................................................108
10.8 Administrative Agent in its Individual Capacity.......................................108
10.9 Successor Administrative Agent........................................................109
SECTION 11 MISCELLANEOUS............................................................................109
11.1 Notices...............................................................................109
11.2 Right of Set-Off......................................................................111
11.3 Benefit of Agreement..................................................................111
11.4 No Waiver; Remedies Cumulative........................................................114
11.5 Payment of Expenses, etc..............................................................114
11.6 Amendments, Waivers and Consents......................................................115
11.7 Counterparts..........................................................................117
11.8 Headings..............................................................................117
11.9 Survival..............................................................................117
11.10 Governing Law; Submission to Jurisdiction; Venue.....................................117
11.11 Severability.........................................................................118
11.12 Entirety.............................................................................118
11.13 Binding Effect; Termination..........................................................119
11.14 Confidentiality......................................................................119
11.15 Source of Funds......................................................................119
11.16 Judgment Currency....................................................................120
11.17 Conflict.............................................................................121
</TABLE>
iii
<PAGE> 5
SCHEDULES
<TABLE>
<S> <C>
Schedule 2.1 Lenders and Commitments
Schedule 2.2(a)(i) Form of Notice of Borrowing for Domestic Revolving Loans
Schedule 2.2(a)(ii) Form of Notice of Request for Letter of Credit
Schedule 2.2(a)(iii) Form of Notice of Borrowing for Swingline Loans
Schedule 2.2(a)(iv) Form of Notice of Borrowing for Canadian Revolving Loans
Schedule 2.2(a)(v) Form of Notice of Borrowing for Bankers' Acceptances
Schedule 2.5-1 Form of Domestic Revolving Note
Schedule 2.5-2 Form of Canadian Revolving Note
Schedule 2.6(b) Existing Letters of Credit
Schedule 3.2 Form of Notice of Extension/Conversion
Schedule 5.1(f)(iii)-1 Form of Officer's Certificate
Schedule 5.1(f)(iii)-2 Form of Officer's Certificate
Schedule 5.1(f)(iii)-3 Form of Officer's Certificate
Schedule 6.8 Existing Liens
Schedule 6.14 Subsidiaries
Schedule 7.2(b) Form of Officer's Compliance Certificate
Schedule 7.11-1 Form of Joinder Agreement for Domestic Subsidiaries
Schedule 7.11-2 Form of Joinder Agreement for Canadian Subsidiaries
Schedule 8.1 Existing Indebtedness
Schedule 11.1 Lenders and Addresses
Schedule 11.3(b) Form of Assignment and Acceptance
</TABLE>
iv
<PAGE> 6
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 5, 1999
(the "Credit Agreement"), is by and among RAILWORKS CORPORATION, a Delaware
corporation, certain of its Subsidiaries identified herein, the lenders
identified herein, FIRST UNION NATIONAL BANK, as documentation agent for the
Lenders, BANK OF AMERICA CANADA, as administrative agent for the Canadian
Lenders (in such capacity, the "Canadian Administrative Agent") and BANK OF
AMERICA, N.A., as administrative agent for the Domestic Lenders (in such
capacity, the "Domestic Administrative Agent").
W I T N E S S E T H
WHEREAS, a $75 million revolving credit facility has been established
in favor of RailWorks Corporation pursuant to the terms of that Credit Agreement
dated as of August 4, 1998 (as amended and modified, the "Original Credit
Agreement") among RailWorks Corporation, as borrower, the subsidiaries
identified therein, as guarantors, the lenders identified therein, First Union
National Bank, as Documentation Agent, and NationsBank, N.A. (now known as Bank
of America, N.A.), as Administrative Agent;
WHEREAS, RailWorks Corporation has requested certain modifications to
the credit facility established pursuant to the Original Credit Agreement,
including, among other things, an increase in the size of the facility to $90
million and the establishment of a $15 million Canadian credit facility;
WHEREAS, the Lenders have agreed to the requested modifications on the
terms and conditions provided herein;
WHEREAS, this Credit Agreement is given in amendment to, restatement of
and substitution for the Original Credit Agreement;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall
have the meanings specified below unless the context otherwise requires:
"Acceptance Fee" shall have the meaning provided in Section
3.5(c).
<PAGE> 7
"Acquisition" means any transaction in which the Domestic
Borrower or any of its Subsidiaries directly or indirectly (i) acquires
any Property with which an ongoing business is conducted or is to be
conducted, (ii) acquires all or substantially all of the assets of any
Person or division thereof, whether through a purchase of assets,
merger or otherwise, (iii) acquires (in one transaction or as the most
recent transaction in a series of transactions) control of at least a
majority of the Voting Stock of a corporation, other than the
acquisition of Voting Stock of a wholly-owned Subsidiary solely in
connection with the organization and capitalization of that Subsidiary
by the Domestic Borrower or another Credit Party, or (iv) acquires
control of more than 50% ownership interest in any partnership, joint
venture or limited liability company.
"Administrative Agents" means the Domestic Administrative
Agent and the Canadian Administrative Agent.
"Administrative Agent's Fee Letter" means that certain letter
agreement, dated as of May 14, 1999, between the Domestic
Administrative Agent and the Domestic Borrower, as amended, modified,
supplemented or replaced from time to time.
"Administrative Agent's Fees" shall have the meaning assigned
to such term in Section 3.5(d).
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person. For purposes of
this definition, "control" when used with respect to any Person means
the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agency Services Address" means Bank of America, N.A.,
NC1-001-15-04, 101 North Tryon Street, Charlotte, North Carolina 28255,
Attn: Agency Services, or such other address as may be identified by
written notice from the Domestic Administrative Agent to the Domestic
Borrower.
"Agents" means the Domestic Administrative Agent, the Canadian
Administrative Agent and the Collateral Agent.
"Aggregate Canadian Revolving Committed Amount" shall have the
meaning assigned to such term in Section 2.1(d).
"Aggregate Domestic Revolving Committed Amount" shall have the
meaning assigned to such term in Section 2.1(a).
"Applicable BA Discount Rate" means (i) with respect to any
Canadian Lender named on Schedule I to the Bank Act (Canada), as
applicable to a Bankers' Acceptance
2
<PAGE> 8
being purchased or otherwise funded by such Canadian Lender on any day,
the respective percentage discount rate per annum for a Canadian Dollar
bankers' acceptance for the term and face amount comparable to the term
and face amount of such Bankers' Acceptance that appears on the Reuters
Screen CDOR Page as of 10:00 A.M. (Toronto, Ontario time) on the date
of determination as reported by the Canadian Administrative Agent;
provided, however, that if on such day no rate appears on the Reuters
Screen CDOR Page as contemplated, the rate for such day shall be the
average (as determined by the Canadian Administrative Agent) of the
respective discount rates per annum (expressed to two decimal places
and rounded upwards, if necessary, to the nearest 1/100th of 1%) quoted
to the Canadian Administrative Agent by each of the five largest
Canadian chartered banks named on Schedule I to the Bank Act (Canada)
(each a "Schedule I Reference Bank") as the percentage discount rate at
which such Schedule I Reference Bank would, in accordance with its
normal practices, at or about 10:00 A.M. (Toronto, Ontario time) on
such day, be prepared to purchase bankers' acceptances accepted by such
Schedule I Reference Bank having a term and a face amount comparable to
the term and face amount of such Bankers' Acceptance, and (ii) with
respect to any Canadian Lender named on Schedule II to the Bank Act
(Canada) and any Canadian Lender which is not named on either Schedule
I or Schedule II to the Bank Act (Canada), as applicable to a Bankers'
Acceptance being purchased or otherwise funded by such Canadian Lender
on any day, the lesser of (x) the percentage discount rate per annum
(expressed to two decimal places and rounded upward, if necessary, to
the nearest 1/100th of 1%) quoted to the Canadian Administrative Agent
by Bank of America Canada (the "Schedule II Reference Bank") as the
percentage discount rate at which the Schedule II Reference Bank would,
in accordance with its normal practices, at or about 10:00 A.M.
(Toronto, Ontario time) on such day, be prepared to purchase bankers'
acceptances accepted by the Schedule II Reference Bank having a term
and a face amount comparable to the term and face amount of such
Bankers' Acceptance and (y) the rate per annum that is 10 basis points
per annum in excess of the rate determined pursuant to clause (i) of
this definition in connection with the relevant issuance of Bankers'
Acceptances.
"Applicable Percentage" means, for any day, the rate per annum
set forth below opposite the applicable Consolidated Total Leverage
Ratio then in effect, it being understood that the Applicable
Percentage for (i) Base Rate Loans shall be the percentage set forth
under the column "Applicable Percentage for Base Rate Loans", (ii)
Eurodollar Loans shall be the percentage set forth under the column
"Applicable Percentage for Eurodollar Loans, Bankers' Acceptances and
Letter of Credit Fee", (iii) the Letter of Credit Fee shall be the
percentage set forth under the column "Applicable Percentage for
Eurodollar Loans, Bankers' Acceptances and Letter of Credit Fee", (iv)
the Domestic Commitment Fee and the Canadian Commitment Fee shall be
the percentage set forth under the column "Commitment Fee", and (v) the
Acceptance Fee for Bankers' Acceptances shall be the percentage set
forth under the column "Applicable Percentage for Eurodollar Loans,
Bankers' Acceptances and Letter of Credit Fee":
3
<PAGE> 9
<TABLE>
<CAPTION>
Applicable
Percentage for
Eurodollar Loans,
Bankers'
Pricing Consolidated Acceptances and Applicable Percentage Applicable Percentage
Level Total Leverage Ratio Letter of Credit Fee for Base Rate Loans for Commitment Fee
----- -------------------- -------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
I [ ] 3.5 2.50% 1.00% 0.50%
II [ ] 3.0 but < 3.5 2.25% 0.75% 0.50%
III [ ] 2.5 but < 3.0 2.00% 0.50% 0.375%
IV [ ] 2.0 but < 2.5 1.75% 0% 0.30%
V [ ] 1.5 but < 2.0 1.50% 0% 0.30%
VI < 1.5 1.25% 0% 0.25%
</TABLE>
The Applicable Percentage shall be determined and adjusted quarterly on
the date (each a "Rate Determination Date") five (5) Business Days
after the date by which the annual and quarterly compliance
certificates and related financial statements and information are
required in accordance with the provisions of Sections 7.1(a) and (b)
and Section 7.2(b), as appropriate; provided that:
(i) from the Closing Date until the Rate
Determination Date occurring in connection with delivery of
the financial statements for the fiscal quarter ending June
30, 1999, the Applicable Percentages shall be based on Pricing
Level II; and
(ii) in the event an annual or quarterly
compliance certificate and related financial statements and
information are not delivered timely to the Agency Services
Address by the date required by Sections 7.1(a) and (b) and
Section 7.2(b), as appropriate, the Applicable Percentages
shall be based on Pricing Level I until such time as an
appropriate compliance certificate and related financial
statements and information are delivered, whereupon the
applicable Pricing Level shall be adjusted based on the
information contained in such compliance certificate and
related financial statements and information.
Each Applicable Percentage shall be effective from a Rate Determination
Date until the next Rate Determination Date. The Domestic
Administrative Agent shall determine the appropriate Applicable
Percentages in the pricing matrix promptly upon receipt of the
quarterly or annual compliance certificate and related financial
information and shall promptly notify the Borrowers and the Lenders of
any change thereof. Such determinations by the Domestic Administrative
Agent shall be conclusive absent manifest error. Adjustments in the
Applicable Percentages shall be effective as to existing Extensions of
Credit as well as new Extensions of Credit made thereafter.
4
<PAGE> 10
"BA Discount Proceeds" means proceeds in respect of any
Bankers' Acceptance to be purchased on any day under Section 2.8(e), in
an amount (rounded to the nearest whole Canadian cent, and with
one-half of one Canadian cent being rounded up) calculated on such day
by dividing:
(a) the Face Amount of such Bankers' Acceptance; by
(b) the sum of one plus the product of:
(i) the Applicable BA Discount Rate (expressed
as a decimal) applicable to such Bankers' Acceptance; and
(ii) a fraction, the numerator of which is the
number of days remaining in the term of such Bankers'
Acceptance and the denominator of which is 365 days;
with such product being rounded up or down to the fifth
decimal place and .000005 being rounded up.
"BA Documents" means with respect to any Bankers' Acceptance,
such documents and agreements as the Canadian Lenders accepting the
same may require in connection with the creation of such Bankers'
Acceptance.
"BA Obligations" means all obligations of the Canadian
Borrowers with respect to Bankers' Acceptances created under the BA
Revolving Commitments.
"BA Revolving Commitment" means the commitment of the Canadian
Lenders to accept Bankers' Acceptances, and with respect to each
Canadian Lender, the commitment of each Canadian Lender to accept
Bankers' Acceptances up to such Canadian Lender's Canadian Revolving
Committed Amount, as such amount may be reduced from time to time in
accordance with the provisions hereof.
"Bank of America" means Bank of America, N.A., and its
successors.
"Bankers' Acceptance" means a depository bill as defined in
the Depository Bills and Notes Act (Canada) in Canadian Dollars that is
in the form of an order signed by the Canadian Borrower and accepted by
a Canadian Lender pursuant to this Agreement or, for Canadian Lenders
not participating in clearing services contemplated in that Act, a
draft or bill of exchange in Canadian Dollars payable in Canada that is
drawn in Canada by a Canadian Borrower and accepted by a Canadian
Lender pursuant to this Agreement. Orders that become depository bills,
drafts and bills of exchange are sometimes collectively referred to in
this Agreement as "orders".
5
<PAGE> 11
"Bankruptcy Code" means either (a) the Bankruptcy Code in
Title 11 of the United States Code, as amended, modified, succeeded or
replaced from time to time or (b) the Bankruptcy and Insolvency Act
(Canada), as amended, modified, succeeded or replaced from time to
time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there
shall be commenced against such Person an involuntary case under any
applicable bankruptcy, reorganization, insolvency or other similar law
now or hereafter in effect, or any case, proceeding or other action for
the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or for the winding up or liquidation
of its affairs, and such involuntary case or other case, proceeding or
other action shall remain undismissed, undischarged or unbonded for a
period of sixty (60) consecutive days; or (iii) such Person shall
commence a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consent to the
entry of an order for relief in an involuntary case under any such law,
or consent to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
make any general assignment for the benefit of creditors; or (iv) such
Person shall be unable to, or shall admit in writing its inability to,
pay its debts generally as they become due.
"Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to
(i) in the case of Domestic Revolving Loans and
Canadian Revolving Loans denominated in U.S. Dollars, the
greater of (a) the Federal Funds Rate in effect on such day
plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If
for any reason the Domestic Administrative Agent shall have
determined (which determination shall be conclusive absent
manifest error) that it is unable after due inquiry to
ascertain the Federal Funds Rate for any reason, including the
inability or failure of the Domestic Administrative Agent to
obtain sufficient quotations in accordance with the terms
hereof, the Base Rate shall be determined without regard to
clause (a) of the first sentence of this subsection until the
circumstances giving rise to such inability no longer exist.
Any change in the Base Rate due to a change in the Prime Rate
or the Federal Funds Rate shall be effective on the effective
date of such change in the Prime Rate or the Federal Funds
Rate, respectively.
(ii) in the case of Canadian Revolving Loans
denominated in Canadian Dollars, the greater of (a) the market
bid rate for bankers' acceptances denominated
6
<PAGE> 12
in Canadian Dollars having a term of 30 days as appears on the
Reuters Screen CDOR Page as of 10:00 A.M. (Toronto, Ontario
time) in effect on such day plus 1/2 of 1% or (b) the Prime
Rate in effect on such day. Any change in the Base Rate due to
a change in the Prime Rate or the foregoing bankers'
acceptance rate shall be effective on the effective date of
such change in the Prime Rate or bankers' acceptance rate,
respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Borrowing Base" means, as of any day, an amount equal to the
sum of (i) eighty-five percent (85%) of Eligible Receivables of the
Credit Parties, (ii) fifty percent (50%) of Eligible Receivables
Retainage of the Credit Parties and (iii) sixty percent (60%) of
Eligible Inventory of the Credit Parties, in each case as set forth in
the most recent Borrowing Base Certificate delivered to the
Administrative Agents and the Lenders in accordance with the terms of
Section 7.1(c), with adjustments to give effect to Acquisitions and
Divestitures since the date of such Borrowing Base Certificate on a Pro
Forma Basis.
"Borrowers" means the Domestic Borrower and the Canadian
Borrowers.
"Borrowing Base Certificate" shall have the meaning assigned
to such term in Section 7.1(c).
"Business Day" means a day other than a Saturday or a Sunday;
provided that, in addition, (a) in the case of Domestic Revolving
Loans, Swingline Loans and Letters of Credit, such day is not a day on
which commercial banks in Charlotte, North Carolina, Baltimore,
Maryland or New York, New York are authorized or required by law to
close and (b) in the case of Canadian Revolving Loans and Bankers'
Acceptances, such day is not a day on which banking institutions in
Toronto, Ontario are authorized or required by law or other
governmental action to close; provided, further, that, when used in
connection with a Eurodollar Loan, such day shall also be a day on
which dealings between banks are carried on in U.S. Dollar deposits in
London, England.
"Canadian Administrative Agent" shall have the meaning
assigned to such term in the heading hereof, together with its
successors in such capacity.
"Canadian Borrowers" means (a) Gantrex RW Company, a Nova
Scotia unlimited liability company, (b) RailWorks of Canada Company, a
Nova Scotia unlimited liability company and (c) any other Canadian
Subsidiary of the Domestic Borrower joined as a Canadian Borrower
hereunder pursuant to such joinder agreement(s) and other documentation
as are reasonably satisfactory to the Canadian Administrative Agent,
and, in each case, together with permitted successors and assigns.
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<PAGE> 13
"Canadian Commitment Fee" shall have the meaning provided in
Section 3.5(a)(ii).
"Canadian Credit Parties" means the Canadian Borrowers and the
Canadian Guarantors.
"Canadian Dollars" and "CDN$" means dollars in lawful currency
of Canada.
"Canadian Guarantors" means (i) the Domestic Borrower, (ii)
the Canadian Subsidiaries identified as Canadian Guarantors on the
signature pages hereto, and (iii) any other Persons which may guarantee
the Canadian Obligations hereunder by joinder as a Canadian Guarantor
hereunder.
"Canadian Lenders" means Lenders holding Canadian Revolving
Commitments.
"Canadian Obligations" means, collectively, the Canadian
Revolving Loans and the BA Obligations.
"Canadian Pension Plan" means any plan, program or arrangement
that is a pension plan for the purposes of any applicable pension
benefits legislation or any tax laws of Canada or a province thereof,
whether or not registered under any such laws, which is maintained or
contributed to by, or to which there is or may be an obligation to
contribute by, any Borrower in respect of any Person's employment in
Canada with such Borrower.
"Canadian Pension Laws" shall have the meaning assigned to
such term in Section 6.18.
"Canadian Pledge Agreement" means the Pledge Agreement dated
as of the Closing Date given by the Canadian Borrowers and certain
other Credit Parties identified therein to the Collateral Agent to
secure the obligations of the Canadian Credit Parties under the Credit
Documents, as amended and modified from time to time.
"Canadian Register" shall have the meaning given such term in
Section 11.3(c)(ii).
"Canadian Required Lenders" means, at any time, Canadian
Lenders having more than fifty percent (50%) of the Canadian Revolving
Commitments, or if the Canadian Revolving Commitments have been
terminated, Canadian Lenders having more than fifty percent (50%) of
the aggregate principal amount of the Canadian Obligations outstanding
(taking into account in each case Participation Interests or
obligations to participate therein); provided that the Canadian
Revolving Commitments of, and outstanding principal amount of Canadian
Obligations (taking into account Participation Interests therein) owing
to, a Defaulting Lender shall be excluded for purposes hereof in making
a determination of Canadian Required Lenders.
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<PAGE> 14
"Canadian Revolving Commitment" means, with respect to each
Canadian Lender, the commitment of such Canadian Lender to make
Canadian Revolving Loans and to create Bankers' Acceptances in an
aggregate principal amount at any time outstanding of up to such
Canadian Lender's Canadian Revolving Commitment Percentage of the
Aggregate Canadian Revolving Committed Amount.
"Canadian Revolving Commitment Percentage" means, with respect
to each Canadian Lender, a fraction (expressed as a percentage) the
numerator of which is the Canadian Revolving Commitment of such
Canadian Lender at such time and the denominator of which is the
Aggregate Canadian Revolving Committed Amount at such time. The initial
Canadian Revolving Commitment Percentages are set out on Schedule 2.1.
"Canadian Revolving Committed Amount" means, with respect to
each Canadian Lender, the amount of each Canadian Lender's Canadian
Revolving Commitment as specified in Schedule 2.1, as such amount may
be reduced from time to time in accordance with the provisions hereof.
"Canadian Revolving Loans" shall have the meaning assigned to
such term in Section 2.1(e).
"Canadian Revolving Note" or "Canadian Revolving Notes" means
the promissory notes of the Canadian Borrowers in favor of each of the
Canadian Lenders evidencing the Canadian Revolving Loans in
substantially the form attached as Schedule 2.5-2, individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to
time.
"Canadian Security Agreement" means the Security Agreement
dated as of the Closing Date given by the Canadian Borrowers and
certain other Canadian Credit Parties to the Collateral Agent to secure
the obligations of the Canadian Credit Parties under the Credit
Documents, as amended and modified from time to time.
"Canadian Subsidiary" means any Subsidiary which is
incorporated or organized under the laws of Canada or its provinces.
"Capital Expenditures" means, for any period, without
duplication, all expenditures (whether paid in cash or other
consideration) during such period that, in accordance with GAAP, are or
should be included in additions to property, plant and equipment or
similar items reflected in the consolidated statement of cash flows for
such period; provided, that Capital Expenditures shall not include, for
purposes hereof, expenditures of proceeds of insurance settlements,
condemnation awards and other settlements in respect of lost,
destroyed, damaged or condemned assets, equipment or other property to
the extent such expenditures are made to replace or repair such lost,
9
<PAGE> 15
destroyed, damaged or condemned assets, equipment or other property or
otherwise to acquire assets or properties useful in the business of the
members of the Consolidated Group.
"Capital Lease" means, as applied to any Person, any lease of
any Property by that Person as lessee which, in accordance with GAAP,
is or should be accounted for as a capital lease on the balance sheet
of that Person.
"Capital Lease Obligation" means the capital lease obligations
relating to a Capital Lease determined in accordance with GAAP.
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. Dollar denominated time deposits and certificates
of deposit of (i) any Lender, or (ii) any domestic commercial bank of
recognized standing (y) having capital and surplus in excess of
US$500,000,000 and (z) whose short-term commercial paper rating from
S&P is at least A-1 or the equivalent thereof or from Moody's is at
least P-1 or the equivalent thereof (any such bank being an "Approved
Bank"), in each case with maturities of not more than 270 days from the
date of acquisition, (c) commercial paper and variable or fixed rate
notes issued by any Approved Bank (or by the parent company thereof) or
any variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody's and maturing
within six months of the date of acquisition, (d) repurchase agreements
entered into by a Person with a bank or trust company (including any of
the Lenders) or recognized securities dealer having capital and surplus
in excess of US$500,000,000 for direct obligations issued by or fully
guaranteed by the United States of America in which such Person shall
have a perfected first priority security interest (subject to no other
Liens) and having, on the date of purchase thereof, a fair market value
of at least 100% of the amount of the repurchase obligations, (e)
obligations of any State of the United States or any political
subdivision thereof, the interest with respect to which is exempt from
federal income taxation under Section 103 of the Internal Revenue Code,
having a long term rating of at least AA- or Aa-3 by S&P or Moody's,
respectively, and maturing within three years from the date of
acquisition thereof, (f) Investments in municipal auction preferred
stock (i) rated AAA (or the equivalent thereof) or better by S&P or Aaa
(or the equivalent thereof) or better by Moody's and (ii) with
dividends that reset at least once every 365 days, (g) Investments,
classified in accordance with GAAP as current assets, in money market
investment programs registered under the Investment Company Act of
1940, as amended, which are administered by reputable financial
institutions having capital of at least US$100,000,000 and the
portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a) through (f), and (h) other
Investments deemed to be cash equivalents in accordance with GAAP.
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<PAGE> 16
"Change of Control" means the occurrence of either of the
following events: (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Domestic Borrower, a
corporation owned directly or indirectly by the stockholders of the
Domestic Borrower (immediately after the IPO) or any of their
respective Affiliates, becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Domestic Borrower representing 50% or more of the
total voting power represented by the Domestic Borrower's then
outstanding securities that vote generally in the election of
directors; or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Domestic
Borrower's Board of Directors and any new directors whose election by
the Domestic Borrower's Board of Directors or nomination for election
by the Domestic Borrower's stockholders was approved by a vote or a
majority of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Domestic Borrower's Board of
Directors.
"Closing Date" means the date hereof.
"Collateral Agent" means Bank of America, N.A., and its
successors in such capacity.
"Combination" has the meaning assigned to such term in the
Registration Statement.
"Commitment" means the Domestic Revolving Commitments, the LOC
Commitment, the Swingline Commitment and the Canadian Revolving
Commitments.
"Commitment Period" means the period from and including the
Closing Date to but not including the earlier of (i) the Termination
Date, or (ii) the date on which the Commitments terminate in accordance
with the provisions of this Credit Agreement.
"Consolidated Capital Expenditures" means, for any period,
Capital Expenditures for the Consolidated Group on a consolidated basis
determined in accordance with GAAP applied on a consistent basis.
"Consolidated EBITDA" means, for any period for the
Consolidated Group, the sum of Consolidated Net Income plus
Consolidated Interest Expense plus all provisions for any Federal,
state or other domestic and foreign income taxes plus depreciation and
amortization minus, to the extent not deducted in determining
Consolidated Net Income, earn-out payments made in connection with the
Permitted Acquisitions, in each case on a consolidated basis determined
in accordance with GAAP applied on a consistent basis,
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<PAGE> 17
but excluding for purposes hereof extraordinary gains and losses and
related tax effects thereon.
"Consolidated Fixed Charge Coverage Ratio" means, for the
period of four consecutive fiscal quarters ending as of the date of
determination, the ratio of Consolidated EBITDA to Consolidated Fixed
Charges.
"Consolidated Fixed Charges" means, for any period for the
Consolidated Group, the sum of the cash portion of Consolidated
Interest Expense plus current maturities of Funded Debt for the four
consecutive fiscal quarters beginning the day after the date of
determination plus the greater of (i) twenty percent (20%) of
Obligations outstanding hereunder on the date of determination, or (ii)
Two Million Dollars (US$2,000,000), in each case on a consolidated
basis determined in accordance with GAAP applied on an consistent
basis. Except as otherwise expressly provided, the applicable period
shall be for the four consecutive fiscal quarters ending as of the date
of determination.
"Consolidated Group" means the Domestic Borrower and its
consolidated subsidiaries as determined in accordance with GAAP.
"Consolidated Interest Expense" means, for any period for the
Consolidated Group, all interest expense, including the amortization of
debt discount and premium, the interest component under Capital Leases
and the implied interest component under Securitization Transactions,
in each case on a consolidated basis determined in accordance with GAAP
applied on a consolidated basis. Except as expressly provided
otherwise, the applicable period shall be for the four consecutive
quarters ending as of the date of determination.
"Consolidated Net Income" means for any period for the
Consolidated Group, net income on a consolidated basis determined in
accordance with GAAP applied on a consistent basis plus the amount of
any deduction from such net income with respect to the fiscal quarter
ending September 30, 1998 attributable to (i) the Stock Incentive Plan
and (ii) other nonrecurring expenses related to the IPO, the
Combination and the Original Credit Agreement. Except as expressly
provided otherwise, the applicable period shall be for the four
consecutive quarters ending as of the date of determination.
"Consolidated Net Worth" means, as of any date for the
Consolidated Group, shareholders' equity or net worth as determined in
accordance with GAAP.
"Consolidated Rent Expense" means rental expense under
Operating Leases of the Consolidated Group on a consolidated basis for
the applicable period, as determined in accordance with GAAP. Except as
expressly provided otherwise, the applicable period shall be for the
four consecutive quarters ending as of the date of determination.
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<PAGE> 18
"Consolidated Senior Debt" means Consolidated Total Funded
Debt less Subordinated Debt of the Consolidated Group on a consolidated
basis as determined in accordance with GAAP.
"Consolidated Senior Leverage Ratio" means, as of the last day
of any fiscal quarter, the ratio of Consolidated Senior Debt on such
day to Consolidated EBITDA for the period of four consecutive fiscal
quarters ending as of such day.
"Consolidated Total Funded Debt" means Funded Debt of the
Consolidated Group determined on a consolidated basis in accordance
with GAAP applied on a consistent basis.
"Consolidated Total Leverage Ratio" means, as of the last day
of any fiscal quarter, the ratio of Consolidated Total Funded Debt on
such day to Consolidated EBITDA for the period of four consecutive
fiscal quarters ending as of such day.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any material
agreement, instrument or undertaking to which such Person is a party or
by which it or any of its property is bound.
"Credit Documents" means a collective reference to this Credit
Agreement, the Notes, the LOC Documents, the BA Documents, the Domestic
Pledge Agreement, the Canadian Pledge Agreement, the Domestic Security
Agreement, the Canadian Security Agreement, each Joinder Agreement, the
Administrative Agent's Fee Letter, and all other related agreements and
documents issued or delivered hereunder or thereunder or pursuant
hereto or thereto.
"Credit Party" means any of the Domestic Credit Parties and
the Canadian Credit Parties.
"Debt Transaction" means, with respect to any member of the
Consolidated Group, any sale, issuance or placement of Subordinated
Debt permitted by Section 8.1.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, at
such time, (i) has failed to make an Extension of Credit required
pursuant to the terms of this Credit Agreement, (ii) has failed to pay
to any Agent or any Lender an amount owed by such Lender pursuant to
the terms of the Credit Agreement or any other of the Credit Documents,
or (iii) has been deemed insolvent or has become subject to a
bankruptcy or insolvency proceeding or to a receiver, trustee or
similar proceeding.
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<PAGE> 19
"Determination Date" means with respect to any Obligations
denominated in foreign currency (including Canadian Dollars):
(i) in connection with the origination of any
new Extension of Credit, the Business Day which is the
earliest of the date such credit is extended, the date the
rate is set or the date the bid is accepted, as applicable;
and
(ii) the last Business Day of each month; and
(iii) in connection with any extension, conversion
or continuation of an existing Obligation, the Business Day
which is the earlier of the date such Obligation is extended,
converted or continued, or the date the rate is set, as
applicable, in connection therewith; and
(iv) the date of any reduction in the Aggregate
Domestic Revolving Committed Amount or the Aggregate Canadian
Revolving Committed Amount pursuant to Section 3.4; and
(v) such additional dates (but not more than one
additional date per month) as determined by the Domestic
Administrative Agent;
For purposes of determining availability, the rate of exchange
for foreign currencies (including Canadian Dollars) shall be
the spot rate therefor as quoted by the Domestic
Administrative Agent at or about 10:00 A.M. (Charlotte, North
Carolina time or Toronto, Ontario time, as appropriate) on the
date of determination.
"Divestiture" means any transaction by which the Domestic
Borrower or any Subsidiary sells, leases, transfers or otherwise
disposes of (i) any Property with which an ongoing business is
conducted or to be conducted; (ii) all or substantially all or any
substantial portion of its assets; or (iii) the capital stock of a
Subsidiary, in each case other than (x) the sale of Inventory in the
ordinary course of business, (y) the sale, lease, transfer or other
disposition of plant, property and equipment which is no longer used or
useful in the business of such Credit Party or as to which the proceeds
thereof are reinvested in plant, property or equipment within six
months thereof, or (z) sales, leases, transfers or other dispositions
of Property or capital stock of a Subsidiary by one Credit Party to
another.
"Dollar Amount" means (i) with respect to U.S. Dollars or an
amount denominated in U.S. Dollars, such amount, and (ii) with respect
to Canadian Dollars or an amount denominated in Canadian Dollars, the
Dollar Equivalent thereof as of the most recent Determination Date.
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<PAGE> 20
"Dollar Equivalent" means, on any date, with respect to an
amount denominated in any foreign currency (including Canadian
Dollars), the amount of U.S. Dollars into which the Domestic
Administrative Agent could, in accordance with its practice, convert
such amount of foreign currency in the interbank foreign exchange
market at its spot rate of exchange (inclusive of all reasonably
related costs of conversion, if any, that are actually incurred) at or
about 10:00 A.M. (Charlotte, North Carolina time or Toronto, Ontario
time, as appropriate), on such date.
"Domestic Administrative Agent" shall have the meaning
assigned to such term in the heading hereof, together with its
successors in such capacity.
"Domestic Borrower" means RailWorks Corporation, a Delaware
corporation, and its permitted successors and assigns.
"Domestic Commitment Fee" shall have the meaning provided in
Section 3.5(a)(i).
"Domestic Credit Parties" means the Domestic Borrower and the
Domestic Guarantors.
"Domestic Guarantors" means (i) the Domestic Subsidiaries
identified as Domestic Guarantors on the signature pages hereto and
(ii) any other Persons which may guarantee the Domestic Obligations
hereunder by joinder as a Domestic Guarantor hereunder.
"Domestic Lenders" means Lenders holding Domestic Revolving
Commitments.
"Domestic Obligations" means, collectively, the Domestic
Revolving Loans, the LOC Obligations and the Swingline Loans.
"Domestic Pledge Agreement" means the Amended and Restated
Pledge Agreement dated as of the Closing Date given by the Domestic
Borrower and certain other Credit Parties identified therein to the
Collateral Agent to secure the obligations of the Domestic Credit
Parties, as such Amended and Restated Pledge Agreement may be amended
and modified from time to time.
"Domestic Register" shall have the meaning given such term in
Section 11.3(c)(i).
"Domestic Required Lenders" means, at any time, Domestic
Lenders having more than fifty percent (50%) of the Domestic Revolving
Commitments (as such Domestic Revolving Commitments may be increased
pursuant to Section 2.1(h)), or if the Domestic Revolving Commitments
have been terminated, Domestic Lenders having more than fifty percent
(50%) of the aggregate principal amount of the Domestic Obligations
outstanding (taking into account in each case Participation Interests
or
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<PAGE> 21
obligations to participate therein); provided that the Domestic
Revolving Commitments of, and outstanding principal amount of Domestic
Obligations (taking into account Participation Interests therein) owing
to, a Defaulting Lender shall be excluded for purposes hereof in making
a determination of Domestic Required Lenders.
"Domestic Revolving Commitment" means, with respect to each
Domestic Lender, the commitment of such Domestic Lender to make
Domestic Revolving Loans in an aggregate principal amount at any time
outstanding of up to such Domestic Lender's Domestic Revolving
Commitment Percentage of the Aggregate Domestic Revolving Committed
Amount, as such amount may be reduced from time to time in accordance
with the provisions hereof.
"Domestic Revolving Commitment Percentage" means, with respect
to each Domestic Lender, a fraction (expressed as a percentage) the
numerator of which is the Domestic Revolving Commitment of such
Domestic Lender at such time and the denominator of which is the
Aggregate Domestic Revolving Committed Amount at such time. The initial
Domestic Revolving Commitment Percentages are set out on Schedule 2.1.
"Domestic Revolving Committed Amount" means, with respect to
each Domestic Lender, the amount of each Domestic Lender's Domestic
Revolving Commitment, as specified in Schedule 2.1, as such amount may
be reduced from time to time in accordance with the provisions hereof.
"Domestic Revolving Loans" shall have the meaning assigned to
such term in Section 2.1(a).
"Domestic Revolving Note" or "Domestic Revolving Notes" means
the promissory notes of the Domestic Borrower in favor of each of the
Domestic Lenders evidencing the Domestic Revolving Loans and the
Swingline Loans in substantially the form attached as Schedule 2.5-1,
individually or collectively, as appropriate, as such promissory notes
may be amended, modified, supplemented, extended, renewed or replaced
from time to time.
"Domestic Security Agreement" means the Amended and Restated
Security Agreement dated as of the Closing Date given by the Domestic
Credit Parties to the Collateral Agent to secure the obligations of the
Domestic Credit Parties, as such Amended and Restated Security
Agreement may be amended and modified from time to time.
"Domestic Subsidiary" means any Subsidiary which is
incorporated or organized under the laws of any State of the United
States or the District of Columbia.
"Eligible Inventory" means, as of any date of determination,
the aggregate book value (based on a FIFO valuation) of all inventory
owned by the Credit Parties on a
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<PAGE> 22
consolidated basis after deducting allowances or reserves relating
thereto, as shown on the books and records of the Credit Parties, but
excluding in any event (i) inventory which is (a) not subject to a
perfected, first priority Lien in favor for the Collateral Agent to
secure the obligations of the Credit Parties under the Domestic
Security Agreement or the Canadian Security Agreement, as applicable,
or (b) subject to any other Lien that is not a Permitted Lien
"Eligible Receivables" means, as of any date of determination,
the aggregate book value of all accounts, accounts receivable,
receivables, and obligations for payment created or arising from the
sale of inventory or the rendering of services in the ordinary course
of business (collectively, the "Receivables"), owned by or owing to the
Credit Parties on a consolidated basis after deducting retainage and
allowances or reserves relating thereto, as shown on the books and
records of the Credit Parties, but excluding in any event (a)
Receivables owing by an account debtor which is not solvent or is
subject to any bankruptcy or insolvency proceeding of any kind and (b)
any Receivable which is (i) not subject to a perfected, first priority
Lien in favor for the Collateral Agent to secure the obligations of the
Credit Parties under the Domestic Security Agreement or the Canadian
Security Agreement, as applicable, or (ii) subject to any other Lien
that is not a Permitted Lien
"Eligible Receivables Retainage" means, as of any date of
determination, the aggregate book value of that portion of Receivables
owned by or owing to the Credit Parties on a consolidated basis
consisting of retainage but excluding in any event such portion of
Receivables owing by an account debtor which is not solvent or is
subject to any bankruptcy or insolvency proceeding of any kind.
"Environmental Laws" means any and all lawful and applicable
Federal, state, provincial, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances
or wastes into the environment including, without limitation, ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes.
"Equity Transaction" means, with respect to any member of the
Consolidated Group, any issuance of shares of its capital stock or
other equity interest, other than an issuance (i) to a member of the
Consolidated Group, (ii) in connection with a conversion of debt
securities to equity or (iii) in connection with exercise by a present
or former employee, officer or director under a stock incentive plan,
stock option plan or other equity-based compensation plan or
arrangement.
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<PAGE> 23
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Credit Party or any of its Subsidiaries within the
meaning of Section 4001(a)(14) of ERISA, or is a member of a group
which includes any Credit Party or any of its Subsidiaries and which is
treated as a single employer under Sections 414(b) or (c) of the
Internal Revenue Code.
"ERISA Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by any Credit Party or any of its Subsidiaries or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan;
(iii) the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which would reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; (vi) the complete or
partial withdrawal of any Credit Party or any of its Subsidiaries or
any ERISA Affiliate from a Multiemployer Plan; (vii) the conditions for
imposition of a lien under Section 302(f) of ERISA exist with respect
to any Plan; or (vii) the adoption of an amendment to any Plan
requiring the provision of security to such Plan pursuant to Section
307 of ERISA.
"Eurodollar Loan" means any Revolving Loan bearing interest at
a rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = Interbank Offered Rate
-------------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means, for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under any regulations of the Board of Governors of the Federal
Reserve System (or any successor) or other Governmental Authority
having jurisdiction with respect thereto) as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined), whether or not Lender has any
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<PAGE> 24
Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements
without benefits of credits for proration, exceptions or offsets that
may be available from time to time to a Lender. The Eurodollar Rate
shall be adjusted automatically on and as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Event of Default" means such term as defined in Section 9.1.
"Existing Letters of Credit" means those Letters of Credit
outstanding on the Closing Date identified on Schedule 2.6(b).
"Extension of Credit" means, as to any Lender, the making of,
or participation in, a Loan by such Lender or the issuance or extension
of, or participation in, a Letter of Credit by such Lender or the
creation of a Bankers' Acceptance by such Lender.
"Face Amount" means, in respect of a Bankers' Acceptance, the
amount payable to the holder thereof at maturity.
"Fees" means all fees payable pursuant to Section 3.5.
"Federal Funds Rate" means, for any day, the rate of interest
per annum (rounded upwards, if necessary, to the nearest whole multiple
of 1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding
such day, provided that (A) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day and (B) if no such rate is so
published on such next preceding Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to the Domestic
Administrative Agent on such day on such transactions as determined by
the Domestic Administrative Agent.
"Foreign Subsidiary" means a Subsidiary which is not a
Domestic Subsidiary.
"Founding Companies" means the Domestic Subsidiaries which
were party to the Original Credit Agreement on the closing date thereof
(being August 4, 1998), as they existed immediately prior to the
Combination.
"Funded Debt" means, with respect to any Person, without
duplication, (i) all Indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, or upon which interest payments are
customarily made, (iii) all purchase money Indebtedness (including for
purposes hereof, indebtedness and obligations described in clauses
(iii) and (iv) of the definition of "Indebtedness") of such Person,
including without limitation the principal
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portion of all obligations of such Person under Capital Leases, (iv)
all Support Obligations of such Person with respect to Funded Debt of
another Person, (v) the maximum available amount of all standby letters
of credit or acceptances issued or created for the account of such
Person, (vi) all Funded Debt of another Person secured by a Lien on any
Property of such Person, whether or not such Funded Debt has been
assumed, provided that for purposes of this clause (vi) the amount of
such Funded Debt shall be limited to the greater of (A) the amount of
such Funded Debt as to which there is recourse to such Person and (B)
the fair market value of the property which is subject to the Lien,
(vii) the outstanding attributed principal amount under any
Securitization Transaction, and (viii) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product
to which such Person is a party, where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP. The Funded Debt of any Person
shall (i) include the Funded Debt of any partnership or joint venture
in which such Person is a general partner or joint venturer, but only
to the extent to which there is recourse to such Person for the payment
of such Funded Debt, but (ii) exclude, in any event, amounts in respect
of financed insurance premium obligations permitted under Section
8.1(g).
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3.
"Governmental Authority" means any Federal, state, provincial,
local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guaranteed Obligations" means
(i) as to each of the Domestic Guarantors,
without duplication, (A) all obligations of the Borrowers
(including interest accruing after a Bankruptcy Event
regardless of whether such interest is allowed as a claim
under the Bankruptcy Code) to the Lenders and the Agents,
whenever arising, under this Credit Agreement, the Notes or
the other Credit Documents, and (B) all liabilities and
obligations, whenever arising, under any Hedging Agreement
with a Credit Party relating to the Obligations. The
obligations of the Domestic Guarantors in respect of the
Guaranteed Obligations hereunder shall be joint and several in
nature as among themselves; and
(ii) as to each of the Canadian Guarantors,
without duplication, (A) all obligations of the Canadian
Borrowers (including interest accruing after a Bankruptcy
Event regardless of whether such interest is allowed as a
claim under the Bankruptcy Code) to the Canadian Lenders, the
Canadian Administrative Agent and the Collateral Agent,
whenever arising, under this Credit Agreement, the Canadian
Revolving Notes or the other Credit Documents, and (B) all
liabilities and obligations, whenever arising under any
Hedging Agreement with a Canadian Credit Party (other than the
Domestic Borrower) relating to the
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<PAGE> 26
Canadian Obligations hereunder. The obligations of the
Canadian Guarantors in respect of the Guaranteed Obligations
hereunder shall be joint and several in nature as among
themselves. The obligations of the Canadian Guarantors
hereunder shall not, however, extend to the Domestic
Obligations or to the obligations of the Domestic Guarantors
in respect thereof, as to which the Canadian Guarantors shall
have no obligation.
"Guarantors" means the Domestic Guarantors and the Canadian
Guarantors.
"Hedging Agreement" means any interest rate protection
agreement or foreign currency exchange agreement between any Borrower
and any Lender, or any Affiliate of a Lender, relating to the
Obligations.
"Indebtedness" of any Person means (i) all obligations of such
Person for borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to Property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers
entered into in the ordinary course of business), (iv) all obligations
of such Person issued or assumed as the deferred purchase price of
Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months
of the incurrence thereof) which would appear as liabilities on a
balance sheet of such Person, (v) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements,
(vi) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production
from, Property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, provided that for
purposes hereof the amount of such Indebtedness shall be limited to the
greater of (A) the amount of such Indebtedness as to which there is
recourse to such Person and (B) the fair market value of the property
which is subject to the Lien, (vii) all Support Obligations of such
Person, (viii) the principal portion of all obligations of such Person
under Capital Leases, (ix) all obligations of such Person in respect of
interest rate protection agreements, foreign currency exchange
agreements, commodity purchase or option agreements or other interest
or exchange rate or commodity price hedging agreements (including, but
not limited to, the Hedging Agreements), (x) the maximum amount of all
standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (xi) all
preferred stock issued by such Person and required by the terms thereof
to be redeemed, or for which mandatory sinking fund payments are due,
by a fixed date, (xii) the outstanding attributed principal amount
under any Securitization Transaction and (xiii) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product
to which such Person is a party, where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as
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<PAGE> 27
an operating lease in accordance with GAAP. The Indebtedness of any
Person shall include the Indebtedness of any partnership or joint
venture in which such Person is a general partner or a joint venturer,
but only to the extent to which there is recourse to such Person for
payment of such Indebtedness.
"IPO" means the initial public offering of the Domestic
Borrower's common stock pursuant to the Registration Statement.
"Interbank Offered Rate" means, for the Interest Period for
each Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
(rounded upwards, if necessary, to the nearest whole multiple of 1/100
of 1%) equal to the rate of interest, determined by the relevant
Administrative Agent on the basis of the offered rates for deposits in
U.S. Dollars for a period of time corresponding to such Interest Period
(and commencing on the first day of such Interest Period), appearing on
Telerate Page 3750 (or, if, for any reason, Telerate Page 3750 is not
available, the Reuters Screen LIBO Page) as of approximately 11:00 A.M.
(London time) two (2) Business Days before the first day of such
Interest Period. As used herein, "Telerate Page 3750" means the display
designated as page 3750 by Dow Jones Markets, Inc. (or such other page
as may replace such page on that service for the purpose of displaying
the British Bankers Association London interbank offered rates) and
"Reuters Screen LIBO Page" means the display designated as page "LIBO"
on the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBO page on that service for the purpose of displaying
London interbank offered rates of major banks).
"Interest Payment Date" means (i) as to any Swingline Loan,
the last day of each Interest Period for such Swingline Loan or such
other dates as the Swingline Lender may agree or require, (ii) as to
any Base Rate Loan (other than a Swingline Loan), the last day of each
March, June, September and December and the Termination Date and (iii)
as to any Eurodollar Loan, the last day of each Interest Period for
such Loan, the date of repayment of principal of such Loan and on the
Termination Date, and in addition where the applicable Interest Period
is more than three months, then also on the date three months from the
beginning of the Interest Period, and each three months thereafter. If
an Interest Payment Date falls on a date which is not a Business Day,
such Interest Payment Date shall be deemed to be the next succeeding
Business Day.
"Interest Period" means (i) as to any Eurodollar Loan, a
period of one, two, three or six months' duration, as the applicable
Borrower may elect, commencing in each case on the date of the
borrowing (including conversions, extensions and renewals) and (ii) as
to any Swingline Loan, a period of such duration as the Domestic
Borrower may request and the Swingline Lender may agree in accordance
with the provisions of Section 2.7, commencing in each case on the date
of borrowing; provided, however, (A) if any Interest Period would end
on a day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day (where the next succeeding
Business Day falls in the next succeeding calendar month, then on the
next preceding Business Day), (B)
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no Interest Period shall extend beyond the Termination Date, and (C)
where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on the last
day of such calendar month.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, and any successor statute thereto, as interpreted by
the rules and regulations issued thereunder, in each case as in effect
from time to time. References to sections of the Internal Revenue Code
shall be construed also to refer to any successor sections.
"Investment", in any Person, means any loan or advance to such
Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities of, or
equity interest in, such Person, any capital contribution to such
Person or any other investment in such Person, including, without
limitation, any Support Obligation incurred for the benefit of such
Person.
"Issuing Lender" means Bank of America.
"Issuing Lender Fees" shall have the meaning given such term
in Section 3.5(b)(ii).
"Joinder Agreement" means (a) in the case of a Domestic
Subsidiary, a joinder agreement substantially in the form of Schedule
7.11-1 hereto and (b) in the case of a Canadian Subsidiary, a joinder
agreement substantially in the form of Schedule 7.11-2 hereto, in each
case executed and delivered by such Subsidiary in accordance with the
provisions of Section 7.11.
"Joint Venture" means any corporation, partnership, limited
liability company or other entity in which the Domestic Borrower or any
other Credit Party owns or acquires fifty percent (50%) or less of the
Voting Stock or economic interests, and which conducts any business
that the Credit Parties would be permitted to conduct in accordance
with Section 7.5.
"Lenders" means each of the Persons identified as a "Lender"
on the signature pages hereto, and their successors and assigns.
"Letter of Credit" means any Existing Letter of Credit or any
letter of credit issued by the Issuing Lender for the account of the
Domestic Borrower in accordance with the terms of Section 2.1(b).
"Letter of Credit Fee" shall have the meaning given such term
in Section 3.5(b)(i).
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference,
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<PAGE> 29
priority or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement,
and any lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans and/or the
Swingline Loans.
"LOC Commitment" means the commitment of the Issuing Lender to
issue, and to honor payment obligations under, Letters of Credit
hereunder and with respect to each Domestic Lender, the commitment of
each Domestic Lender to purchase participation interests in the Letters
of Credit up to such Domestic Lender's LOC Committed Amount.
"LOC Committed Amount" shall have the meaning assigned to such
term in Section 2.1(b).
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties concerned
or at risk or (ii) any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding,
assuming compliance with all requirements for drawings referred to in
such Letters of Credit plus (ii) the aggregate amount of all drawings
under Letters of Credit honored by the Issuing Lender but not
theretofore reimbursed.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets or liabilities of the Consolidated Group taken as a whole, (ii)
the ability of the Credit Parties taken as a whole to perform any
material obligation under the Credit Documents to which it is a party
or (iii) the rights and remedies of the Lenders under the Credit
Documents.
"Material Credit Party" means (i) the Domestic Borrower, (ii)
any Canadian Borrower and (iii) any other Credit Party at any time
whose assets at the time of determination constitute five percent (5%)
or more of the assets of the Consolidated Group or whose revenues at
the time of determination constitute five percent (5%) or more of the
revenues of the Consolidated Group.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, asbestos, polychlorinated biphenyls and
ureaformaldehyde insulation.
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"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which any Credit Party
or any of its Subsidiaries or any ERISA Affiliate and at least one
employer other than any Credit Party or any of its Subsidiaries or any
ERISA Affiliate are contributing sponsors.
"Notes" means the Domestic Revolving Notes and the Canadian
Revolving Notes.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of (a) with respect to Domestic Revolving Loans,
Schedule 2.2(a)(i), (b) with respect to Swingline Loans, Schedule
2.2(a)(iii), (c) with respect to Canadian Revolving Loans, Schedule
2.2(a)(iv), and (d) with respect to Bankers' Acceptances, Schedule
2.2(a)(v), in each case as required by Section 2.2(a).
"Notice of Extension/Conversion" means a written notice of
extension or conversion in substantially the form of Schedule 3.2, as
required by Section 3.2.
"Obligations" means the Domestic Obligations and the Canadian
Obligations.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property which is not a Capital Lease other
than any such lease in which that Person is the lessor.
"Participation Interest" means the purchase by a Lender of a
participation in LOC Obligations as provided in Section 2.6(b), in
Swingline Loans as provided in Section 2.7, in Loans as provided in
Section 3.16 and in Obligations after termination of Commitments as
provided in Section 9.3(b).
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"Permitted Acquisitions" means (i) the acquisition by the
Domestic Borrower or any of its Subsidiaries of the following entities:
(a) Gantrex Group, (b) FCM Rail, LTD., (c) Walpar Inc., (d) Midwest
Railroad Construction, (e) F&V Metro Contracting Corp. and affiliates
and (e) Earl Campbell Construction Company, Inc. and (ii) other
acquisitions as may be permitted hereunder or consented to by the
Required Lenders in accordance with the provisions hereof.
"Permitted Investments" means Investments which are either (i)
cash and Cash Equivalents; (ii) accounts receivable created, acquired
or made in the ordinary course of
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business and payable or dischargeable in accordance with customary
trade terms; (iii) Investments consisting of stock, obligations,
securities or other property received in settlement of accounts
receivable (created in the ordinary course of business) from obligors;
(iv) Support Obligations permitted by Section 8.1; (v) Acquisitions
permitted by Section 8.4; (vi) advances or loans to employees,
directors or officers to pay the tax liabilities associated with
participation in the Stock Incentive Plan and other advances or loans
to employees, directors, officers or agents not to exceed US$1,000,000
in the aggregate at any time outstanding; (vii) advances or loans to
customers or suppliers (other than advance payment of sums due under
contracts in the ordinary course of business) that do not exceed
US$500,000 in the aggregate at any one time outstanding; (viii)
Investments by a member of the Consolidated Group or an Affiliate of a
member of the Consolidated Group in connection with a Permitted
Securitization Transaction; (ix) Investments by members of the
Consolidated Group in their Subsidiaries existing on the Closing Date;
(x) Investments by a Domestic Credit Party in and to another Domestic
Credit Party; (xi) Investments by a Canadian Credit Party in and to
another Credit Party; (xii) advances of working capital by a Domestic
Credit Party to a Canadian Credit Party; (xiii) Investments in Joint
Ventures not to exceed, on a cost basis, US$5,000,000 in any individual
Joint Venture, and US$10,000,000 in the aggregate in all Joint Ventures
at any one time outstanding; and (xiv) other loans, advances and
investments of a nature not contemplated in the foregoing subsections
in an amount not to exceed US$1,000,000 in the aggregate at any time
outstanding.
"Permitted Liens" means:
(i) Liens in favor of the Collateral Agent on
behalf of the Lenders;
(ii) Liens in favor of a Lender or an Affiliate
of a Lender pursuant to a Hedging Agreement, but only (A) to
the extent such Liens secure obligations under such agreements
permitted under Section 8.1, (B) to the extent such Liens are
on the same collateral as to which the Lenders also have a
Lien and (C) so long as the obligations under such Hedging
Agreement and the Obligations hereunder and under the other
Credit Documents shall share pari passu in the collateral
subject to such Liens
(iii) Liens (other than Liens created or imposed
under ERISA) for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes being contested in good
faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and
as to which the Property subject to any such Lien is not yet
subject to foreclosure, sale or loss on account thereof);
(iv) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers
and other Liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary
course of
26
<PAGE> 32
business, provided that such Liens secure only amounts not yet
due and payable or, if due and payable, are unfiled and no
other action has been taken to enforce the same or are being
contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such
Lien is not yet subject to foreclosure, sale or loss on
account thereof);
(v) Liens (other than Liens created or imposed
under ERISA) incurred or deposits made by the Domestic
Borrower and its Subsidiaries in the ordinary course of
business in connection with workers' compensation,
unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations,
bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money);
(vi) Liens in connection with attachments or
judgments (including judgment or appeal bonds) provided that
the judgments secured shall, within 30 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 30 days
after the expiration of any such stay;
(vii) easements, rights-of-way, restrictions
(including zoning restrictions), minor defects or
irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use
of the encumbered Property for its intended purposes;
(viii) Liens securing purchase money and
sale/leaseback Indebtedness (including Capital Leases) to the
extent permitted under Sections 8.1(b) and 8.1(c) provided
that any such Lien attaches only to the Property financed or
leased and such Lien attaches thereto concurrently with or
within 90 days after the acquisition thereof in connection
with the purchase money transactions and within 30 days after
the closing of any sale/leaseback transaction;
(ix) leases or subleases granted to others not
interfering in any material respect with the business of any
member of the Consolidated Group;
(x) any interest of title of a lessor under, and
Liens arising from UCC financing statements (or equivalent
filings, registrations or agreements in foreign jurisdictions)
relating to, leases permitted by this Credit Agreement;
(xi) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods;
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<PAGE> 33
(xii) Liens created or deemed to exist in
connection with a Permitted Securitization Transaction
(including any related filings of any financing statements),
but only to the extent that any such Lien relates to the
applicable receivables and related property actually sold,
contributed or otherwise conveyed pursuant to such
transaction;
(xiii) Liens deemed to exist in connection with
Investments in repurchase agreements permitted under Section
8.5;
(xiv) normal and customary rights of setoff upon
deposits of cash in favor of banks or other depository
institutions;
(xv) Liens in respect of Indebtedness permitted
under Section 8.1(g), limited solely to sums payable under the
policy or policies to which such Indebtedness relates;
(xvi) Liens on personal property of the Canadian
Subsidiaries in favor of one or more Canadian lenders securing
the Indebtedness described under Section 8.1(j); and
(xvii) Liens existing as of the Closing Date and
set forth on Schedule 6.8; provided that no such Lien shall at
any time be extended to or cover any Property other than the
Property subject thereto on the Closing Date.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which any
Credit Party or any of its Subsidiaries or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" within the meaning of Section 3(5)
of ERISA.
"Pledge Agreements" means the Domestic Pledge Agreement and
the Canadian Pledge Agreement.
"Prime Rate" means
(i) in the case of Domestic Revolving
Loans, the rate of interest per annum publicly announced from
time to time by Bank of America as its prime rate in effect at
its principal office in Charlotte, North Carolina, with each
change in the Prime Rate being effective on the date such
change is publicly announced as effective (it being understood
and agreed that the Prime Rate is a reference rate used
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<PAGE> 34
by Bank of America in determining interest rates on certain
loans and is not intended to be the lowest rate of interest
charged on any extension of credit by Bank of America to any
debtor);
(ii) in the case of Canadian Revolving
Loans denominated in U.S. Dollars, the rate of interest
publicly announced by the Canadian Administrative Agent as its
prime or reference rate in effect for commercial loans in
Canada denominated in U.S. Dollars, with each change thereof
being effective on the date any such change is publicly
announced as effective (it being understood and agreed that
such prime or reference rate is a reference rate used in
determining interest rates on certain loans and is not
intended to be the lowest rate of interest charged on any
extension of credit); and
(iii) in the case of Canadian Revolving
Loans denominated in Canadian Dollars, the rate of interest
publicly announced by the Canadian Administrative Agent as its
prime or reference rate in effect for commercial loans in
Canada denominated in Canadian Dollars, with each change
thereof being effective on the date any such change is
publicly announced as effective (it being understood and
agreed that such prime or reference rate is a reference rate
used in determining interest rates on certain loans and is not
intended to be the lowest rate of interest charged on any
extension of credit).
"Pro Forma Basis" means, with respect to any calculation of
financial covenants in connection with any proposed Acquisition or
Divestiture pursuant to Sections 8.4 or 8.3, respectively, that (i)
such financial covenants shall be calculated on a pro forma basis
giving effect to such Acquisition or Divestiture, (ii) such Acquisition
or Divestiture shall be deemed to have occurred as of the first day of
the four fiscal quarter period ending as of the most recent fiscal
quarter end preceding the date of such Acquisition or Divestiture with
respect to which both Administrative Agents and the Lenders have
received the Officer's Certificate required by Section 7.2(b), (iii)
any Indebtedness incurred in connection with any such Acquisition shall
be deemed to have been incurred as of the first day of such four fiscal
quarter period, (iv) any Indebtedness repaid in connection with any
such Divestiture shall be deemed to have been repaid as of the first
day of such four fiscal quarter period, and (v) if such Indebtedness
incurred or repaid for the purposes of clause (iv) has a floating or
formula rate, then the implied rate of interest for such Indebtedness
for the applicable four quarter period shall be determined by utilizing
the rate which is or would be in effect with respect to such
Indebtedness as at the relevant date of determination.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
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"Quoted Rate" means, with respect to a Quoted Rate Swingline
Loan, the fixed or floating percentage rate per annum, if any, offered
by the Swingline Lender and accepted by the Domestic Borrower in
accordance with the provisions hereof.
"Quoted Rate Swingline Loan" means a Swingline Loan bearing
interest at the Quoted Rate.
"Registers" means the Domestic Register and the Canadian
Register.
"Registration Statement" means the Registration Statement of
the Domestic Borrower on Form S-1, initially filed with the SEC on May
22, 1998, as amended and supplemented through Post-Effective Amendment
No. 1 thereto, filed with the SEC on July 29, 1998 and declared
effective by the SEC on July 29, 1998.
"Regulation D, O, T, U or X" means Regulation D, O, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles
containing any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
notice requirement has been waived by regulation.
"Required Lenders" means, at any time, Lenders having more
than fifty percent (50%) of the Commitments (as such Commitments may be
increased pursuant to Section 2.1(h)), or if the Commitments have been
terminated, Lenders having more than fifty percent (50%) of the
aggregate principal amount of the Obligations outstanding (taking into
account in each case Participation Interests or obligation to
participate therein); provided that the Commitments of, and outstanding
principal amount of Obligations (taking into account Participation
Interests therein) owing to, a Defaulting Lender shall be excluded for
purposes hereof in making a determination of Required Lenders.
"Requirement of Law" means any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its material property is subject.
"Responsible Officer" means the Chief Executive Officer, the
Chief Financial Officer, the Controller, the Chief Operating Officer,
the Chief Accounting Officer and the Treasurer of the Domestic
Borrower.
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"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock now or hereafter outstanding, except (A) a dividend payable
solely in shares of that class to the holders of that class, (B)
dividends and other distributions payable to a Credit Party, (C)
dividends paid or payable to the shareholders of certain of the
Founding Companies in respect of tax liabilities incurred under
Subchapter S of the Internal Revenue Code on or before the Closing Date
(whether such dividends are paid on, before or after the Closing Date)
and (D) the repurchase of stock of a minority shareholder of one of the
Founding Companies referred to in note 4g(1) to the unaudited pro forma
as adjusted financial statements of the Domestic Borrower, as set forth
on page F-8 of the Registration Statement, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class
of stock now or hereafter outstanding, and (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock now or
hereafter outstanding.
"Revolving Loan" means any Domestic Revolving Loan or any
Canadian Revolving Loan.
"SEC" means the Securities and Exchange Commission and any
successor Governmental Authority.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Securitization Transaction" means any financing transaction
or series of financing transactions that have been or may be entered
into by a member of the Consolidated Group pursuant to which such
member of the Consolidated Group may sell, convey or otherwise transfer
to (i) a Subsidiary or affiliate (a "Securitization Subsidiary"), or
(ii) any other Person, or may grant a security interest in, any
receivables or interests therein secured by merchandise or services
financed thereby (whether such receivables are then existing or arising
in the future) of such member of the Consolidated Group, and any assets
related thereto, including without limitation, all security interests
in merchandise or services financed thereby, the proceeds of such
receivables, and other assets which are customarily sold or in respect
of which security interests are customarily granted in connection with
securitization transactions involving such assets.
"Security Agreements" means the Domestic Security Agreement
and the Canadian Security Agreement.
"Senior Subordinated Notes" means those 11 1/2% Senior
Subordinated Notes of the Domestic Borrower due 2009 issued on April
15, 1999, as amended, modified and extended.
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"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple
Employer Plan.
"Stock Incentive Plan" means the Domestic Borrower's 1998
Stock Incentive Plan described in the Registration Statement.
"Subordinated Debt" means (i) the Indebtedness evidenced by
the Senior Subordinated Notes, and (ii) any other Indebtedness of a
member of the Consolidated Group which by its terms is expressly
subordinated in right of payment to the prior payment of the
obligations under the Credit Agreement and the other Credit Documents
on terms and conditions satisfactory to the Required Lenders.
"Subsidiary" means, as to any Person, (a) any corporation more
than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time, any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by
such Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture or other entity in which such
Person directly or indirectly through Subsidiaries has more than 50% of
the voting interests at any time. Unless otherwise identified,
"Subsidiary" or "Subsidiaries" shall mean Subsidiaries of the Domestic
Borrower.
"Support Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or provide
funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including without limitation keep
well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder
of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof, but
specifically excluding guaranties or other assurances with respect to
any Credit Party's performance obligations under bids or contracts made
or entered into in the ordinary course of business (including, without
limitation, guaranties in favor of sureties under performance bonds or
the like and guaranties issued by Credit Parties in substitution for or
in support of such guaranties issued prior to the Closing Date by the
Founding Companies or their respective stockholders and principals).
The amount of any Support Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger)
of the Indebtedness in respect of which such Support Obligation is
made.
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"Swingline Commitment" means the commitment of the Swingline
Lender to make Swingline Loans in an aggregate principal amount at any
time outstanding up to the Swingline Committed Amount and the
commitment of the Domestic Lenders to purchase participation interests
in the Swingline Loans up to their respective Domestic Revolving
Commitment Percentage.
"Swingline Committed Amount" shall have the meaning assigned
to such term in Section 2.1(c).
"Swingline Lender" means Bank of America.
"Swingline Loan" means a swingline revolving loan made by the
Swingline Lender pursuant to the provisions of Section 2.1(c).
"Termination Date" means August 5, 2002, or if extended
pursuant to the provisions of Section 2.1(e), such later date as to
which the Termination Date may be extended.
"U.S. Dollars" and "US$" means dollars in lawful currency of
the United States of America.
"Voting Stock" means, with respect to any Person, capital
stock issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the happening of
such a contingency.
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder, the
word "from" means "from and including" and the words "to" and "until" each mean
"to but excluding."
1.3 Accounting Terms; Certain Calculations
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Lenders hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis. All calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with the most recent annual or quarterly financial statements delivered pursuant
to Section 7.1; provided, however, if (a) the Domestic Borrower shall object to
determining such compliance on such basis at the time of delivery of such
financial statements due to any change in GAAP or the rules promulgated with
respect thereto or (b) the Domestic Administrative Agent or the Required Lenders
shall so object in writing within 30
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days after delivery of such financial statements, then such calculations shall
be made on a basis consistent with the most recent financial statements
delivered by the Domestic Borrower to the Lenders as to which no such objection
shall have been made.
(b) Notwithstanding anything to the contrary contained in
subsection (a) above, the parties hereto agree that the financial covenants set
forth in Section 7.9 shall be calculated as follows (including, without
limitation, calculation of the Consolidated Total Leverage Ratio for the purpose
of the definition of "Applicable Percentage" set forth in Section 1.1 and
calculation of all such financial covenants for the purposes of Sections 8.3 and
8.4):
(i) all such calculations shall be performed on a Pro
Forma Basis with respect to any Acquisition or Divestiture occurring
within such four quarter period (or, solely for the purposes of
Sections 8.3 and 8.4, contemplated to occur within the fiscal quarter
following such period);
(ii) solely for the purpose of calculations to be
performed on a Pro Forma Basis for the purposes of Section 8.4, any
adjustments to pro forma consolidated income statement items
attributable to an Acquisition shall be performed in accordance with
Rule 11.02 of Regulation S-X promulgated by the SEC or otherwise
consented to by both Administrative Agents and the Required Lenders;
and
(iii) all such calculations with respect to periods ending
on or before June 30, 1999 shall be performed utilizing, to the extent
applicable, the unaudited pro forma as adjusted financial statements
for the fiscal quarters ended December 31, 1997, March 31, 1998, June
30, 1998 and September 30, 1998.
SECTION 2
CREDIT FACILITIES
2.1 Commitments.
(a) Domestic Revolving Commitment. During the Commitment
Period, subject to the terms and conditions hereof, each Domestic Lender
severally agrees to make revolving credit loans (the "Domestic Revolving
Loans") to the Domestic Borrower in U.S. Dollars from time to time in the amount
of such Domestic Lender's Domestic Revolving Commitment Percentage of such
Domestic Revolving Loans for the purposes hereinafter set forth; provided that
(i) with regard to the Domestic Lenders collectively, the aggregate principal
amount of Domestic Obligations outstanding at any time shall not exceed NINETY
MILLION U.S. DOLLARS (US$90,000,000) (as such amount may be reduced or increased
from time to time in accordance with the provisions hereof, the "Aggregate
Domestic Revolving Committed Amount"), (ii) with regard to each Domestic Lender
individually, such Domestic Lender's Domestic Revolving Commitment Percentage of
Domestic Obligations outstanding at any time
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shall not exceed such Domestic Lender's Domestic Revolving Committed Amount, and
(iii) with regard to the Lenders collectively, the aggregate principal Dollar
Amount of Obligations outstanding at any time shall not exceed the Borrowing
Base. Domestic Revolving Loans may consist of Base Rate Loans or Eurodollar
Loans, or a combination thereof, as the Domestic Borrower may request, and may
be repaid and reborrowed in accordance with the provisions hereof.
(b) Letter of Credit Commitment. During the Commitment
Period, subject to the terms and conditions hereof and of the LOC Documents, if
any, and such other terms and conditions which the Issuing Lender may reasonably
require, the Issuing Lender shall issue, and the Domestic Lenders shall
participate in, such Letters of Credit in U.S. Dollars as the Domestic Borrower
may request for its own account or for the account of another Domestic Credit
Party as provided herein, in a form acceptable to the Issuing Lender, for the
purposes hereinafter set forth; provided that (i) the aggregate amount of LOC
Obligations shall not exceed TWENTY MILLION U.S. DOLLARS (US$20,000,000) at any
time (as such amount may be reduced from time to time in accordance with the
provisions hereof, the "LOC Committed Amount"), (ii) with regard to the Domestic
Lenders collectively, the aggregate principal amount of Domestic Obligations
outstanding at any time shall not exceed the Aggregate Domestic Revolving
Committed Amount, (iii) with regard to each Domestic Lender individually, such
Domestic Lender's Domestic Revolving Commitment Percentage of Domestic
Obligations outstanding at any time shall not exceed such Domestic Lender's
Domestic Revolving Committed Amount, and (iv) with regard to the Lenders
collectively, the aggregate principal Dollar Amount of Obligations outstanding
at any time shall not exceed the Borrowing Base. Letters of Credit issued
hereunder shall not have an original expiry date more than one year from the
date of issuance or extension. If any Letter of Credit issued hereunder shall
have an expiry date, whether as originally issued or by extension, extending
beyond the Termination Date for Domestic Revolving Commitments, the Domestic
Borrower shall, on the Termination Date, either (i) cause such Letter of Credit
to be surrendered to the Issuing Lender, (ii) provide to the Issuing Lender a
back-to-back letter of credit in respect thereof reasonably satisfactory to the
Issuing Lender or (iii) provide cash collateral to the Issuing Lender in an
amount equal to the maximum amount available to be drawn under such Letter of
Credit. Each Letter of Credit shall comply with the related LOC Documents. The
issuance date of each Letter of Credit shall be a Business Day.
(c) Swingline Commitment. During the Commitment Period,
subject to the terms and conditions hereof, the Swingline Lender agrees to make
certain revolving credit loans (the "Swingline Loans") to the Domestic Borrower
in U.S. Dollars from time to time for the purposes hereinafter set forth;
provided that (i) the aggregate principal amount of Swingline Loans shall not
exceed FIVE MILLION U.S. DOLLARS (US$5,000,000) (as such amount may be reduced
from time to time in accordance with the provisions hereof, the "Swingline
Committed Amount"), (ii) with regard to the Domestic Lenders collectively, the
aggregate principal amount of Domestic Obligations outstanding at any time shall
not exceed the Aggregate Domestic Revolving Committed Amount, and (iii) with
regard to the Lenders collectively, the aggregate principal Dollar Amount of
Obligations outstanding at any time shall not exceed the Borrowing Base.
Swingline Loans may consist of Base Rate Loans or Quoted
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Rate Swingline Loans, or a combination thereof, as the Domestic Borrower may
request, and may be repaid and reborrowed in accordance with the provisions
hereof.
(d) Canadian Revolving Commitment. During the Commitment
Period, subject to the terms and conditions hereof, each Canadian Lender
severally agrees to make revolving credit loans (the "Canadian Revolving Loans")
to the Canadian Borrowers in U.S. Dollars or Canadian Dollars from time to time
in the amount of such Canadian Lender's Canadian Revolving Commitment Percentage
of such Canadian Revolving Loans for the purposes hereinafter set forth;
provided that (i) with regard to the Canadian Lenders collectively, the
aggregate principal Dollar Amount of Canadian Obligations outstanding at any
time shall not exceed FIFTEEN MILLION U.S. DOLLARS (US$15,000,000) (as such
amount may be reduced from time to time in accordance with the provisions
hereof, the "Aggregate Canadian Revolving Committed Amount"), (ii) with regard
to each Canadian Lender individually, such Canadian Lender's Canadian Revolving
Commitment Percentage of the Dollar Amount of Canadian Obligations outstanding
at any time shall not exceed such Canadian Lender's Canadian Revolving Committed
Amount, and (iii) with regard to the Lenders collectively, the aggregate
principal Dollar Amount of Obligations outstanding at any time shall not exceed
the Borrowing Base. Canadian Revolving Loans denominated in Canadian Dollars
shall consist of Base Rate Loans. Canadian Revolving Loans denominated in U.S.
Dollars may consist of Base Rate Loans or Eurodollar Loans, or a combination
thereof, as the Canadian Borrowers may request. Canadian Revolving Loans may be
repaid and reborrowed in accordance with the provisions hereof.
The Canadian Administrative Agent shall give notice to the Domestic
Administrative Agent of each advance of a Canadian Revolving Loan (including
extensions and conversions thereof) and repayments thereof.
(e) Canadian Bankers' Acceptance Commitment. During the
Commitment Period, subject to the terms and conditions hereof and of the BA
Documents, if any, and such other terms and conditions which the Canadian
Lenders may reasonably require, each Canadian Lender severally agrees to create
Bankers' Acceptances by accepting orders of the Canadian Borrowers presented to
it for acceptance equal to such Canadian Lender's Canadian Revolving Commitment
Percentage of such Bankers' Acceptances; provided that (i) with regard to the
Canadian Lenders collectively, the aggregate principal Dollar Amount of Canadian
Obligations outstanding at any time shall not exceed the Aggregate Canadian
Revolving Committed Amount, (ii) with regard to each Canadian Lender
individually, such Canadian Lender's Canadian Revolving Commitment Percentage of
the Dollar Amount of Canadian Obligations outstanding at any time shall not
exceed such Canadian Lender's Canadian Revolving Committed Amount, and (iii)
with regard to the Lenders collectively, the aggregate principal Dollar Amount
of Obligations outstanding at any time shall not exceed the Borrowing Base. The
Canadian Lenders may, but are not obligated to, purchase any of the Bankers'
Acceptances. For greater certainty, with respect to each Extension of Credit by
way of Bankers' Acceptances, each Bankers' Acceptance shall have the same term
and, upon sale, each Bankers' Acceptance shall be discounted. The creation and
maturity date for each Bankers' Acceptance shall be a Business Day and no
Bankers' Acceptance shall have a maturity date later than the Termination Date.
Subject to Section
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2.8(e)(iii), it shall be the responsibility of each Canadian Lender to arrange,
in accordance with normal market practice, for the sale on each drawdown date of
the Bankers' Acceptances issued by a Canadian Borrower and to be accepted by a
Canadian Lender, failing which each Canadian Lender shall purchase such Bankers'
Acceptances at the Applicable BA Discount Rate. The Canadian Administrative
Agent shall give notice to the Domestic Administrative Agent of each advance by
way of a Bankers' Acceptance (including extensions and conversions thereof) and
repayments thereof.
(f) Joint and Several Nature of Canadian Borrowers'
Obligations. The obligations of the Canadian Borrowers, as to the Canadian
Obligations hereunder, are joint and several in nature.
(g) Extension of Termination Date. The Domestic Borrower
may request that the Domestic Lenders extend the Termination Date for Domestic
Revolving Commitments for an additional one year period, and the Canadian
Borrowers may request that the Canadian Lenders extend the Termination Date for
Canadian Revolving Commitments for an additional one year period as follows:
(i) Request for Extension. Not more than 15
months and not less than 60 days prior to the Termination Date, the
applicable Borrower(s) may, by notice to the respective Administrative
Agent, make written request of the respective Lenders to extend the
Termination Date for an additional one year period. In any such case,
the relevant Administrative Agent will give prompt notice to each of
the relevant Lenders of its receipt of any such request for extension
of the Termination Date. Each such Lender shall notify the
Administrative Agent in writing not later than 30 days after receipt of
such notice as to whether or not it will agree to extend the
Termination Date as requested. Each decision by each such Lender shall
be in its sole discretion; provided, however, that failure by any such
Lender to respond within 30 days after receipt of such notice shall be
deemed to constitute a refusal by such Lender to extension of the
Termination Date. If Domestic Lenders holding more than 50% of the
respective aggregate Domestic Revolving Commitments (as such Domestic
Revolving Commitments may be increased pursuant to Section 2.1(g)(ii)
below) timely agree in writing to extend the Termination Date for
Domestic Revolving Commitments for an additional one year period, then,
subject to the provisions and limitations of clause (ii) below, the
Termination Date for Domestic Revolving Commitments shall be extended
for an additional one year period. If Canadian Lenders holding more
than 50% of the respective aggregate Canadian Revolving Commitments (as
such Canadian Revolving Commitments may be increased pursuant to
Section 2.1(g)(ii) below) timely agree in writing to extend the
Termination Date for Canadian Revolving Commitments for an additional
one year period, then, subject to the provisions and limitations of
clause (ii) below, the Termination Date for Canadian Revolving
Commitments shall be extended for an additional one year period.
(ii) Lender Not Consenting. If any Lender does
not timely agree in writing to extend the Termination Date applicable
to such Lender's Commitments, then
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the Termination Date, as it relates to such Lender, shall not be
extended, the Commitments of such Lender shall terminate on the
Termination Date applicable to such Lender and any Loans made by such
Lender and all accrued and unpaid interest thereon shall be due and
payable on the Termination Date applicable to such Lender. Upon the
termination of the Commitments of any Lender pursuant to the foregoing
sentence, unless this Agreement is amended as provided in Section
2.1(g)(v), the aggregate amount of the Commitments shall be reduced by
the amount of such terminated Commitments and the Domestic Revolving
Commitment Percentage and/or Canadian Revolving Commitment Percentage
of each other Lender shall be adjusted accordingly.
(iii) Other Lenders. No refusal by any Lender or
Lenders to consent to any extension of the Termination Date shall
affect the extension of the Termination Date as it may relate to the
Commitment and Loans of any Lender which consents to such extension
pursuant to Section 2.1(g)(i), and one or more Lenders may consent to
the extension of the Termination Date as it relates to them
notwithstanding any refusal by any other Lenders so to consent;
provided that even as to the consenting Lenders the Termination Date
will be extended only upon consent to such an extension by Lenders
holding more than 50% of the respective aggregate Canadian Revolving
Commitments in the case of the Canadian Lenders and the Domestic
Revolving Commitments in the case of the Domestic Lenders (in each case
as such Commitments may be increased pursuant to Section 2.1(g)(v)
below).
(iv) Termination of Commitment. If any Lender
does not timely consent to the extension of the Termination Date
pursuant to Section 2.1(g)(i) and no Loans are then outstanding, the
applicable Borrower(s) may upon at least three (3) Business Days' prior
notice to such Lender and to the relevant Administrative Agent
terminate the Commitment of such Lender. Upon any such termination the
Domestic Revolving Commitment Percentage and/or the Canadian Revolving
Commitment Percentage of each other Lender shall be adjusted, if
necessary, after giving effect to such termination and any increases in
the aggregate amount of the Commitments under the provisions of Section
2.1(g)(v).
(v) Increase in Commitment of Other Lender or
Lenders. If any Lender does not timely consent to the extension of the
Termination Date applicable to such Lender pursuant to Section
2.1(g)(i), upon the expiration of the Commitments of such Lender, or
upon the termination of the Commitments of such Lender as provided in
Section 2.1(g)(iv), the applicable Borrower(s) may offer each relevant
Lender which has timely consented to the extension of the Termination
Date pursuant to Section 2.1(g)(i) a reasonable opportunity to increase
its Commitment by an amount equal to its pro-rata share (based on its
Commitment before such increase) of the Commitment of the Lender which
does not timely consent to the extension of the Termination Date
pursuant to Section 2.1(g)(i). After giving such Lenders such an
opportunity, the applicable Borrower(s) and the relevant Administrative
Agent, acting on behalf of the relevant Lenders, shall amend this
Credit Agreement to increase the Commitment of any Lender
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or Lenders that consent to an increase in their respective Commitments
hereunder, and such amendment shall be binding on all of the Lenders,
provided that such increase does not increase the aggregate amount of
the Commitments to an amount greater than the aggregate amount of
Commitments in effect immediately before such expiration or
termination.
(vi) Notice. The relevant Administrative Agent
shall promptly advise each relevant Lender of any change in Domestic
Revolving Commitment Percentages and/or the Canadian Revolving
Commitment Percentages made pursuant to Section 2.1(g)(v) and shall
promptly provide each of the relevant Lenders and the other
Administrative Agent with a copy of any amendment made pursuant to
Section 2.1(g)(v).
(h) Increase in Domestic Revolving Commitments. Subject to the
terms and conditions set forth herein, the Domestic Borrower may at any time
upon notice to the Domestic Administrative Agent increase the Domestic Revolving
Commitments by an amount equal to (i) TEN MILLION DOLLARS (US$10,000,000) plus
(ii) the amount by which the Aggregate Canadian Revolving Committed Amount is at
any time permanently reduced by the Domestic Borrower pursuant to Section
3.4(a), in the aggregate to an Aggregate Domestic Revolving Committed Amount of
up to One Hundred Fifteen Million U.S. Dollars (US$115,000,000); provided that
(A) any such increase shall be in a minimum
aggregate principal amount of US$5,000,000 and integral multiples of
US$1,000,000 in excess thereof (or the remaining amount, if less),
(B) if any Domestic Revolving Loans are
outstanding at the time of any such increase, the Domestic Borrower
shall make such payments and adjustments on the Domestic Revolving
Loans (including payment of any break-funding amounts owing under
Section 3.11) as necessary to give effect to the revised commitment
percentages and commitment amounts,
(C) the conditions to the making of an
additional Domestic Revolving Loan provided in Section 5.2 shall be
satisfied, and
(D) the Domestic Borrower shall obtain
commitments for the amount of the increase from existing Domestic
Lenders or other banks or financial institutions reasonably acceptable
to the Domestic Administrative Agent provided that such other
commercial banks and financial institutions join in this Agreement as
Domestic Lenders by joinder agreement or other arrangement reasonably
acceptable to the Domestic Administrative Agent. In connection with any
such increase in the Domestic Revolving Commitments, Schedule 2.1 shall
be revised to reflect the modified commitments and commitment
percentages of the Domestic Lenders, and the Domestic Borrower will
provide in connection therewith supporting corporate resolutions, legal
opinions,
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promissory notes and other items as may be reasonably requested by the
Domestic Administrative Agent and the Domestic Lenders or prospective
Domestic Lenders.
2.2 Method of Borrowing.
(a) Notice of Request for Extensions of Credit. The
applicable Borrower shall request an Extension of Credit hereunder by written
notice (or telephonic notice promptly confirmed in writing) as follows:
(i) Domestic Revolving Loans. In the case of
Domestic Revolving Loans, by the Domestic Borrower to the Domestic
Administrative Agent not later than 11:00 A.M. (Charlotte, North
Carolina time) on the date of the requested borrowing in the case of
Base Rate Loans, and on the third Business Day prior to the date of the
requested borrowing in the case of Eurodollar Loans. Each such request
for borrowing shall be irrevocable and shall specify (A) that a
Domestic Revolving Loan is requested, (B) the date of the requested
borrowing (which shall be a Business Day), (C) the aggregate principal
amount to be borrowed, and (D) whether the borrowing shall be comprised
of Base Rate Loans, Eurodollar Loans or a combination thereof, and if
Eurodollar Loans are requested, the Interest Period(s) therefor. A form
of Notice of Borrowing is attached as Schedule 2.2(a)(i). The Domestic
Administrative Agent shall give notice to each Domestic Lender promptly
upon receipt of each Notice of Borrowing pursuant to this Section
2.2(a)(i), the contents thereof and each Domestic Lender's share of any
borrowing to be made pursuant thereto.
(ii) Letters of Credit. In the case of Letters of
Credit, by the Domestic Borrower to the Issuing Lender with a copy to
the Domestic Administrative Agent not later than 11:00 A.M. (Charlotte,
North Carolina time) on the third Business Day prior to the date of the
requested issuance or extension (or such shorter period as may be
agreed by the Issuing Lender). Each such request for issuance or
extension of a Letter of Credit shall be irrevocable and shall specify,
among other things, (A) that a Letter of Credit is requested, (B) the
date of the requested issuance or extension, (C) the type, amount,
expiry date and terms on which the Letter of Credit is to be issued or
extended, and (D) the beneficiary. A form of Notice of Request for
Letter of Credit is attached as Schedule 2.2(a)(ii).
(iii) Swingline Loans. In the case of Swingline
Loans, by the Domestic Borrower to the Swingline Lender with a copy to
the Domestic Administrative Agent not later than 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day of the requested borrowing.
Each such request for borrowing shall be irrevocable and shall specify
(A) that a Swingline Loan is requested, (B) the date of the requested
borrowing (which shall be a Business Day), (C) the aggregate principal
amount to be borrowed, and (D) the interest rate option and maturity
requested therefor. A form of Notice of Borrowing is attached as
Schedule 2.2(a)(iii). Notwithstanding the foregoing, however, in the
event that an "auto borrow" or "zero balance" or similar arrangement
shall then be in place with
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the Swingline Lender, the Domestic Borrower shall request Swingline
Loans pursuant to such alternative notice arrangements, if any,
provided thereunder or in connection therewith. Each Swingline Loan
shall have a maturity date as the Domestic Borrower may request and the
Swingline Lender may agree.
(iv) Canadian Revolving Loans. In the case of the
Canadian Revolving Loans, by a Canadian Borrower to the Canadian
Administrative Agent not later than 10:00 A.M. (Toronto, Ontario time)
on the Business Day prior to the date of requested borrowing in the
case of Base Rate Loans, and on the third Business Day prior to the
date of requested borrowing in the case of Eurodollar Loans. Each such
request for borrowing shall be irrevocable and shall specify (A) that a
Canadian Revolving Loan is requested, (B) the aggregate principal
amount and applicable currency to be borrowed, and (C) whether the
borrowing shall be comprised of Base Rate Loans, Eurodollar Loans or a
combination thereof, and if Eurodollar Loans are requested, the
Interest Period(s) therefor. A form of Notice of Borrowing is attached
as Schedule 2.2(a)(iv). The Canadian Administrative Agent shall give
notice to each Canadian Lender promptly upon receipt of each such
Notice of Borrowing pursuant to this clause (iv), the contents thereof
and each such Canadian Lender's share of any borrowing to be made
pursuant thereto.
(v) Canadian Bankers' Acceptances. In the case
of Bankers' Acceptances, by a Canadian Borrower to the Canadian
Administrative Agent not later than 10:00 A.M. (Toronto, Ontario time)
on the second Business Day prior to the date requested for creation of
the Bankers' Acceptance. Each such request shall be irrevocable and
shall specify (A) that creation of a Bankers' Acceptance is requested,
(B) the aggregate Face Amount and the applicable term date of 30, 60,
90 or 180 days therefor, and shall be accompanied by the Acceptance Fee
relating thereto (unless otherwise withheld pursuant to Section
2.8(e)(ii)). A form of Notice of Borrowing is attached as Schedule
2.2(a)(v). The Canadian Administrative Agent shall give notice to each
Canadian Lender promptly upon receipt of each such Notice of Borrowing
relating to creation, drawdown, continuation or conversion pursuant
this clause (v), the contents thereof and each Canadian Lender's share
of the Bankers' Acceptances to be created thereby.
(b) Minimum Amounts. Each Revolving Loan advance shall be
in a minimum principal amount of US$1,000,000, in the case of Eurodollar Loans,
or US$1,000,000 (or, if less, the remaining Aggregate Canadian Revolving
Committed Amount in the case of Canadian Revolving Loans, or the Aggregate
Domestic Revolving Committed Amount in the case of Domestic Revolving Loans), in
the case of Base Rate Loans, and integral multiples of US$250,000 in excess
thereof. Each Swingline Loan advance shall be in a minimum principal amount of
US$1,000,000 and integral multiples of US$100,000 in excess thereof (or the
remaining amount of the Swingline Committed Amount, if less) provided that in
the event that an "auto borrow" or "zero balance" or similar arrangement shall
then be in place with the Swingline Lender, each Swingline Loans advance shall
be in such minimum amounts, if any, provided by such agreement. Each request for
creation of Bankers' Acceptances shall be in a minimum aggregate principal
amount of CDN$1,000,000 and integral multiples thereof,
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provided that (i) the minimum Face Amount of each Bankers' Acceptance created
hereunder shall be in a minimum Face Amount of CDN$100,000 and integral
multiples thereof, and (ii) the amount of any request for Bankers' Acceptances
may be rounded by the Canadian Administrative Agent, in its discretion, to
provide for Face Amounts for each Canadian Lender in a minimum principal amount
of CDN$100,000 and integral multiples thereof.
(c) Information Not Provided. If in connection with any
such request for a Revolving Loan, the applicable Borrower shall fail to specify
(i) an applicable Interest Period in the case of a Eurodollar Loan, the
applicable Borrower shall be deemed to have requested an Interest Period of one
month, or (ii) the type of loan requested in the case of a Revolving Loan or a
Swingline Loan, the applicable Borrower shall be deemed to have requested a Base
Rate Loan.
(d) Maximum Number of Eurodollar Loans. In connection
with any request for a Revolving Loan, (i) Domestic Revolving Loans may be
comprised of no more than five (5) Eurodollar Loans outstanding at any time and
(ii) Canadian Revolving Loans denominated in U.S. Dollars may be comprised of no
more than five (5) Eurodollar Loans outstanding at any time. For purposes
hereof, Eurodollar Loans with separate or different Interest Periods will be
considered as separate Eurodollar Loans even if their Interest Periods expire on
the same date.
2.3 Interest.
Subject to Section 3.1, the Loans hereunder shall bear interest at a
per annum rate, payable in arrears on each applicable Interest Payment Date (or
at such other times as may be specified herein), as follows:
(a) Base Rate Loans. During such periods as the Loans
shall be comprised of Base Rate Loans, the sum of the Base Rate plus the
Applicable Percentage;
(b) Eurodollar Loans. During such periods as the Loans
shall be comprised of Eurodollar Loans, the sum of the Eurodollar Rate plus the
Applicable Percentage; and
(c) Quoted Rate Swingline Loans. During such periods as
the Swingline Loans shall be comprised of Quoted Rate Swingline Loans, the
Quoted Rate.
2.4 Repayment.
(a) Domestic Revolving Loans. The principal amount of all
Domestic Revolving Loans shall be due and payable in full on the Termination
Date.
(b) Swingline Loans. The principal amount of all
Swingline Loans shall be due and payable in full on the Termination Date.
(c) Canadian Revolving Loans. The principal amount of all
Canadian Revolving Loans shall be due and payable in full on the Termination
Date.
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2.5 Notes.
Domestic Revolving Loans and Swingline Loans shall be evidenced by the
Domestic Revolving Notes. Canadian Revolving Loans shall be evidenced by the
Canadian Revolving Notes.
2.6 Additional Provisions relating to Letters of Credit.
(a) Reports. The Issuing Lender will provide to the Domestic
Administrative Agent at least monthly, and more frequently upon request, a
detailed summary report on each Letter of Credit and the activity thereon, in
form and substance acceptable to the Domestic Administrative Agent. In addition,
the Issuing Lender will provide to the Domestic Administrative Agent for
dissemination to the Domestic Lenders at least quarterly, and more frequently
upon request, a detailed summary report on each Letter of Credit and the
activity thereon, including, among other things, the Domestic Credit Party for
whose account the Letter of Credit is issued, the beneficiary, the face amount,
and the expiry date. The Issuing Lender will provide copies of each Letter of
Credit to the Domestic Administrative Agent and the Domestic Lenders promptly
upon request.
(b) Participation. Each Domestic Lender, with respect to the
Existing Letters of Credit, hereby purchases a participation interest in the
Existing Letters of Credit, and with respect to Letters of Credit issued on or
after the Closing Date, upon issuance of a Letter of Credit, shall be deemed to
have purchased without recourse a risk participation from the Issuing Lender in
such Letter of Credit and the obligations arising thereunder, in each case in an
amount equal to its pro rata share of the obligations under such Letter of
Credit (based on the respective Domestic Revolving Commitment Percentages of the
Domestic Lenders) and shall absolutely, unconditionally and irrevocably assume,
as primary obligor and not as surety, and be obligated to pay to the Issuing
Lender therefor and discharge when due, its pro rata share of the obligations
arising under such Letter of Credit. Without limiting the scope and nature of
each Domestic Lender's participation in any Letter of Credit, to the extent that
the Issuing Lender has not been reimbursed as required hereunder or under any
such Letter of Credit, each Domestic Lender shall pay to the Issuing Lender its
pro rata share of such unreimbursed drawing in same day funds on the day of
notification by the Issuing Lender of an unreimbursed drawing pursuant to the
provisions of subsection (d) hereof. The obligation of each Domestic Lender to
so reimburse the Issuing Lender shall be absolute and unconditional and shall
not be affected by the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of the Domestic Borrower to reimburse the Issuing Lender
under any Letter of Credit, together with interest as hereinafter provided.
(c) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Lender will promptly notify the Domestic Borrower. Unless
the Domestic Borrower shall immediately notify the Issuing Lender that it
intends to otherwise reimburse the Issuing Lender for such drawing, the Domestic
Borrower shall be deemed to have requested that the Domestic Lenders
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make a Domestic Revolving Loan in the amount of the drawing as provided in
subsection (d) below on the related Letter of Credit, the proceeds of which will
be used to satisfy the related reimbursement obligations. The Domestic Borrower
promises to reimburse the Issuing Lender on the day of drawing under any Letter
of Credit (either with the proceeds of a Domestic Revolving Loan obtained
hereunder or otherwise) in same day funds. If the Domestic Borrower shall fail
to reimburse the Issuing Lender as provided hereinabove, the unreimbursed amount
of such drawing shall bear interest at a per annum rate equal to the Base Rate
for Domestic Revolving Loans plus the sum of (i) the Applicable Percentage and
(ii) two percent (2%). The Domestic Borrower's reimbursement obligations
hereunder shall be absolute and unconditional under all circumstances
irrespective of any rights of setoff, counterclaim or defense to payment the
Domestic Borrower may claim or have against the Issuing Lender, the Domestic
Administrative Agent, the Lenders, the beneficiary of the Letter of Credit drawn
upon or any other Person, including without limitation any defense based on any
failure of the Domestic Borrower or any other Credit Party to receive
consideration or the legality, validity, regularity or unenforceability of the
Letter of Credit. The Issuing Lender will promptly notify the other Domestic
Lenders of the amount of any unreimbursed drawing and each Domestic Lender shall
promptly pay to the Domestic Administrative Agent for the account of the Issuing
Lender in U.S. Dollars and in immediately available funds, the amount of such
Domestic Lender's Domestic Revolving Commitment Percentage of such unreimbursed
drawing. Such payment shall be made on the day such notice is received by such
Domestic Lender from the Issuing Lender if such notice is received at or before
2:00 P.M. (Charlotte, North Carolina time) otherwise such payment shall be made
at or before 12:00 Noon (Charlotte, North Carolina time) on the Business Day
next succeeding the day such notice is received. If such Domestic Lender does
not pay such amount to the Issuing Lender in full upon such request, such
Domestic Lender shall, on demand, pay to the Domestic Administrative Agent for
the account of the Issuing Lender interest on the unpaid amount during the
period from the date of such drawing until such Domestic Lender pays such amount
to the Issuing Lender in full at a rate per annum equal to, if paid within two
(2) Business Days of the date that such Domestic Lender is required to make
payments of such amount pursuant to the preceding sentence, the Federal Funds
Rate and thereafter at a rate equal to the Base Rate for Domestic Revolving
Loans. Each Domestic Lender's obligation to make such payment to the Issuing
Lender, and the right of the Issuing Lender to receive the same, shall be
absolute and unconditional, shall not be affected by any circumstance whatsoever
and without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or the
acceleration of the obligations of the Domestic Borrower hereunder and shall be
made without any offset, abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a Domestic Lender to the
Issuing Lender, such Domestic Lender shall, automatically and without any
further action on the part of the Issuing Lender or such Domestic Lender,
acquire a participation in an amount equal to such payment (excluding the
portion of such payment constituting interest owing to the Issuing Lender) in
the related unreimbursed drawing portion of the LOC Obligation and in the
interest thereon and in the related LOC Documents, and shall have a claim
against the Domestic Borrower with respect thereto.
(d) Repayment with Domestic Revolving Loans. On any day on which
the Domestic Borrower shall have requested, or been deemed to have requested, a
Domestic Revolving Loan
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advance to reimburse a drawing under a Letter of Credit, the Domestic
Administrative Agent shall give notice to the Domestic Lenders that a Domestic
Revolving Loan has been requested or deemed requested by the Domestic Borrower
to be made in connection with a drawing under a Letter of Credit, in which case
a Domestic Revolving Loan advance comprised of Base Rate Loans (or Eurodollar
Loans to the extent the Domestic Borrower has complied with the procedures of
Section 2.2(a)(i) with respect thereto) shall be immediately made to the
Domestic Borrower by all Domestic Lenders (notwithstanding any termination of
the Commitments pursuant to Section 9.2) pro rata based on the respective
Domestic Revolving Commitment Percentages of the Domestic Lenders (determined
before giving effect to any termination of the Commitments pursuant to Section
9.2) and the proceeds thereof shall be paid directly to the Issuing Lender for
application to the respective LOC Obligations. Each such Domestic Lender hereby
irrevocably agrees to make its pro rata share of each such Domestic Revolving
Loan immediately upon any such request or deemed request in the amount, in the
manner and on the date specified in the preceding sentence notwithstanding (i)
the amount of such borrowing may not comply with the minimum amount for advances
of Domestic Revolving Loans otherwise required hereunder, (ii) whether any
conditions specified in Section 5.2 are then satisfied, (iii) whether a Default
or an Event of Default then exists, (iv) failure for any such request or deemed
request for Domestic Revolving Loan to be made by the time otherwise required
hereunder, (v) whether the date of such borrowing is a date on which Domestic
Revolving Loans are otherwise permitted to be made hereunder or (vi) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Domestic Revolving
Loan cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Domestic Borrower or any Credit
Party), then each such Domestic Lender hereby agrees that it shall forthwith
purchase (as of the date such borrowing would otherwise have occurred, but
adjusted for any payments received from the Domestic Borrower on or after such
date and prior to such purchase) from the Issuing Lender such participation in
the outstanding LOC Obligations as shall be necessary to cause each such
Domestic Lender to share in such LOC Obligations ratably (based upon the
respective Domestic Revolving Commitment Percentages of the Domestic Lenders
(determined before giving effect to any termination of the Commitments pursuant
to Section 9.2)), provided that in the event such payment is not made on the day
of drawing, such Domestic Lender shall pay in addition to the Issuing Lender
interest on the amount of its unfunded Participation Interest at a rate equal
to, if paid within two (2) Business Days of the date of drawing, the Federal
Funds Rate, and thereafter at the Base Rate for Domestic Revolving Loans.
(e) Designation of other Credit Parties as Account Parties.
Notwithstanding anything to the contrary set forth in this Credit Agreement,
including without limitation Section 2.2(a)(ii), a Letter of Credit issued
hereunder may contain a statement to the effect that such Letter of Credit is
issued for the account of a Domestic Credit Party other than the Domestic
Borrower, provided that notwithstanding such statement, the Domestic Borrower
shall be the actual account party for all purposes of this Credit Agreement for
such Letter of Credit and such statement shall not affect the Domestic
Borrower's reimbursement obligations hereunder with respect to such Letter of
Credit.
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(f) Renewal, Extension. The renewal or extension of any Letter of
Credit shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender may have the
Letters of Credit be subject to The Uniform Customs and Practice for Documentary
Credits (the "UCP") or the International Standby Practices 1998 (the "ISP98"),
in either case as published as of the date of issue by the International Chamber
of Commerce, in which case the UCP or the ISP98, as applicable, may be
incorporated therein and deemed in all respects to be a part thereof.
(h) Indemnification; Nature of Issuing Lender's Duties.
(i) In addition to its other obligations under this
Section 2.6, the Domestic Borrower hereby agrees to protect, indemnify,
pay and save the Issuing Lender harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) that the Issuing Lender
may incur or be subject to as a consequence, direct or indirect, of (A)
the issuance of any Letter of Credit or (B) the failure of the Issuing
Lender to honor a drawing under a Letter of Credit as a result of any
act or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or governmental authority (all such acts
or omissions, herein called "Government Acts").
(ii) As between the Domestic Borrower and the Issuing
Lender, the Domestic Borrower shall assume all risks of the acts,
omissions or misuse of any Letter of Credit by the beneficiary thereof.
The Issuing Lender shall not be responsible: (A) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for
and issuance of any Letter of Credit, even if it should in fact prove
to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher; (D)
for any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under a Letter of Credit or of the
proceeds thereof; and (E) for any consequences arising from causes
beyond the control of the Issuing Lender, including, without
limitation, any Government Acts. None of the above shall affect,
impair, or prevent the vesting of the Issuing Lender's rights or powers
hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender, under or in connection with any Letter
of Credit or the related certificates, if taken or omitted in good
faith, shall not put the Issuing Lender under any resulting liability
to the Domestic Borrower or any other Credit Party. It is the intention
of the parties that this Credit Agreement shall
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be construed and applied to protect and indemnify the Issuing Lender
against any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Domestic Borrower
(on behalf of itself and each of the other Credit Parties), including,
without limitation, any and all Government Acts. The Issuing Lender
shall not, in any way, be liable for any failure by the Issuing Lender
or anyone else to pay any drawing under any Letter of Credit as a
result of any Government Acts or any other cause beyond the control of
the Issuing Lender.
(iv) Nothing in this subsection (h) is intended to limit
the reimbursement obligations of the Domestic Borrower contained in
subsection (d) above. The obligations of the Domestic Borrower under
this subsection (h) shall survive the termination of this Credit
Agreement. No act or omissions of any current or prior beneficiary of a
Letter of Credit shall in any way affect or impair the rights of the
Issuing Lender to enforce any right, power or benefit under this Credit
Agreement.
(v) Notwithstanding anything to the contrary contained in
this subsection (h), the Domestic Borrower shall have no obligation to
indemnify the Issuing Lender in respect of any liability incurred by
the Issuing Lender (A) arising out of the gross negligence or willful
misconduct of the Issuing Lender, as determined by a court of competent
jurisdiction, or (B) caused by the Issuing Lender's failure to pay
under any Letter of Credit after presentation to it of a request
strictly complying with the terms and conditions of such Letter of
Credit, as determined by a court of competent jurisdiction, unless such
payment is prohibited by any law, regulation, court order or decree.
(i) Responsibility of Issuing Lender. It is expressly understood
and agreed that the obligations of the Issuing Lender hereunder to the Lenders
are only those expressly set forth in this Credit Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set forth in
Section 5.2 have been satisfied unless it shall have acquired actual knowledge
that any such condition precedent has not been satisfied; provided, however,
that nothing set forth in this Section 2.6 shall be deemed to prejudice the
right of any Lender to recover from the Issuing Lender any amounts made
available by such Lender to the Issuing Lender pursuant to this Section 2.6 in
the event that it is determined by a court of competent jurisdiction that the
payment with respect to a Letter of Credit constituted gross negligence or
willful misconduct on the part of the Issuing Lender.
(j) Conflict with LOC Documents. Solely as among the parties
hereto, in the event of any conflict between this Credit Agreement and any LOC
Document (including any letter of credit application), this Credit Agreement
shall control.
2.7 Additional Provisions relating to Swingline Loans.
The Swingline Lender may, at any time, in its sole discretion, by
written notice to the Domestic Borrower and the Domestic Lenders, demand
repayment of its Swingline Loans by way of a Domestic Revolving Loan advance, in
which case the Domestic Borrower shall be deemed to
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have requested a Domestic Revolving Loan advance comprised solely of Base Rate
Loans in the amount of such Swingline Loans; provided, however, that any such
demand shall be deemed to have been given one Business Day prior to the
Termination Date and on the date of the occurrence of any Event of Default
described in Section 9.1 and upon acceleration of the indebtedness hereunder and
the exercise of remedies in accordance with the provisions of Section 9.2. Each
Domestic Lender hereby irrevocably agrees to make its Domestic Revolving
Commitment Percentage of each such Domestic Revolving Loan in the amount, in the
manner and on the date specified in the preceding sentence notwithstanding (i)
the amount of such borrowing may not comply with the minimum amount for advances
of Domestic Revolving Loans otherwise required hereunder, (ii) whether any
conditions specified in Section 5.2 are then satisfied, (iii) whether a Default
or an Event of Default then exists, (iv) failure of any such request or deemed
request for Domestic Revolving Loan to be made by the time otherwise required
hereunder, (v) whether the date of such borrowing is a date on which Domestic
Revolving Loans are otherwise permitted to be made hereunder or (vi) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Domestic Revolving
Loan cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Domestic Borrower or any other
Credit Party), then each Domestic Lender hereby agrees that it shall forthwith
purchase (as of the date such borrowing would otherwise have occurred, but
adjusted for any payments received from the Domestic Borrower on or after such
date and prior to such purchase) from the Swingline Lender such Participation
Interests in the outstanding Swingline Loans as shall be necessary to cause each
such Domestic Lender to share in such Swingline Loans ratably based upon its
Domestic Revolving Commitment Percentage (determined before giving effect to any
termination of the Commitments pursuant to Section 3.4), provided that (A) all
interest payable on the Swingline Loans shall be for the account of the
Swingline Lender until the date as of which the respective Participation
Interest is funded and (B) at the time any purchase of Participation Interests
pursuant to this sentence is actually made, the purchasing Domestic Lender shall
be required to pay to the Swingline Lender, to the extent not paid to the
Swingline Lender by the Domestic Borrower in accordance with the terms of
Section 2.4(b), interest on the principal amount of Participation Interests
purchased for each day from and including the day upon which such borrowing
would otherwise have occurred to but excluding the date of payment for such
Participation Interests, at the rate equal to the Federal Funds Rate.
2.8 Additional Provisions relating to Canadian Bankers'
Acceptances.
(a) Form.
(i) To facilitate the acceptance of Bankers' Acceptances
hereunder, each of the Canadian Borrowers hereby appoints each Canadian
Lender as its attorney to sign and endorse on its behalf, as and when
considered necessary by such Canadian Lender, an appropriate number of
orders in the form prescribed by that Canadian Lender.
(ii) Each Canadian Borrower may, at its option, execute
any order in handwriting or by the facsimile or mechanical signature of
any of its authorized officers,
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and the Canadian Lenders are hereby authorized to accept or pay, as the
case may be, any order of such Canadian Borrower which purports to bear
such a signature notwithstanding that any such individual has ceased to
be an authorized officer of such Canadian Borrower (any such order or
Bankers' Acceptance shall be as valid and binding on such Canadian
Borrower as if the individual which signed the order or Bankers'
Acceptance) were an authorized officer at the date of issue of the
order or Bankers' Acceptance.
(iii) Any order signed by a Canadian Lender as attorney for
a Canadian Borrower, whether signed in handwriting or by the facsimile
or mechanical signature of an authorized officer of a Canadian Lender,
may be dealt with by the Canadian Administrative Agent or any Canadian
Lender to all intents and purposes and shall bind the Canadian Borrower
as if duly signed and issued by the Canadian Borrower.
(iv) The receipt by the Canadian Administrative Agent of a
notice under Section 2.2(a)(v) requesting the issuance of a Bankers'
Acceptance shall be each Canadian Lender's sufficient authority to
execute, and each Canadian Lender shall, subject to the terms and
conditions of this Agreement, execute orders in accordance with such
request, and the orders so executed shall thereupon be deemed to have
been presented for acceptance.
(b) Safekeeping of Orders. Any executed orders to be used as
Bankers' Acceptances which are delivered to a Canadian Lender shall be held in
safekeeping with the same degree of care as if they were such Canadian Lender's
own property, and shall be kept at the place at which such orders are ordinarily
held by such Canadian Lender, provided that such Canadian Lender shall not be
deemed to be an insurer thereof.
(c) Maturity/Continuations. The Canadian Borrowers shall pay to
the Canadian Administrative Agent, and there shall become due and payable, on
the earlier of (i) 1:00 P.M. (Toronto, Ontario time) on the maturity date for
each Bankers' Acceptance and (ii) the occurrence of an Event of Default and
acceleration of the Loans by the Domestic Administrative Agent pursuant to
Section 9.2, an amount in Canadian Dollars in same day funds equal to the Face
Amount of such Bankers' Acceptance (notwithstanding that any Canadian Lender
which accepted any such Bankers' Acceptance may be the holder thereof at
maturity); provided, however, with respect to clause (i) above, subject to
Section 3.7 and all other applicable provisions hereof and provided that the
applicable Canadian Borrower has, by giving notice in accordance with subsection
2.2(a)(v) or 3.2, requested the Canadian Lenders to accept its orders to replace
all or a portion of outstanding Bankers' Acceptances as they mature, each
Canadian Lender shall, on the maturity of such Bankers' Acceptances and
concurrent with the payment by the Canadian Borrowers to the Canadian Lenders of
the Face Amount of such Bankers' Acceptances or the portion thereof to be
replaced, accept the Canadian Borrowers' order(s) having an aggregate Face
Amount equal to its pro rata share of the aggregate Face Amount of the matured
Bankers' Acceptances or the portion thereof to be replaced. Notwithstanding
anything to the contrary herein or in any other Credit Document, upon the
occurrence of an Event of Default and acceleration of the Loans by the Domestic
Administrative Agent pursuant to Section 9.2, an amount equal to the BA
Obligations shall, without demand upon or further notice to the
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Canadian Borrowers, be deemed to have been paid or disbursed by the Canadian
Lenders under the applicable Bankers' Acceptances (notwithstanding that such
amounts may not in fact have been so paid or disbursed), and a Canadian
Revolving Loan at the rate of interest then applicable to Canadian Revolving
Loans which are Base Rate Loans in the amount of such payment or disbursement to
have been made and accepted, which Loan shall be immediately due and payable. In
lieu of the foregoing, at the Domestic Administrative Agent's election, after an
Event of Default has occurred and the Loans have been accelerated by the
Domestic Administrative Agent pursuant to Section 9.2, upon the Domestic
Administrative Agent's demand, the applicable Canadian Borrower shall deliver to
Canadian Administrative Agent cash collateral equal to the BA Obligations at
such time. Any such cash collateral and/or any amounts received by Canadian
Administrative Agent in payment of the Loan made pursuant to this section shall
be held by Canadian Administrative Agent, for the benefit of the Canadian
Lenders and shall be retained by the Canadian Administrative Agent, for the
benefit of Canadian Lenders, as collateral security in respect of the BA
Obligations as provided in Section 9.2. Such amounts may be applied to reimburse
Canadian Lenders for drawings or payments under or pursuant to Bankers'
Acceptances which have been paid (or to reimburse any Canadian Lender if any
Bankers' Acceptances have been purchased by a Canadian Lender). Any amounts
remaining in any cash collateral account established pursuant to this section
following payment in full of all Obligations and termination of this Agreement
shall be returned to the applicable Canadian Borrower.
(d) Repayments Prior to Maturity. Except as required by Section
3.3(b), no repayment of a Bankers' Acceptance may be made by the Canadian
Borrowers to the Canadian Lenders prior to the maturity date thereof. Any such
repayment required by Section 3.3(b) shall be made to the Canadian
Administrative Agent and such monies shall be held by the Canadian
Administrative Agent, in a cash collateral account hypothecated to the Canadian
Administrative Agent, to be paid to each of the Canadian Lenders on the maturity
date of the Bankers' Acceptances which have been accepted by it. The Canadian
Borrowers shall be entitled to the benefit of any interest accruing thereon, in
each case, on the respective maturity date of each Bankers' Acceptance in
respect of which repayment is made, and upon the maturity of each such Bankers'
Acceptance the Canadian Lenders shall apply the interest thereon in payment of
amounts owed by the Canadian Borrowers hereunder. Any such payment by the
Canadian Borrowers to the Canadian Lenders shall satisfy the Canadian Borrowers'
obligations under the Bankers' Acceptance to which it relates and the Canadian
Lender which has accepted such Bankers' Acceptance shall thereafter be solely
responsible for the payment of such Bankers' Acceptance.
(e) Funding of Bankers' Acceptances.
(i) Subject to subsections (ii) and (iii) below, each
Canadian Lender shall, not later than 1:00 P.M., Toronto, Ontario time,
on the date of creation of the Bankers' Acceptances, accept orders of
the Canadian Borrowers which are presented to it for acceptance in an
amount equal to each such Canadian Lender's Canadian Revolving
Commitment Percentage of the aggregate Face Amounts of Bankers'
Acceptances created on such date; provided, however, that if the Face
Amount of a Banker's Acceptance, which
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would otherwise be accepted by a Canadian Lender, would not be
CD$100,000 or a larger multiple thereof, such Face Amount shall be
increased or reduced by the Canadian Administrative Agent in its
discretion to the nearest multiple of CD$100,000. Subject to the
provisions hereof, the Canadian Administrative Agent shall be
responsible for making all necessary arrangements with each of the
Canadian Lenders with respect to the acceptance of Bankers'
Acceptances.
(ii) Each Canadian Lender shall transfer to the Canadian
Administrative Agent for value on such creation date immediately
available Canadian Dollars in an aggregate amount equal to the BA
Discount Proceeds of all Bankers' Acceptances accepted and sold or
purchased by the Canadian Lender on such date net of the applicable
Acceptance Fee and net of the amount required to pay any of its
previously accepted Bankers' Acceptances that are maturing on such date
or its percentage of any Base Rate Loan that is being converted to
Bankers' Acceptances on such date.
(iii) Subject to Section 3.7, in the sole judgment of a
Canadian Lender, if such Canadian Lender is unable to create a Bankers'
Acceptance in accordance with this Agreement, such Canadian Lender
shall, if such Canadian Lender is named on Schedule I or Schedule II to
the Bank Act (Canada), give an irrevocable notice to such effect to the
Canadian Administrative Agent and the Canadian Borrowers prior to 10:00
A.M., Toronto, Ontario time, on the date of the requested creation of
the Bankers' Acceptances. Any Canadian Lender which is unable to create
a Bankers' Acceptance in accordance with this Agreement shall make
available to the Canadian Borrowers not later than 1:00 P.M., Toronto,
Ontario time, on the date of such requested Bankers' Acceptance a
Canadian Dollar loan in a principal amount equal to the BA Discount
Proceeds of such Canadian Lender's pro rata share of the aggregate Face
Amounts of Bankers' Acceptances to be created on such date, such loan
to be funded in the same manner as the Bankers' Acceptances provided by
the other Canadian Lenders. Such loan shall have the same term as the
Bankers' Acceptance for which it is a substitute and shall bear such
interest per annum throughout the term thereof as shall permit such
Canadian Lender to obtain the same effective rate as if such Canadian
Lender had accepted and purchased a Bankers' Acceptance at the same
Acceptance Fee and pricing in which the Canadian Administrative Agent
would have accepted and purchased on the bid side of the market, such
Bankers' Acceptance at approximately 1:00 P.M., Toronto, Ontario time,
on the date such loan is made. The Canadian Borrower hereby agrees that
if such loan is made by a Canadian Lender interest shall be payable in
advance on the date of such loan by deducting the interest payable in
respect thereof from the principal amount of such loan. Except as
described above, such substitute loan shall for all purposes be treated
as an Extension of Credit by way of a Bankers' Acceptance (including,
without limitation, for purposes of the definition of "BA Obligations"
and Sections 2.8(c), 3.5(c), 3.7(b), 3.9, 3.11, 3.13, 5.2(g), 9.2(iii)
and 9.3).
If the Canadian Administrative Agent determines that all the conditions
precedent to an Extension of Credit specified in this Agreement have been met,
it shall advance to the applicable
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Canadian Borrower the amount delivered by each Canadian Lender by crediting the
applicable account of the applicable Canadian Borrower prior to 2:00 P.M.
(Toronto, Ontario time) on the date of such advance, but if the conditions
precedent to such advance are not met by (Toronto time) on such date, the
Canadian Administrative Agent shall return the funds to the Canadian Lenders or
invest them in an overnight investment as orally instructed by each Canadian
Lender until such time as the advance is made.
The Canadian Administrative Agent shall promptly inform the Domestic
Administrative Agent of the creation of Bankers' Acceptances and the terms
thereof. No Canadian Lender shall be responsible for the failure or delay by any
other Canadian Lender in its obligation to create Bankers' Acceptances
hereunder; provided, however, that the failure of any Canadian Lender to fulfill
its Commitment hereunder shall not relieve any other Canadian Lender of its
Commitment hereunder.
(f) Deemed Advances. Except for amounts which are paid from the
proceeds of rollovers of a Bankers' Acceptance, or for which payment has
otherwise been funded by the Canadian Borrowers, any amount which a Canadian
Lender pays to any third party on or after the date of maturity of a Bankers'
Acceptance in satisfaction thereof or which is owing to the Canadian Lender in
respect of such a Bankers' Acceptance on or after the date of maturity of such a
Bankers' Acceptance, shall at the option of Canadian Administrative Agent, be
deemed to be a Canadian Revolving Loan at the rate of interest then applicable
to Canadian Revolving Loans which are Base Rate Loans.
(g) Indemnity. Each Canadian Borrower shall on a joint and several
basis indemnify and hold Canadian Administrative Agent and the Canadian Lenders
harmless from any loss, cost, damage or expense with respect to any Bankers'
Acceptance dealt with by Canadian Administrative Agent or the Canadian Lenders
but shall not be obliged to indemnify Canadian Administrative Agent or the
Canadian Lenders for any loss, cost, damage or expense caused by the gross
negligence or willful misconduct of Canadian Administrative Agent or the
Canadian Lenders.
(h) Waiver. No Canadian Borrower shall claim from Canadian
Administrative Agent or any Canadian Lender any days of grace for the payment at
maturity of any Bankers' Acceptances presented and accepted by a Canadian Lender
pursuant to this Agreement. Each Canadian Borrower waives any defence to payment
which might otherwise exist if for any reason a Bankers' Acceptance shall be
held by a Canadian Lender in its own right at the maturity thereof, and the
doctrine of merger shall not apply to any Bankers' Acceptance that is at any
time held by a Canadian Lender in its own right.
(i) Obligations Absolute. The obligations of each Canadian
Borrower with respect to Bankers' Acceptances under this Agreement shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation,
the following circumstances:
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(i) any lack of validity or enforceability of any order
accepted by a Canadian Lender as a Bankers' Acceptance; or
(ii) the existence of any claim, set-off, defence or other
right which a Canadian Borrower may have at any time against the holder
of a Bankers' Acceptance, a Canadian Lender or any other person or
entity, whether in connection with this Agreement or otherwise.
(j) Shortfall on Drawdowns, Rollovers and Conversions. Each
Canadian Borrower agrees that:
(i) the difference between the amount of an advance
requested by a Canadian Borrower by way of Bankers' Acceptances and the
actual proceeds of such Bankers' Acceptances;
(ii) the difference between the actual proceeds of a
Bankers' Acceptance and the amount required to pay a maturing Bankers'
Acceptance, if a Bankers' Acceptance is being rolled over; and
(iii) the difference between the actual proceeds of a
Bankers' Acceptance and the amount required to repay any advance which
is being converted to such Bankers' Acceptance;
shall be funded by the Canadian Borrowers from their own resources by
11:00 a.m. on the day of the advance or may be advanced by Canadian
Administrative Agent as a Canadian Revolving Loan at the rate of
interest then applicable to Canadian Revolving Loans which are Base
Rate Loans.
(k) Prohibited Use of Bankers' Acceptances. No Canadian Borrower
shall enter into any agreement or arrangement of any kind with any person to
whom Bankers' Acceptances have been delivered whereby it undertakes to replace
such Bankers' Acceptances on a continuing basis with other Bankers' Acceptances,
nor shall a Canadian Borrower directly or indirectly take, use or provide
Bankers' Acceptances as security for loans or advances from any other Person.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
Upon the occurrence, and during the continuance, of an Event
of Default, the principal of and, to the extent permitted by law, interest on
the Loans and any other amounts owing hereunder or under the other Credit
Documents shall bear interest, payable on demand, at a per annum rate 2% greater
than the rate which would otherwise be applicable (or if no rate is
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applicable, whether in respect of interest, fees or other amounts, then 2%
greater than the Base Rate).
3.2 Extension and Conversion.
Subject to the terms of Section 5.2, the applicable Borrower
shall have the option, on any Business Day, to extend existing Eurodollar Loans
into a subsequent permissible Interest Period or to convert Base Rate Loans into
Eurodollar Loans; provided, however, that (i) except as provided in Section 3.8,
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
the Interest Period applicable thereto, (ii) Eurodollar Loans may be extended,
and Base Rate Loans may be converted into Eurodollar Loans, only if no Default
or Event of Default is in existence on the date of extension or conversion,
(iii) Revolving Loans extended as, or converted into, Eurodollar Loans shall be
subject to the terms of the definition of "Interest Period" and shall be in such
minimum amounts as provided in Section 2.2(b), and (iv) any request for
extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month. Each such extension or conversion shall be effected by the applicable
Borrower by giving a Notice of Extension/Conversion (or telephonic notice
promptly confirmed in writing) to, in the case of Domestic Revolving Loans, the
Domestic Administrative Agent prior to 11:00 A.M. (Charlotte, North Carolina
time) or, in the case of Canadian Revolving Loans, the Canadian Administrative
Agent prior to 11:00 A.M. (Toronto, Ontario time), on the Business Day of, in
the case of the conversion of a Eurodollar Loan into a Base Rate Loan, and on
the third Business Day prior to, in the case of the extension of a Eurodollar
Loan as, or conversion of a Base Rate Loan into, a Eurodollar Loan, the date of
the proposed extension or conversion, specifying the date of the proposed
extension or conversion, the Revolving Loans to be so extended or converted, the
types of Revolving Loans into which such Revolving Loans are to be converted
and, if appropriate, the applicable Interest Periods with respect thereto. Each
request for extension of a Eurodollar Loan or conversion of a Base Rate Loan
into a Eurodollar Loan shall be irrevocable and shall constitute a
representation and warranty by the applicable Borrower of the matters specified
in Section 5.2. In the event the applicable Borrower fails to request extension
or conversion of any Eurodollar Loan in accordance with this Section 3.2, or any
such conversion or extension is not permitted or required by this Section 3.2,
then such Eurodollar Loan shall be automatically converted into a Base Rate Loan
at the end of the Interest Period applicable thereto. The Domestic
Administrative Agent shall give each Domestic Lender notice as promptly as
practicable of any such proposed extension or conversion affecting any Domestic
Revolving Loan and the Canadian Administrative Agent shall give each Canadian
Lender notice as promptly as practicable of any such proposed extension or
conversion affecting any Canadian Revolving Loan.
3.3 Prepayments.
(a) Voluntary Prepayments. Loans may be prepaid in whole or in
part without premium or penalty; provided that (i) Eurodollar Loans may be
prepaid only upon three (3) Business Days' prior written notice to the
appropriate Administrative Agent and must be accompanied by payment of any
amounts owing under Section 3.11, (ii) partial prepayments
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shall be (A) in the case of Revolving Loans which are Eurodollar Loans, in a
minimum aggregate principal amount of US$2,500,000 (or CD$2,500,000, if
applicable) and integral multiples of US$500,000 (or CD$500,000, if applicable)
in excess thereof, (B) in the case of Revolving Loans which are Base Rate Loans,
in a minimum aggregate principal amount of US$1,000,000 (or CD$1,000,000, if
applicable) and integral multiples of US$100,000 (or CD$100,000, if applicable)
in excess thereof, and (C) in the case of Swingline Loans, in a minimum
aggregate principal amount of US$1,000,000 (or CD$1,000,000, if applicable) and
integral multiples of US$100,000 (or CD$100,000, if applicable) in excess
thereof, provided that in the event that an "auto-borrow" or "zero balance" or
other similar arrangement shall then be in place with the Swingline Lender,
Swingline Loans shall be prepaid in such minimum amounts, if any, provided by
such agreement, and (iii) Bankers' Acceptances may not be paid prior to their
respective maturity dates.
(b) Mandatory Prepayments. If at any time, (A) the aggregate
principal amount of Domestic Obligations shall exceed the Aggregate Domestic
Revolving Committed Amount, (B) the aggregate amount of LOC Obligations shall
exceed the LOC Committed Amount, or (C) the aggregate amount of Swingline Loans
shall exceed the Swingline Committed Amount, the Domestic Borrower shall
immediately make payment on the Domestic Revolving Loans, on the Swingline Loans
and/or to a cash collateral account in respect of the LOC Obligations, in an
amount equal to the difference. If at any time, the aggregate principal Dollar
Amount of Canadian Obligations shall exceed the Aggregate Canadian Revolving
Committed Amount, the Canadian Borrowers shall immediately make payment on the
Canadian Revolving Loans and/or to a cash collateral account in respect of the
BA Obligations, in an amount equal to the difference. If at any time, the
aggregate principal Dollar Amount of Obligations shall exceed the Borrowing
Base, the Borrowers shall immediately make payment on the Loans and/or to a cash
collateral account in respect of the LOC Obligations or the BA Obligations in an
amount sufficient to eliminate the excess.
(c) Application. Unless otherwise specified by the applicable
Borrower, (i) prepayments on the Domestic Obligations shall be applied first to
Swingline Loans, then to Domestic Revolving Loans which are Base Rate Loans,
then to Domestic Revolving Loans which are Eurodollar Loans in direct order of
Interest Period maturities, and then to a cash collateral account to secure LOC
Obligations and (ii) prepayments on the Canadian Obligations shall be applied
first to Canadian Revolving Loans which are Base Rate Loans, then to Canadian
Revolving Loans which are Eurodollar Loans in direct order of Interest Period
maturities, and then to a cash collateral account in respect of BA Obligations.
Amounts prepaid hereunder may be reborrowed in accordance with the provisions
hereof.
3.4 Termination and Reduction of Commitments
(a) Voluntary Reductions. The Commitments may be
terminated or permanently reduced in whole or in part upon three (3) Business
Days' prior written notice by the Domestic Borrower to the appropriate
Administrative Agent, provided that (i) after giving effect to any voluntary
reduction in the Domestic Revolving Commitments, the aggregate
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amount of Domestic Obligations shall not exceed the Aggregate Domestic Revolving
Committed Amount, as reduced, (ii) after giving effect to any voluntary
reduction in the Canadian Revolving Commitments, the aggregate amount of
Canadian Obligations shall not exceed the Aggregate Canadian Revolving Committed
Amount, as reduced, and (iii) partial reductions shall be in a minimum principal
amount of US$1,000,000 (or CD$1,000,000, if applicable), and in integral
multiples of US$100,000 (or CD$100,000, if applicable) in excess thereof.
(b) Termination. Unless terminated earlier in accordance
with the terms of this Agreement, the Commitments hereunder shall terminate on
the Termination Date.
3.5 Fees.
(a) Commitment Fees.
(i) Domestic Revolving Commitments. In
consideration of the Domestic Revolving Commitments, the Domestic
Borrower agrees to pay to the Domestic Administrative Agent for the
ratable benefit of the Domestic Lenders a commitment fee (the "Domestic
Commitment Fee") equal to the Applicable Percentage per annum on the
average daily unused amount of the Aggregate Domestic Revolving
Committed Amount for the applicable period. The Domestic Commitment Fee
shall be payable quarterly in arrears on the 15th day following the
last day of each calendar quarter for the immediately preceding
calendar quarter (or portion thereof) beginning with the first such
date to occur after the Closing Date (as well as on the Termination
Date). For purposes of computation of the Domestic Commitment Fee, (A)
Swingline Loans shall not be counted toward or considered usage of the
Aggregate Domestic Revolving Committed Amount and (B) LOC Obligations
shall be counted toward and considered usage of the Aggregate Domestic
Revolving Committed Amount.
(ii) Canadian Revolving Commitments. In
consideration of the Canadian Revolving Commitments, the Canadian
Borrowers agree to pay to the Canadian Administrative Agent for the
ratable benefit of the Canadian Lenders a commitment fee (the "Canadian
Commitment Fee") equal to the Applicable Percentage per annum on the
average daily unused amount of the Aggregate Canadian Revolving
Committed Amount for the applicable period. The Canadian Commitment Fee
shall be payable quarterly in arrears on the 15th day following the
last day of each calendar quarter for the immediately preceding
calendar quarter (or portion thereof) beginning with the first such
date to occur after the Closing Date (as well as on the Termination
Date). For purposes of computation of the Canadian Commitment Fee, the
Face Amount of BA Obligations shall be counted toward and considered
usage of the Aggregate Canadian Revolving Committed Amount.
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(b) Letter of Credit Fees.
(i) Letter of Credit Fee. In consideration of
the LOC Commitment hereunder, the Domestic Borrower agrees to pay to
the Domestic Administrative Agent for the ratable benefit of the
Domestic Lenders a fee (the "Letter of Credit Fee") equal to the
Applicable Percentage per annum on the average daily maximum amount
available to be drawn under Letters of Credit from the date of issuance
to the date of expiration. The Letter of Credit Fee shall be payable
quarterly in arrears on the 15th day following the last day of each
calendar quarter for the immediately preceding calendar quarter (or
portion thereof) beginning with the first such date to occur after the
Closing Date (as well as on the Termination Date).
(ii) Issuing Lender Fees. In addition to the
Letter of Credit Fee, the Domestic Borrower agrees to pay to the
Issuing Lender for its own account without sharing by the other Lenders
a fronting and negotiation fee of one-eighth of one percent (0.125%)
per annum on the average daily maximum amount available to be drawn
under Letters of Credit issued by it from the date of issuance to the
date of expiration (the "Issuing Lender Fees").
(c) Acceptance Fee. In consideration of the creation of a
particular Bankers' Acceptance hereunder, the Canadian Borrowers agree to pay to
the Canadian Administrative Agent for the benefit of the Canadian Lenders which
created such Bankers' Acceptance an acceptance fee (the "Acceptance Fee") on the
date of issuance or creation of such Bankers' Acceptance in an amount equal to
the product of (i) the Applicable Percentage for Bankers' Acceptances as of the
date of creation of such Banker's Acceptance, multiplied by (ii) the aggregate
Face Amount of such Bankers' Acceptance, multiplied by (iii) a fraction, the
numerator of which is the term to maturity of such Bankers' Acceptance in days,
and the denominator of which is the number of days in the current calendar year.
(d) Administrative Agent's Fees. The Borrowers agree to
pay to the Domestic Administrative Agent, for its own account, the annual
administrative fee and such other fees, if any, referred to in the
Administrative Agent's Fee Letter (collectively, the "Administrative Agent's
Fees").
3.6 Capital Adequacy.
If any Lender has reasonably determined, after the date
hereof, that the adoption or the becoming effective of, or any change in, or any
change by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof in the interpretation or
administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by 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 capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which such Lender
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could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Lender's policies with respect to capital
adequacy), then, subject to the provisions of Section 3.12, each Borrower shall
be obligated to pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction, to the extent related to Extensions
of Credit made to such Borrower.
3.7 Inability To Determine Interest Rate.
(a) If prior to the first day of any Interest Period, the Domestic
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrowers) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, the Domestic
Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrowers and the Lenders as soon as practicable thereafter (which notice shall
be withdrawn by the Domestic Administrative Agent whenever such circumstances no
longer exist). If such notice is given (a) any Eurodollar Loans requested to be
made on the first day of such Interest Period shall be made as Base Rate Loans
and (b) any Revolving Loans that were to have been converted on the first day of
such Interest Period to or continued as Eurodollar Loans shall be converted to
or continued as Base Rate Loans. Until such notice has been withdrawn by the
Domestic Administrative Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrowers have the right to convert Base Rate
Loans to Eurodollar Loans.
(b) If the Canadian Administrative Agent determines in good faith,
which determination shall be final, conclusive and binding upon the Canadian
Borrowers absent manifest error, and notifies the Canadian Borrowers and each of
the Canadian Lenders that, by reason of circumstances affecting the money market
or the market for bankers' acceptances generally (i) there is no market for
Bankers' Acceptances; or (ii) the demand for Bankers' Acceptances is
insufficient to allow the sale or trading of the Bankers' Acceptances created
and purchased hereunder, then
(A) the right of the Canadian Borrowers to request a
borrowing by way of Bankers' Acceptances shall be suspended until the
Canadian Administrative Agent determines in good faith that the
circumstances causing such suspension no longer exist and the Canadian
Administrative Agent so notifies the Canadian Borrower; and
(B) any notice of requested Bankers' Acceptances which is
outstanding shall be canceled and the Bankers' Acceptance requested
therein shall not be made.
(C) The Canadian Administrative Agent shall promptly
notify the Canadian Borrowers of the suspension of the Canadian
Borrowers' right to request a Bankers' Acceptance and of the
termination of any such suspension.
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3.8 Illegality.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Borrowers
and the Administrative Agents (which notice shall be withdrawn by such Lender
whenever such circumstances no longer exist), (b) the commitment of such Lender
hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert a Base Rate Loan to Eurodollar Loans shall forthwith be canceled and,
until such time as it shall no longer be unlawful for such Lender to make or
maintain Eurodollar Loans, such Lender shall then have a commitment only to make
a Base Rate Loan when a Eurodollar Loan is requested and (c) such Lender's
Revolving Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such earlier period as
required by law. If any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, each Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 3.11 to the extent related to Eurodollar Loans made
to such Borrower
3.9 Requirements of Law.
If, after the date hereof, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
any Lender, or compliance by any Lender with any request or directive (whether
or not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if later, the
date on which such Lender becomes a Lender):
(a) shall subject such Lender to any tax of any
kind whatsoever with respect to any Letter of Credit or any Bankers'
Acceptances or any Eurodollar Loans made by it or its obligation to
make, issue or create the foregoing, or change the basis of taxation of
payments to such Lender in respect thereof (except for (i) Taxes
covered by Section 3.10 (including Taxes imposed solely by reason of
any failure of such Lender to comply with its obligations under Section
3.10(d)) and (ii) changes in taxes measured by or imposed upon the
overall net income, or franchise tax (imposed in lieu of such net
income tax), of such Lender or its applicable lending office, branch,
or any affiliate thereof));
(b) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(c) shall impose on such Lender any other
condition (excluding any tax of any kind whatsoever);
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and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or creating Bankers' Acceptances or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, subject to the
provisions of Section 3.12, the Borrowers shall be obligated to promptly pay
such Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such increased cost or reduced amount receivable, to the extent
related to Extensions of Credit made to such Borrower, provided that, in any
such case, the Borrowers may elect to convert the Eurodollar Loans made by such
Lender hereunder to Base Rate Loans by giving the appropriate Administrative
Agent at least one Business Day's notice of such election, in which case each
Borrower shall promptly pay to such Lender, upon demand, without duplication,
such amounts, if any, as may be required pursuant to Section 3.11 to the extent
related to Eurodollar Loans made to such Borrower. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances of the type
referred to in paragraphs (a) through (c) above which would result in any such
increased cost or reduced amount receivable, the affected Lender shall, to the
extent not inconsistent with such Lender's internal policies of general
application, designate a different lending office for the making of Revolving
Loans or for accepting or issuing Bankers' Acceptances or Letters of Credit or
otherwise use reasonable commercial efforts to minimize the amounts payable to
it by the Borrowers pursuant to this Section 3.9. This covenant shall survive
the termination of this Credit Agreement and the payment of the Revolving Loans
and all other amounts payable hereunder.
3.10 Taxes.
(a) Any and all payments by any Credit Party to or for the account
of any Lender or either Administrative Agent hereunder or under any other Credit
Document shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and each Administrative Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Lender (or its applicable lending office) or such Administrative Agent (as the
case may be) is organized or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings,
and liabilities being hereinafter referred to as "Taxes"). If any Credit Party
shall be required by law to deduct or withhold any Taxes from or in respect of
any sum payable under this Credit Agreement or any other Credit Document to any
Lender or either Administrative Agent, (i) the sum payable shall be increased as
necessary so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums payable
under this Section 3.10) such Lender or such Administrative Agent receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) such Credit Party shall make such deductions and withholdings, (iii) such
Credit Party shall pay the full amount deducted or withheld to the relevant
taxation authority or other authority in accordance with applicable law, and
(iv) such Credit Party shall furnish to the appropriate Administrative Agent, in
each case at its address referred to in Section 11.1, the original or a
certified copy of a receipt evidencing payment thereof.
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(b) In addition, the Domestic Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise or property
taxes or charges or similar levies which arise from any payment made under this
Credit Agreement or any other Credit Document or from the execution or delivery
of, or otherwise with respect to, this Credit Agreement or any other Credit
Document (hereinafter referred to as "Other Taxes").
(c) The Domestic Borrower agrees to indemnify each Lender and each
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 3.10) paid by such Lender or
such Administrative Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect thereto.
(d) Each Domestic Lender that is not a United States person under
Section 7701(a)(30) of the Internal Revenue Code, on or prior to the date of its
execution and delivery of this Credit Agreement in the case of each Domestic
Lender listed on the signature pages hereof and on or prior to the date on which
it becomes a Domestic Lender in the case of each other Domestic Lender, and from
time to time thereafter if requested in writing by the Domestic Borrowers or the
Domestic Administrative Agent (but only so long as such Domestic Lender remains
lawfully able to do so), shall provide the Domestic Borrower and the Domestic
Administrative Agent with (i) Internal Revenue Service Form W-8 BEN or W-8 ECI,
as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Domestic Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces to zero
the rate of withholding tax on payments of interest or certifying that the
income receivable pursuant to this Credit Agreement is effectively connected
with the conduct of a trade or business in the United States, (ii) Internal
Revenue Service Form W-8 or W-9, as appropriate, or any successor form
prescribed by the Internal Revenue Service, and/or (iii) any other form or
certificate required by any taxing authority (including any certificate required
by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that
such Domestic Lender is entitled to an exemption from tax on payments pursuant
to this Credit Agreement or any of the other Credit Documents.
(e) For any period with respect to which a Domestic Lender has
failed to provide the Domestic Borrower and the Domestic Administrative Agent
with the appropriate form pursuant to Section 3.10(d) (unless such failure is
due to a change in treaty, law, or regulation occurring subsequent to the date
on which a form originally was required to be provided), such Domestic Lender
shall not be entitled to indemnification under Section 3.10(a) or 3.10(b) with
respect to Taxes imposed by the United States; provided, however, that should a
Domestic Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, become subject to Taxes because of its failure to deliver a
form required hereunder, the Domestic Borrower shall take such steps as such
Domestic Lender shall reasonably request to assist such Domestic Lender to
recover such Taxes.
(f) If any Credit Party is required to pay additional amounts to
or for the account of any Lender pursuant to this Section 3.10, then, unless a
Commitment Termination Event shall
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have occurred, such Lender will agree to use reasonable efforts to change the
jurisdiction of its applicable lending office so as to eliminate or reduce any
such additional payment which may thereafter accrue if such change, in the
judgment of such Lender, is not otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of
Taxes, the applicable Credit Party shall furnish to the Administrative Agents
the original or a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
the Credit Parties hereunder, the agreements and obligations of the Credit
Parties contained in this Section 3.10 shall survive the repayment of the Loans,
LOC Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
3.11 Indemnity.
The Domestic Borrower, with respect to the Domestic Lenders, and the
Canadian Borrowers, with respect to the Canadian Lenders, promise to indemnify
each such Lender and to hold each such Lender harmless from any loss or expense
which such Lender may sustain or incur (other than through such Lender's gross
negligence or willful misconduct) as a consequence of (a) default by such
Borrower in making a borrowing of, conversion into or continuation of a
Eurodollar Loan or a Bankers' Acceptance after such Borrower has given a notice
requesting the same in accordance with the provisions of this Credit Agreement,
(b) default by such Borrower in making any prepayment of a Eurodollar Loan after
such Borrower has given a notice thereof in accordance with the provisions of
this Credit Agreement or (c) the making of a prepayment of a Eurodollar Loan on
a day which is not the last day of the Interest Period for such Eurodollar Loan.
With respect to any Eurodollar Loan or Bankers' Acceptance, such indemnification
may be calculated, in lieu of any other method, based on an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
amount so prepaid, or not so borrowed, converted or continued, for the period
from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of the Interest Period for such Eurodollar Loan (or, in
the case of a failure to borrow, convert or continue, the Interest Period of
such Eurodollar Loan or term of such Bankers' Acceptance that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Revolving Loans provided for herein (excluding, however, the
Applicable Percentage included therein, if any) over (ii) the amount of interest
(as reasonably determined by such Lender) which would have accrued to such
Lender on such amount by placing such amount on deposit for a comparable period
with leading banks in the interbank Eurodollar market. The covenants of each
Borrower set forth in this Section 3.11 shall survive the termination of this
Credit Agreement and the payment of the Revolving Loans and all other amounts
payable hereunder.
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3.12 Certain Limitations.
The provisions of Sections 3.6, 3.9, 3.10 and 3.11 shall be subject to
the following:
(a) Each Lender that desires compensation or indemnification under
Sections 3.6, 3.9 or 3.11 shall notify the appropriate Borrower through the
appropriate Administrative Agent of any event occurring after the Closing Date
entitling such Lender to compensation or indemnification under any of such
Sections as promptly as practicable, but in any event within 90 days after the
occurrence of the event giving rise thereto; provided that (i) if any such
Lender fails to give such notice within 90 days after the occurrence of such an
event, such Lender shall only be entitled to compensation or indemnification in
respect of such event accruing under Sections 3.6, 3.9 or 3.11 with respect to
the period from and after the date 90 days prior to the date that such Lender
does give notice.
(b) Any notice given by a Lender pursuant to subsection (a) above
shall certify (i) that one of the events described in Sections 3.6, 3.9 or 3.11
has occurred, describing in reasonable detail the nature of such event, (ii) as
to the increased cost, reduced amount receivable or loss or expense resulting
from such event and (iii) as to the additional amount demanded by such Lender,
attaching a reasonably detailed explanation of the calculation thereof. Such a
certificate as to any compensation or indemnification payable pursuant to
Sections 3.6, 3.9 or 3.11, submitted by such Lender through the appropriate
Administrative Agent to the appropriate Borrower, shall be conclusive and
binding on the parties hereto in the absence of manifest error.
(c) If any Lender requests compensation or indemnification from a
Borrower under Sections 3.6, 3.9 or 3.10, the Domestic Borrower may, at its
option, within fifteen (15) days after receipt by such Borrower of written
demand from the affected Lender for payment of such compensation or
indemnification, notify the appropriate Administrative Agent and such affected
Lender of its intention to replace the affected Lender. So long as no Event of
Default shall have occurred and be continuing, the Domestic Borrower may obtain,
at the Domestic Borrower's expense, a replacement Lender for the affected
Lender. If the Domestic Borrower obtains a replacement Lender within ninety (90)
days following notice of its intention to do so, the affected Lender must sell
and assign its loans and obligations and any Commitments to such replacement
Lender pursuant to Section 11.3(b) (without giving effect to any requirement
therein that the appropriate Administrative Agent consent thereto), for an
amount equal to the principal balance of all Revolving Loans held by the
affected Lender and all accrued interest and Fees with respect thereto through
the date of such sale, provided that the applicable Borrower shall have paid to
such affected Lender the compensation or indemnification that it is entitled to
receive under Sections 3.6, 3.9 or 3.10, through the date of such sale and
assignment. Notwithstanding the foregoing, the Domestic Borrower shall not have
the right to obtain a replacement Lender if the affected Lender rescinds its
demand for such compensation or indemnification within fifteen (15) days
following its receipt of the Domestic Borrower's notice of intention to replace
such affected Lender. Additionally, if the Domestic Borrower gives a notice to
the appropriate Administrative Agent and an affected Lender of its intention to
replace such affected Lender and does not so replace such affected Lender within
ninety (90) days thereafter, the Domestic Borrower's rights
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under this Section 3.12(c) shall terminate and the applicable Borrower shall
promptly pay all compensation or indemnification demanded by such affected
Lender pursuant to Sections 3.6, 3.9 or 3.10.
3.13 Notice under the Income Tax Act (Canada).
Notwithstanding anything contained in this Agreement to the contrary,
if either Administrative Agent or a Lender receives notice under subsection
224(1.1) of the Income Tax Act (Canada) or any successor provision thereto or
any comparable provision of any other taxing statute in respect of a Borrower or
Guarantor, then so long as such notice is effective, the Lenders shall not be
obliged to make any further advances hereunder.
3.14 Prohibited Rates of Interest.
Notwithstanding any other provisions of this Agreement or any other
Credit Documents or any related document, the Canadian Credit Parties shall not
be obliged to make any payment of interest or other amounts payable to the
Administrative Agents or Lenders in an amount or at a rate that would be
prohibited by law or would result in the receipt of interest at a criminal rate,
as the terms "interest" and "criminal rate" are defined under the Criminal Code
(Canada), or that would contravene any local usury laws which may be applicable
to any obligations of the Canadian Credit Parties under or in connection with
this Agreement. In any such case, any payment, collection or demand for interest
in excess of the maximum permitted rate shall be deemed to have been made by
mutual mistake, any excess payment shall be refunded to the applicable Canadian
Credit Party and the amount or rate otherwise payable under the terms of any
Credit Document or related document shall be reduced to the maximum amount or
rate payable in accordance with applicable law. For the purposes of this
Agreement, the effective annual rate of interest shall be determined in
accordance with generally accepted actuarial practices and principles and in the
event of any dispute, a certificate of a Fellow of the Canadian Institute of
Actuaries of Canada appointed by the Canadian Administrative Agent shall be
conclusive for the purpose of such determination.
3.15 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Obligations. Each Domestic Revolving Loan advance, each
payment or prepayment of principal of any Domestic Revolving Loan, each payment
of interest on any Domestic Revolving Loan, each payment on or in respect of the
LOC Obligations and each payment of interest thereon, each payment of the
Domestic Commitment Fee, each payment of the Letter of Credit Fee, each
reduction of Aggregate Domestic Revolving Committed Amount, and each conversion
or extension of Domestic Revolving Loan shall be allocated pro rata among the
Domestic Lenders according to the respective Domestic Revolving Commitment
Percentages of the Domestic Lenders. Each Canadian Revolving Loan advance, each
creation of Bankers' Acceptances, each payment or prepayment of principal of any
Canadian Revolving Loan, each
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payment of interest on the Canadian Revolving Loans, each payment of the
Canadian Commitment Fee, each reduction of Aggregate Canadian Revolving
Committed Amount, and each conversion or extension of Canadian Revolving Loan
shall be allocated pro rata among the Canadian Lenders according to the
respective Canadian Revolving Commitment Percentages of the Canadian Lenders.
(b) Advances. No Lender shall be responsible for the failure or
delay by any other Lender in its obligation to make its ratable share of a
borrowing hereunder; provided, however, that the failure of any Lender to
fulfill its obligations hereunder shall not relieve any other Lender of its
obligations hereunder. Unless the appropriate Administrative Agent shall have
been notified in writing by any Lender prior to a borrowing that such Lender
will not make the amount that would constitute its ratable share of such
borrowing available to such Administrative Agent, such Administrative Agent may
assume that such Lender is making such amount available to such Administrative
Agent, and such Administrative Agent may, in reliance upon such assumption, make
available to the appropriate Borrower a corresponding amount. If such amount is
not made available to such Administrative Agent by such Lender within the time
period specified therefor hereunder, such Lender shall pay to such
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the Federal Funds Rate for a period of two (2) Business Days, and
thereafter at the Base Rate, for the period until such Lender makes such amount
immediately available to such Administrative Agent. If such Lender does not pay
such amounts to such Administrative Agent forthwith upon demand, such
Administrative Agent may notify the appropriate Borrower(s) and request such
Borrower(s) to immediately pay such amount to such Administrative Agent with
interest at the rate applicable thereto. A certificate of such Administrative
Agent submitted to any Lender with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error.
3.16 Sharing of Payments.
(a) Domestic Lenders. The Domestic Lenders agree that, in the
event that any Domestic Lender shall obtain payment in respect of any Domestic
Revolving Loan, LOC Obligation or any other obligation owing to such Domestic
Lender under this Credit Agreement through the exercise of a right of setoff,
banker's lien or counterclaim, or pursuant to a secured claim under Section 506
of the Bankruptcy Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Domestic Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other means,
in excess of its pro rata share of such payment as provided for in this Credit
Agreement, such Domestic Lender shall promptly purchase from the other Domestic
Lenders a participation in such Domestic Revolving Loan, LOC Obligation and
other obligations in such amounts, and make such other adjustments from time to
time, as shall be equitable to the end that all such Domestic Lenders share such
payment in accordance with the respective Domestic Revolving Commitment
Percentages of such Domestic Lenders, as provided for in this Credit Agreement.
The Domestic Lenders further agree that if payment to any such Domestic Lender
obtained by such Domestic Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Domestic Lender which shall have shared the
benefit of such payment
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shall, by repurchase of a participation theretofore sold, return its share of
that benefit (together with its share of any accrued interest payable with
respect thereto) to each such Domestic Lender whose payment shall have been
rescinded or otherwise restored. The Domestic Borrower agrees that any Domestic
Lender so purchasing such a participation may, to the fullest extent permitted
by law, exercise all rights of payment, including setoff, banker's lien or
counterclaim, with respect to such participation as fully as if such Domestic
Lender were a holder of such Domestic Revolving Loan, LOC Obligation or other
obligation in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law, any Domestic Lender receives a
secured claim in lieu of a setoff to which this Section 3.16 applies, such
Domestic Lender shall, to the extent practicable, exercise its rights in respect
of such secured claim in a manner consistent with the rights of the Domestic
Lenders under this Section 3.16 to share in the benefits of any recovery on such
secured claim.
(b) Canadian Lenders. The Canadian Lenders agree that, in the
event that any Canadian Lender shall obtain payment in respect of any Canadian
Revolving Loan, BA Obligation or any other obligation owing to such Canadian
Lender under this Credit Agreement through the exercise of a right of setoff,
banker's lien or counterclaim, or pursuant to a secured claim under the
Bankruptcy Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Canadian Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, in excess
of its pro rata share of such payment as provided for in this Credit Agreement,
such Canadian Lender shall promptly purchase from the other Canadian Lenders a
participation in such Canadian Revolving Loan, BA Obligation and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all such Canadian Lenders share such
payment in accordance with the respective Canadian Revolving Commitment
Percentages of such Canadian Lenders, as provided for in this Credit Agreement.
The Canadian Lenders further agree that if payment to any such Canadian Lender
obtained by such Canadian Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Canadian Lender which shall have shared the
benefit of such payment shall, by repurchase of a participation theretofore
sold, return its share of that benefit (together with its share of any accrued
interest payable with respect thereto) to each such Canadian Lender whose
payment shall have been rescinded or otherwise restored. The Canadian Borrower
agrees that any Canadian Lender so purchasing such a participation may, to the
fullest extent permitted by law, exercise all rights of payment, including
setoff, banker's lien or counterclaim, with respect to such participation as
fully as if such Canadian Lender were a holder of such Canadian Revolving Loan,
BA Obligation or other obligation in the amount of such participation. If under
any applicable bankruptcy, insolvency or other similar law, any Canadian Lender
receives a secured claim in lieu of a setoff to which this Section 3.16 applies,
such Canadian Lender shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Canadian Lenders under this Section 3.16 to share in the benefits of any
recovery on such secured claim.
(c) Lenders and Agents. Except as otherwise expressly provided in
this Credit Agreement, if any Lender or any Agent shall fail to remit to any
other Agent or any other Lender an
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amount payable by such Lender or such Agent to such other Agent or such other
Lender pursuant to this Credit Agreement on the date when such amount is due,
such payments shall be made together with interest thereon for each date from
the date such amount is due until the date such amount is paid to such other
Agent or such other Lender at a rate per annum equal to the Federal Funds Rate.
3.17 Payments, Computations, Etc.
(a) Except as otherwise specifically provided herein, (i) all
payments of principal, interest and fees in connection with Canadian Revolving
Loans, BA Obligations, the Canadian Commitment Fee and the Acceptance Fees shall
be made to the Canadian Administrative Agent in the currency in which such
amount is denominated in immediately available funds, without setoff, deduction,
counterclaim or withholding of any kind, at the Canadian Administrative Agent's
office specified in Section 11.1 not later than 2:00 P.M. (Toronto, Ontario
time) on the date when due and (ii) all payments of principal, interest and fees
in connection with Domestic Revolving Loans, LOC Obligations, Swingline Loans,
the Domestic Commitment Fee, the Letter of Credit Fees, the Issuing Lender Fees
and the Administrative Agent's Fees shall be made to the Domestic Administrative
Agent in Dollars in immediately available funds, without setoff, deduction,
counterclaim or withholding of any kind, at the Domestic Administrative Agent's
office specified in Section 11.1 not later than 2:00 P.M. (Charlotte, North
Carolina time) on the date when due. Payments received after such time shall be
deemed to have been received on the next succeeding Business Day. Such
Administrative Agent may (but shall not be obligated to) debit the amount of any
such payment which is not made by such time to any ordinary deposit account of
the applicable Borrower maintained with such Administrative Agent (with notice
to such Borrower). Each Borrower shall, at the time it makes any payment under
this Credit Agreement, specify to the Domestic Administrative Agent or the
Canadian Administrative Agent, as applicable, the Loans, LOC Obligations, BA
Obligations, Fees, interest or other amounts payable by such Borrower hereunder
to which such payment is to be applied (and in the event that it fails so to
specify, or if such application would be inconsistent with the terms hereof, the
Domestic Administrative Agent or the Canadian Administrative Agent, as
applicable, shall distribute such payment to the relevant Lenders in such manner
as such Administrative Agent may determine to be appropriate in respect of
obligations owing by such Borrower hereunder, subject to the terms of Section
3.15(a) and Section 3.17). The Domestic Administrative Agent or the Canadian
Administrative Agent, as applicable, will distribute such payments to the
applicable Lenders if any such payment is received prior to 12:00 Noon
(Charlotte, North Carolina time or Toronto, Ontario time, as appropriate) on a
Business Day in like funds as received prior to the end of such Business Day and
otherwise such Administrative Agent will distribute such payment to such Lenders
entitled thereto on the next succeeding Business Day. Whenever any payment
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day (subject
to accrual of interest and Fees for the period of such extension). Except as
expressly provided otherwise herein, all computations of interest and fees shall
be made on the basis of the actual number of days elapsed over a year of 360
days, except with respect to computation of interest on Base Rate Loans
determined by reference to the Prime Rate which shall be calculated based on a
year of 365 or 366 days, as appropriate; provided that in respect of Canadian
Obligations, for purposes of the Interest Act (Canada), if interest computed on
the basis of a 360-
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day year is payable for any part of a calendar year, the equivalent yearly rate
of interest may be determined by multiplying the specified rate of interest by
the number of days (365 or 366) in such calendar year and dividing such product
by 360. Interest shall accrue from and include the date of borrowing, but
exclude the date of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Credit Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Administrative Agents or any Lender on account of
the Obligations or any other amounts outstanding under any of the Credit
Documents shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Agents in connection with enforcing the rights of the Lenders
under the Credit Documents;
SECOND, to payment of any Administrative Agent's Fees then due
and payable;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation, reasonable attorneys' fees)
of each of the Lenders in connection with enforcing its rights under
the Credit Documents or otherwise with respect to the Obligations owing
to such Lender;
FOURTH, to the payment of all accrued interest and Fees on or
in respect of the Obligations;
FIFTH, to the payment of the outstanding principal amount of
the Obligations (including the payment of all LOC Obligations then
reimbursable by the Borrower pursuant to Section 2.6(c), but excluding
any LOC Obligations attributable to issued but undrawn Letters of
Credit, and the payment of all matured and unpaid BA Obligations) and
to the payment of any principal amounts outstanding under Hedging
Agreements relating to the Obligations to the extent permitted
hereunder;
SIXTH, to the cash collateralization of all LOC Obligations
and BA Obligations attributable to issued but undrawn Letters of Credit
and Bankers' Acceptances;
SEVENTH, to all other Obligations and other obligations which
shall have become due and payable under the Credit Documents or
otherwise and not repaid pursuant to clauses "FIRST" through "SIXTH"
above; and
EIGHTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders
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shall receive an amount equal to its pro rata share (based on the proportion
that the then outstanding Obligations and obligations under Hedging Agreements
(relating to the Obligations to the extent permitted hereunder) held by such
Lender bears to the aggregate then outstanding Obligations and obligations under
Hedging Agreements (relating to the Obligations to the extent permitted
hereunder)) of amounts available to be applied pursuant to clauses "THIRD",
"FOURTH", "FIFTH" and "SIXTH" above; and (iii) all amounts available to be
applied to pursuant to clause "SIXTH" above shall be held by the Administrative
Agent in a cash collateral account and applied (A) first, to reimburse the
Issuing Lender for any drawings under such Letters of Credit and (B) then,
following the expiration of all Letters of Credit, to all other obligations of
the types described in clauses "SIXTH" AND "SEVENTH" above in the manner
provided in this Section 3.17(b).
3.18 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts evidencing
each Revolving Loan made by such Lender to the Borrowers from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time under this Credit Agreement. Each Lender will make reasonable
efforts to maintain the accuracy of its account or accounts and to promptly
update its account or accounts from time to time, as necessary.
(b) The Domestic Administrative Agent shall maintain the Domestic
Register pursuant to Section 11.3(c)(i), and a subaccount for each Domestic
Lender, in which Domestic Register and subaccounts (taken together) shall be
recorded (A) the amount, type and Interest Period of each such Domestic
Revolving Loan hereunder, (B) the amount of any principal or interest due and
payable or to become due and payable to each Domestic Lender hereunder and (C)
the amount of any sum received by the Domestic Administrative Agent hereunder
from or for the account of the Domestic Borrower and each Domestic Lender's
share thereof. The Canadian Administrative Agent shall maintain the Canadian
Register pursuant to Section 11.3(c)(ii), and a subaccount for each Canadian
Lender, in which Canadian Register and subaccounts (taken together) shall be
recorded (A) the amount, type and Interest Period of each such Canadian
Revolving Loan hereunder, (B) the amount of any principal or interest due and
payable or to become due and payable to each Canadian Lender hereunder and (C)
the amount of any sum received by the Canadian Administrative Agent hereunder
from or for the account of the Canadian Borrower and each Canadian Lender's
share thereof. Each Administrative Agent will make reasonable efforts to
maintain the accuracy of the respective subaccounts referred to in the preceding
sentences and to promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the Registers, accounts and the
subaccounts maintained pursuant to subsection (b) of this Section 3.18 (and, if
consistent with the entries of the relevant Administrative Agent, subsection
(a)) shall be prima facie evidence of the existence and amounts of the
obligations of the applicable Borrower therein recorded; provided, however, that
the failure of any Lender or either Administrative Agent to maintain either
Register, any such account, or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation of the
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Borrowers to repay the Loans and other obligations owing to such Lenders in
accordance with the terms hereof.
SECTION 4
GUARANTY
4.1 The Guarantee.
(a) (i) Each of the Domestic Guarantors hereby jointly and
severally guarantees to each Lender, to each Affiliate of a Lender that enters
into a Hedging Agreement with a Credit Party relating to the Obligations and to
the Agents, as hereinafter provided, the prompt payment of the Guaranteed
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Domestic Guarantors hereby
further agree that if any of the Guaranteed Obligations are not paid in full
when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise), the Domestic
Guarantors will, jointly and severally, promptly pay the same, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or otherwise)
in accordance with the terms of such extension or renewal.
(ii) Each of the Canadian Guarantors hereby jointly and
severally guarantees to each Canadian Lender, to each Affiliate of a Canadian
Lender that enters into a Hedging Agreement with a Canadian Credit Party
relating to the Canadian Obligations, to the Canadian Administrative Agent and
to the Collateral Agent, as hereinafter provided, the prompt payment of the
Guaranteed Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, a mandatory cash collateralization or
otherwise) strictly in accordance with the terms thereof. The Canadian
Guarantors hereby further agree that if any of the Guaranteed Obligations are
not paid in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as mandatory cash collateralization or otherwise),
the Canadian Guarantors will, jointly and severally, promptly pay the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Guaranteed Obligations, the same
will be promptly paid in full when due (whether at extended maturity, as a
mandatory prepayment, by acceleration or otherwise) in accordance with the terms
of such extension or renewal. Notwithstanding the foregoing or any other
provision hereof or in any other Credit Documents, the obligations of the
Canadian Guarantors under Section 4.1 in respect of the Guaranteed Obligations
do not extend to the Domestic Obligations or to the obligations of the Domestic
Guarantors in respect thereof, as to which such Canadian Guarantors shall have
no obligation; and the obligations of the Canadian Guarantors which are Ontario
corporations (each, an "Ontario Guarantor") shall be guarantees only of the
obligations of each respective Ontario
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Guarantor's direct parent corporation of which such Ontario Guarantor is a
direct wholly-owned subsidiary or any corporation which is a subsidiary of such
Ontario Guarantor.
(b) Notwithstanding any provision to the contrary contained herein
or in any other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state,
provincial or federal law relating to fraudulent conveyances or transfers or the
granting of financial assistance) then the obligations of each Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal, state or provincial and including, without
limitation, the Bankruptcy Code). In such case or otherwise at the request of an
Agent, each Credit Party shall take such action and shall execute and deliver
all such further documents required by such Agent to cause the obligations of
such Guarantor to be enforceable to the extent required by this Agreement.
4.2 Obligations Unconditional.
The obligations of the Domestic Guarantors under Section 4.1 in respect
of the Guaranteed Obligations are joint and several in nature as among the
Domestic Guarantors. The obligations of all of the Guarantors under Section 4.1
are absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 4.2 that the obligations of each
of the Guarantors hereunder shall be absolute and unconditional under any and
all circumstances. Each Guarantor agrees that such Guarantor shall have no right
of subrogation, indemnity, reimbursement or contribution against any of the
Borrowers or any other Guarantor for amounts paid under this Section 4 until
such time as all of the Lenders (and any Affiliates of Lenders entering into
Hedging Agreements) have been paid in full, all Commitments under the Credit
Agreement have been terminated and no Person or Governmental Authority shall
have any right to request any return or reimbursement of funds from the Lenders
in connection with monies received under the Credit Documents or Hedging
Agreements relating to the Obligations. Without limiting the generality of the
foregoing, it is agreed that, to the fullest extent permitted by law, the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:
(i) at any time or from time to time, without notice to
any Guarantor, the time for any performance of or compliance with any
of the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of
any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements shall be done or omitted;
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(iii) the maturity of any of the Guaranteed Obligations
shall be accelerated, or any of the Guaranteed Obligations shall be
modified, supplemented or amended in any respect, or any right under
any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, either
Administrative Agent or any Lender or Lenders as security for any of
the Guaranteed Obligations shall fail to attach or be perfected; or
(v) any of the Guaranteed Obligations shall be determined
to be void or voidable (including, without limitation, for the benefit
of any creditor of any Guarantor) or shall be subordinated to the
claims of any Person (including, without limitation, any creditor of
any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the either Administrative Agent or any
Lender exhaust any right, power or remedy or proceed against any Person under
any of the Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements, or against
any other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations.
4.3 Reinstatement.
(a) The obligations of the Domestic Guarantors under this Section
4 shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Guaranteed Obligations
is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Domestic Guarantor agrees that it will
indemnify the Agents and each Lender on demand for all reasonable costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by the Agents or such Lender in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
(b) The obligations of the Canadian Guarantors under this Section
4 shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Guaranteed Obligations
is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Canadian Guarantor agrees that it will
indemnify the Canadian Administrative Agent, the Collateral Agent and each
Canadian Lender on demand for all reasonable costs and expenses (including,
without limitation, reasonable fees and expenses of
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counsel) incurred by the Canadian Administrative Agent, the Collateral Agent or
such Canadian Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
Each Guarantor agrees that such Guarantor shall have no right of
recourse to security for the Guaranteed Obligations, except through the exercise
of the rights of subrogation pursuant to Section 4.2.
4.5 Remedies.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agents and the Lenders, on the
other hand, the Guaranteed Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Guaranteed
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Guaranteed Obligations
being deemed to have become automatically due and payable), the Guaranteed
Obligations (whether or not due and payable by any other Person) shall forthwith
become due and payable by the Guarantors for purposes of Section 4.1.
4.6 Rights of Contribution.
The Domestic Guarantors hereby agree, as among themselves, that if any
Domestic Guarantor shall become an Excess Funding Guarantor (as defined below),
each other Domestic Guarantor shall, on demand of such Excess Funding Guarantor
(but subject to the succeeding provisions of this Section 4.6), pay to such
Excess Funding Guarantor an amount equal to such Domestic Guarantor's Pro Rata
Share (as defined below and determined, for this purpose, without reference to
the properties, assets, liabilities and debts of such Excess Funding Guarantor)
of such Excess Payment (as defined below). The Canadian Guarantors hereby agree,
as among themselves, that if any Canadian Guarantor shall become an Excess
Funding Guarantor (as defined below), each other Canadian Guarantor shall, on
demand of such Excess Funding Guarantor (but subject to the succeeding
provisions of this Section 4.6), pay to such Excess Funding Guarantor an amount
equal to such Canadian Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment obligation of any Guarantor to any Excess
Funding Guarantor under this Section 4.6 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of such
Guarantor under the other provisions of this Section 4, and such Excess Funding
Guarantor shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For purposes
hereof, (a) "Excess Funding Guarantor" shall mean, in respect of any obligations
arising under the
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other provisions of this Section 4 (hereafter, the "Guarantied Obligations"), a
Guarantor that has paid an amount in excess of its Pro Rata Share of the
Guarantied Obligations; (b) "Excess Payment" shall mean, in respect of any
Guarantied Obligations, the amount paid by an Excess Funding Guarantor in excess
of its Pro Rata Share of such Guarantied Obligations; and (c) "Pro Rata Share",
for the purposes of this Section 4.6, shall mean, for any Guarantor, the ratio
(expressed as a percentage) of (i) the amount by which the aggregate present
fair saleable value of all of its assets and properties exceeds the amount of
all debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder) to (ii) (A) in the case of the Domestic Guarantors, the
amount by which the aggregate present fair saleable value of all assets and
other properties of the Domestic Borrower and all of the Domestic Guarantors
exceeds the amount of all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of the Domestic Borrower and the Domestic Guarantors hereunder) of
the Domestic Borrower and all of the Domestic Guarantors, all as of the Closing
Date and (B) in the case of the Canadian Guarantors, the amount by which the
aggregate present fair saleable value of all assets and other properties of the
Canadian Borrowers and all of the Canadian Guarantors (other than the Domestic
Borrower) exceeds the amount of all of the debts and liabilities (including
contingent, subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of the Canadian Borrowers and the Canadian Guarantors hereunder)
of the Canadian Borrowers and all of the Canadian Guarantors, all as of the
Closing Date (in each case, if any Guarantor becomes a party hereto subsequent
to the Closing Date, then for the purposes of this Section 4.6 such subsequent
Guarantor shall be deemed to have been a Guarantor as of the Closing Date and
the information pertaining to, and only pertaining to, such Guarantor as of the
date such Guarantor became a Guarantor shall be deemed true as of the Closing
Date).
4.7 Continuing Guarantee.
The guarantee in this Section 4 is a continuing guarantee, and shall
apply to all Guaranteed Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Conditions to Closing.
This Credit Agreement shall become effective, and the initial
Extensions of Credit may be made, upon the satisfaction of the following
conditions precedent:
(a) Execution of Credit Agreement and Credit Documents.
Receipt by the Domestic Administrative Agent of (i) multiple counterparts of
this Credit Agreement, (ii) a Note for each Lender, (iii) multiple counterparts
of the Pledge Agreements, (iv) multiple counterparts of the Security Agreements
and (v) UCC financing statements, Personal Property Security Act financing
statements and other documents relating to the Pledge Agreements and the
Security
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Agreements, if any, in each case executed by a duly authorized officer of each
party thereto and in each case conforming to the requirements of this Credit
Agreement.
(b) Legal Opinions. Receipt by the Domestic
Administrative Agent of multiple counterparts of opinions of counsel for the
Credit Parties relating to the Credit Documents and the transactions
contemplated herein, in form and substance satisfactory to the Administrative
Agents and the Required Lenders.
(c) Stock Certificates. Receipt by the Collateral Agent
of original stock certificates evidencing the ownership interests of the Credit
Parties pledged pursuant to the Pledge Agreements, together in each case with
original undated stock powers executed in blank, and other ancillary documents
required by the Collateral Agent.
(d) Evidence of Insurance. Receipt by the Collateral
Agent of insurance certificates or policies evidencing casualty insurance
(including builders' risk and all-risk permanent policies) and liability
insurance conforming to the requirements of this Credit Agreement and the other
Credit Documents, together with evidence of payment of premiums thereon.
(e) Absence of Legal Proceedings. The absence of any
action, suit, investigation or proceeding pending in any court or before any
arbitrator or governmental instrumentality which could reasonably be expected to
have a Material Adverse Effect.
(f) Corporate Documents. Receipt by the Domestic
Administrative Agent of the following (or their equivalent) for each of the
Credit Parties:
(i) Resolutions. Copies of resolutions of the
board of directors approving and adopting the respective Credit
Documents, the transactions contemplated therein and authorizing
execution and delivery thereof, certified by a secretary or assistant
secretary as of the Closing Date to be true and correct and in force
and effect as of such date.
(ii) Good Standing. Copies, where applicable, of
(A) certificates of good standing, existence or its equivalent
certified as of a recent date by the appropriate governmental
authorities of the state of incorporation and (B) certificates
indicating payment of all corporate franchise taxes certified as of a
recent date by the appropriate governmental taxing authorities of the
state of incorporation.
(iii) Officer's Certificate. An officer's
certificate for each of the Credit Parties dated as of the Closing Date
substantially in the form of Schedule 5.1(f)(iii)-1, Schedule
5.1(f)(iii)-2, Schedule 5.1(f)(iii)-3, as appropriate, in each case
with appropriate insertions and attachments.
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(g) Fees. Receipt of all fees, if any, owing pursuant to
the Administrative Agent's Fee Letter, Section 3.5 or otherwise.
(h) Section 5.2 Conditions. The conditions specified in
Section 5.2 shall be satisfied.
5.2 Conditions to All Extensions of Credit.
The obligation of each Lender to make any Extension of Credit hereunder
(including the initial Extension of Credit to be made hereunder) is subject to
the satisfaction of the following conditions precedent on the date of making
such Extension of Credit:
(a) Representations and Warranties. The representations
and warranties made by the Credit Parties herein and in the other Credit
Documents or which are contained in any certificate furnished at any time under
or in connection herewith shall be true and correct in all material respects on
and as of the date of such Extension of Credit as if made on and as of such date
(except for those which expressly relate to an earlier date and those which are
untrue solely as a result of a change permitted by this Agreement).
(b) No Default or Event of Default. No Default or Event
of Default shall have occurred and be continuing on such date or after giving
effect to the Extension of Credit to be made on such date unless such Default or
Event of Default shall have been waived in accordance with this Credit
Agreement.
(c) Additional Conditions to Domestic Revolving Loans. If
a Domestic Revolving Loan is requested pursuant to Section 2.1, all conditions
set forth in Section 2 shall have been satisfied.
(d) Additional Conditions to Letters of Credit. If the
issuance of a Letter of Credit is requested pursuant to Section 2.1, all
conditions set forth in Section 2 shall have been satisfied.
(e) Additional Conditions to Swingline Loans. If a
Swingline Loan is requested pursuant to Section 2.1, all conditions set forth in
Section 2 shall have been satisfied.
(f) Additional Conditions to Canadian Revolving Loans. If
a Canadian Revolving Loan is requested pursuant to Section 2.1, all conditions
set forth in Section 2 shall have been satisfied.
(g) Additional Conditions to Bankers' Acceptances. If the
issuance of a Bankers' Acceptance is requested pursuant to Section 2.1, all
conditions set forth in Section 2 shall have been satisfied.
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Each request for Extension of Credit (including extensions of
Eurodollar Loans and conversions of Base Rate Loans into Eurodollar Loans) and
each acceptance by the applicable Borrower of an Extension of Credit (including
extensions of Eurodollar Loans and conversions of Base Rate Loans into
Eurodollar Loans) shall be deemed to constitute a representation and warranty by
such Borrower as of the date of such Extension of Credit that the applicable
conditions in paragraphs (a) and (b), and in (c), (d), (e), (f) or (g) of this
subsection have been satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to make
Extensions of Credit herein provided for, each of the Credit Parties hereby
represents and warrants to each Administrative Agent and to each Lender that:
6.1 Financial Condition.
Each of the financial statements described below (copies of which have
heretofore been provided to the Administrative Agents for distribution to the
Lenders), have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, are complete and correct in all material
respects and present fairly the financial condition and results from operations
of the entities and for the periods specified (subject in the case of interim
company-prepared statements to normal year-end adjustments and the absence of
footnotes):
(i) audited consolidated and consolidating balance sheets for the
members of the Consolidated Group dated as of December 31, 1998, together with
related audited consolidated and consolidating statements of operations,
shareholders equity and cash flows certified by Arthur Andersen LLP, certified
public accountants;
(ii) company-prepared consolidated and consolidating balance sheets
for the members of the Consolidated Group dated as of March 31, 1999, together
with related consolidated statements of operations, shareholders equity and cash
flows; and
(iii) after the Closing Date, the annual and quarterly financial
statements provided in accordance with Sections 7.1(a) and (b).
6.2 No Changes or Restricted Payments.
Since March 31, 1999, (a) there has been no circumstance, development
or event relating to or affecting the members of the Consolidated Group which
has had or would be reasonably expected to have a Material Adverse Effect, and
(b) except as permitted herein, no Restricted Payments have been made or
declared by any members of the Consolidated Group.
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6.3 Organization; Existence; Compliance with Law.
Each of the Credit Parties (a) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization, except to the extent that the failure to be in good standing would
not, in the aggregate, have a Material Adverse Effect, (b) has the corporate or
other necessary power and authority, and the legal right to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
entity and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, other than in such jurisdictions where the failure
to be so qualified and in good standing would not, in the aggregate, have a
Material Adverse Effect, and (d) is in compliance with its certificate of
incorporation and bylaws (or other organizational or governing documents) and
all Requirements of Law, except to the extent that the failure to comply
therewith would not, in the aggregate, be reasonably expected to have a Material
Adverse Effect.
6.4 Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has the corporate or other necessary power
and authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party and has taken all necessary corporate or other
action to authorize the execution, delivery and performance by it of the Credit
Documents to which it is a party. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with acceptance of extensions of credit
or the making of the guaranties hereunder or with the execution, delivery or
performance of any Credit Documents by the Credit Parties (other than those
which have been obtained, such filings as are required by the Securities and
Exchange Commission and to fulfill other reporting requirements with
Governmental Authorities) or with the validity or enforceability of any Credit
Document against the Credit Parties (except such filings as are necessary in
connection with the perfection of the Liens created by such Credit Documents).
Each Credit Document to which it is a party constitutes a legal, valid and
binding obligation of such Credit Party enforceable against such Credit Party in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
6.5 No Legal Bar.
The execution, delivery and performance of the Credit Documents, the
borrowings hereunder and the use of the Extensions of Credit will not violate
any Requirement of Law, the certificate of incorporation or bylaws (or other
organizational or governing documents) or any Contractual Obligation of any
Credit Party (except those as to which waivers or consents have been obtained),
and will not result in, or require, the creation or imposition of any Lien on
any of its respective properties or revenues pursuant to any Requirement of Law,
its certificate of incorporation or bylaws (or other organizational or governing
documents) or Contractual
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Obligation other than the Liens arising under or contemplated in connection with
the Credit Documents. No member of the Consolidated Group is in default under or
with respect to any of its Contractual Obligations in any respect which would
reasonably be expected to have a Material Adverse Effect.
6.6 No Material Litigation.
No claim, litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of the
Credit Parties, threatened by or against, any members of the Consolidated Group
or against any of their respective properties or revenues which (a) purports to
affect the legality, validity or enforceability of any of the Credit Documents
and which is reasonably likely to be adversely determined, or (b) is reasonably
likely to have a Material Adverse Effect.
6.7 No Default.
No Default or Event of Default has occurred and is continuing.
6.8 Ownership of Property; Liens.
Each of the Credit Parties has good record and marketable title in fee
simple to, or (subject to the documentation of certain agreed-upon leases
between certain Credit Parties and certain of the shareholders or principals of
the corresponding Founding Companies) a valid leasehold interest in, all its
real property material to the Consolidated Group, and good title to, or a valid
leasehold interest in, all its other property material to the Consolidated
Group, and none of such property is subject to any Lien, except for Permitted
Liens.
6.9 Intellectual Property.
Each of the members of the Consolidated Group owns, or has the legal
right to use, all United States trademarks, tradenames, copyrights, technology,
know-how and processes, if any, necessary for each of them to conduct its
business as currently conducted (the "Intellectual Property") except for those
the failure to own or have such legal right to use would not be reasonably
expected to have a Material Adverse Effect. No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does any Credit Party know of any such claim, and the use of such
Intellectual Property by the members of the Consolidated Group does not infringe
on the rights of any Person, except for such claims and infringements that in
the aggregate, would not be reasonably expected to have a Material Adverse
Effect.
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6.10 No Burdensome Restrictions.
Neither the certificate of incorporation or bylaws (or other
organizational or governing documents) nor any Requirement of Law or Contractual
Obligation of the members of the Consolidated Group would be reasonably expected
to have a Material Adverse Effect.
6.11 Taxes.
Each of the Credit Parties has filed or caused to be filed all United
States and Canadian federal income tax returns and all other material tax
returns which, to the best knowledge of the Credit Parties, are required to be
filed and has paid (a) all taxes shown to be due and payable on said returns or
(b) all taxes shown to be due and payable on any assessments of which it has
received notice made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority (other than any (i) taxes, fees or other charges with respect to which
the failure to pay, in the aggregate, would not have a Material Adverse Effect
or (ii) taxes, fees or other charges the amount or validity of which are
currently being contested and with respect to which reserves in conformity with
GAAP have been provided on the books of such Person), and no tax Lien has been
filed (other than tax Liens which, in the aggregate, would not have a Material
Adverse Effect), and, to the best knowledge of the Credit Parties, no claim is
being asserted, with respect to any such tax, fee or other charge (other than
such claims which, in the aggregate, would not have a Material Adverse Effect).
6.12 ERISA
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred, and, to
the best knowledge of the Credit Parties, no event or condition has occurred or
exists as a result of which any ERISA Event could reasonably be expected to
occur, with respect to any Plan; (ii) no "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA and Section 412 of the Internal
Revenue Code, whether or not waived, has occurred with respect to any Plan;
(iii) each Plan has been maintained, operated, and funded in compliance with its
own terms and in material compliance with the provisions of ERISA, the Internal
Revenue Code, and any other applicable federal or state laws; and (iv) no lien
in favor of the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under each
Single Employer Plan, as of the last annual valuation date prior to the date on
which this representation is made or deemed made (determined, in each case, in
accordance with Financial Accounting Standards Board Statement 87, utilizing the
actuarial assumptions used in such Plan's most recent actuarial valuation
report), did not exceed as of such valuation date the fair market value of the
assets of such Plan.
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(c) No member of the Consolidated Group nor any ERISA Affiliate
has incurred, or, to the best knowledge of the Credit Parties, could be
reasonably expected to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. No member of the Consolidated
Group nor any ERISA Affiliate would become subject to any withdrawal liability
under ERISA if any member of the Consolidated Group or any ERISA Affiliate were
to withdraw completely from all Multiemployer Plans and Multiple Employer Plans
as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No member of the Consolidated Group nor
any ERISA Affiliate has received any notification that any Multiemployer Plan is
in reorganization (within the meaning of Section 4241 of ERISA), is insolvent
(within the meaning of Section 4245 of ERISA), or has been terminated (within
the meaning of Title IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be in reorganization,
insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Internal Revenue Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected or may
subject any member of the Consolidated Group or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of
the Internal Revenue Code, or under any agreement or other instrument pursuant
to which any member of the Consolidated Group or any ERISA Affiliate has agreed
or is required to indemnify any person against any such liability.
(e) No member of the Consolidated Group nor any ERISA Affiliates
has any material liability with respect to "expected post-retirement benefit
obligations" within the meaning of the Financial Accounting Standards Board
Statement 106. Each Plan which is a welfare plan (as defined in Section 3(1) of
ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Internal
Revenue Code apply has been administered in compliance in all material respects
of such sections.
6.13 Governmental Regulations, Etc.
(a) No part of the proceeds of the Extensions of Credit hereunder
will be used, directly or indirectly, for the purpose of purchasing or carrying
any "margin stock" within the meaning of Regulation U. If requested by any
Lender or the Domestic Administrative Agent, each Borrower will furnish to the
Domestic Administrative Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form U-1 referred to in said
Regulation U. No indebtedness being reduced or retired out of the proceeds of
the Extensions of Credit hereunder was or will be incurred for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U or
any "margin security" within the meaning of Regulation T. "Margin stock" within
the meanings of Regulation U does not constitute more than 25% of the value of
the consolidated assets of the Domestic Borrower and its Subsidiaries. None of
the transactions contemplated by this Credit Agreement (including, without
limitation, the direct or indirect use of the proceeds of the Loans) will
violate or result in a violation of the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, or regulations issued pursuant
thereto, or Regulation T, U or X.
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(b) None of the members of the Consolidated Group is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940, each as amended. In addition,
none of the members of the Consolidated Group is (i) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, and is not controlled by such a company, or (ii) a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(c) No director, executive officer or principal shareholder of any
member of the Consolidated Group is a director, executive officer or principal
shareholder of any Lender. For the purposes hereof the terms "director",
"executive officer" and "principal shareholder" (when used with reference to any
Lender) have the respective meanings assigned thereto in Regulation O.
6.14 Subsidiaries.
Set forth on Schedule 6.14 are all the Subsidiaries of the Domestic
Borrower at the Closing Date, the jurisdiction of their incorporation and the
direct or indirect ownership interest of the Domestic Borrower therein.
6.15 Purpose of Extensions of Credit.
The Extensions of Credit may be used (i) for working capital, capital
expenditures and other lawful corporate purposes and (ii) to finance
Acquisitions permitted hereunder and refinance funded debt in connection with
such Acquisitions.
6.16 Environmental Matters.
Except as would not reasonably be expected to have a Material Adverse
Effect:
(a) Each of the facilities and properties owned, leased or
operated by the members of the Consolidated Group (the "Properties") and all
operations at the Properties are in compliance with all applicable Environmental
Laws, and there is no violation of any Environmental Law with respect to the
Properties or the businesses operated by the members of the Consolidated Group
(the "Businesses"), and there are no conditions relating to the Businesses or
Properties that could give rise to liability under any applicable Environmental
Laws.
(b) None of the Properties contains, or has previously contained,
any Materials of Environmental Concern at, on or under the Properties in amounts
or concentrations that constitute or constituted a violation of, or could give
rise to liability under, Environmental Laws.
(c) None of the members of the Consolidated Group has received any
written or verbal notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation,
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non-compliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws with regard to any of the Properties or
the Businesses, nor does any member of the Consolidated Group have knowledge or
reason to believe that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported
or disposed of from the Properties, or generated, treated, stored or disposed of
at, on or under any of the Properties or any other location, in each case by or
on behalf any members of the Consolidated Group in violation of, or in a manner
that would be reasonably likely to give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the best knowledge of any Credit Party, threatened,
under any Environmental Law to which any member of the Consolidated Group is or
will be named as a party, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect to
any member of the Consolidated Group, the Properties or the Businesses.
(f) There has been no release or, threat of release of Materials
of Environmental Concern at or from the Properties, or arising from or related
to the operations (including, without limitation, disposal) of any member of the
Consolidated Group in connection with the Properties or otherwise in connection
with the Businesses, in violation of or in amounts or in a manner that could
give rise to liability under Environmental Laws.
6.17 Year 2000 Compliance.
The Domestic Borrower has (i) developed a plan and timeline for
addressing the "Year 2000 Problem" (that is, the risk that computer applications
used by such Person may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999) on a timely basis, (ii) to date, implemented that plan in
accordance with that timetable and (iii) believes that all of its computer
applications that are material to its or any of its Subsidiaries' business and
operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 Compliant"), except to the extent that a failure to do
so could not reasonably be expected to have a Material Adverse Effect.
6.18 Canadian Pension Plans
Except as would not reasonably be expected to have a Material Adverse
Effect, (a) each Canadian Pension Plan is ongoing, duly registered and complies,
and has been administered in compliance, in all material respects, with all
applicable legislation and governmental rules and regulations (collectively,
"Canadian Pension Laws") including, without limitation, pension benefits
standards legislation and the Income Tax Act (Canada) and any applicable
provincial legislation; (b) each Canadian Pension Plan is in good standing under
Canadian Pension Laws,
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and no events have occurred which would reasonably be expected to impair such
status; (c) there has been no payment out of the pension fund held in respect of
any Canadian Pension Plan except for the purpose of paying or arranging for the
payment of authorized benefits or the proper expenses of any Canadian Pension
Plan in accordance with its terms and Canadian Pension Laws; (d) no steps have
been instituted by a Canadian Credit Party and no Canadian Credit Party has
acquiesced in any action by another Person which could result in the
termination, in whole or in part, of any Canadian Pension Plan, whether by
declaration by any governmental authority or otherwise; (e) all contributions
have been made to each Canadian Pension Plan in accordance with the terms of
such Canadian Pension Plan and the recommended funding requirements disclosed in
any actuarial valuations or reports pertaining to such Canadian Pension Plan and
no contribution failure has occurred with respect to any Canadian Pension Plan
sufficient to give rise to any liability, to constitute an offense or to
jeopardize the registration of any Canadian Pension Plan under any Canadian
Pension Laws; (f) no Canadian Pension Plan has a "solvency deficiency" as
defined and determined in accordance with any Canadian Pension Laws; (g) no
material actions, suits, claims or proceedings are pending or threatened in
respect of any Canadian Pension Plan, other than routine uncontested claims for
benefits; (h) no condition exists or transaction has occurred in connection with
any Canadian Pension Plan which could result in the incurrence by a Canadian
Credit Party of any material liability, fine or penalty and (i) where a Canadian
Pension Plan is required to be registered under applicable Canadian Pension Law,
either such Canadian Pension Plan is duly registered or timely application for
such registration has been made.
SECTION 7
AFFIRMATIVE COVENANTS
Each of the Credit Parties covenants and agrees that on the Closing
Date, and so long as this Credit Agreement is in effect and until the
Commitments have been terminated, no Obligations remain outstanding and all
amounts owing hereunder or in connection herewith have been paid in full, unless
the Required Lenders otherwise consent in writing, the Domestic Borrower shall,
and in the case of Sections 7.4, 7.5, 7.6, 7.7 and 7.8 below, shall cause each
of the other Credit Parties to:
7.1 Financial Statements.
Furnish, or cause to be furnished, to the Administrative Agents and
Lenders:
(a) Audited Financial Statements. As soon as available,
but in any event within 95 days after the end of each fiscal year, an
audited consolidated balance sheet of the Consolidated Group as of the
end of the fiscal year and the related consolidated statements of
operations, shareholders' equity and cash flows for the year, audited
by Arthur Andersen LLP, or other firm of independent certified public
accountants of nationally recognized standing reasonably acceptable to
the Required Lenders, setting forth in each case in comparative form
the figures for the previous year, reported without
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a "going concern" or like qualification or exception, or qualification
indicating that the scope of the audit was inadequate to permit such
independent certified public accountants to certify such financial
statements without such qualification.
(b) Company-Prepared Financial Statements. As soon as
available, but in any event
(i) within 50 days after the end of each of the
first three fiscal quarters, a company-prepared consolidated
and consolidating balance sheet of the Consolidated Group as
of the end of the quarter and related company-prepared
consolidated and consolidating statements of operations,
shareholders' equity and cash flows for such quarterly period
and for the fiscal year to date;
(ii) within 30 days prior to the end of each
fiscal year, an annual business plan and budget for the
members of the Consolidated Group, containing, among other
things, projected financial statements for the next fiscal
year,
in each case setting forth in comparative form the consolidated and
consolidating figures for the corresponding period or periods of the
preceding fiscal year or the portion of the fiscal year ending with
such period, as applicable, in each case subject to normal year-end
audit adjustments.
(c) Borrowing Base Certificate. Within 30 days after the
end of each calendar month, a statement of the Borrowing Base and its
components as of the end of such calendar month, in form and content
satisfactory to the Administrative Agents and certified by the chief
financial officer of the Domestic Borrower to be true and correct as of
the date thereof (the "Borrowing Base Certificate").
All such financial statements shall be complete and correct in all
material respects (subject, in the case of interim statements, to
normal year-end audit adjustments) and shall be prepared in reasonable
detail and, in the case of the annual and quarterly financial
statements provided in accordance with subsections (a) and (b) above,
in accordance with GAAP applied consistently throughout the periods
reflected therein and further accompanied by a description of, and an
estimation of the effect on the financial statements on account of, any
change in the application of accounting principles as provided in
Section 1.3(a).
7.2 Certificates; Other Information.
Furnish, or cause to be furnished, to the Administrative Agents and the
Lenders:
(a) Accountant's Certificate and Reports. Concurrently
with the delivery of the financial statements referred to in subsection
7.1(a) above, a certificate of the independent certified public
accountants reporting on such financial statements stating
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that in the course of performing their audit, nothing came to their
attention that caused them to believe the Domestic Borrower was not in
compliance with the financial covenants contained in Section 7.9 below
insofar as such covenants relate to accounting matters, except as
specified in such certificate.
(b) Officer's Compliance Certificate. Concurrently with
the delivery of the financial statements referred to in Sections 7.1(a)
and 7.1(b) above, a certificate of a Responsible Officer stating that,
to the best of such Responsible Officer's knowledge and belief, (i) the
financial statements fairly present in all material respects the
financial condition of the parties covered by such financial
statements, (ii) during such period the Credit Parties have observed or
performed in all material respects the covenants and other agreements
hereunder and under the other Credit Documents relating to them, and
satisfied in all material respects the conditions contained in this
Credit Agreement to be observed, performed or satisfied by them, and
(iii) such Responsible Officer has obtained no knowledge of any Default
or Event of Default except as specified in such certificate. Such
certificate shall include the calculations required to indicate
compliance with Section 7.9. A form of Officer's Certificate is
attached as Schedule 7.2(b).
(c) Accountants' Reports. Promptly upon receipt, a copy
of any final (as distinguished from a preliminary or discussion draft)
"management letter" or other similar report submitted by independent
accountants or financial consultants to the members of the Consolidated
Group in connection with any annual, interim or special audit.
(d) Public Information. Within thirty days after the same
are sent, copies of all reports (other than those otherwise provided
pursuant to Section 7.1) and other financial information which the
Domestic Borrower sends to its public stockholders, and within thirty
days after the same are filed, copies of all financial statements and
non-confidential reports which the Domestic Borrower may make to, or
file with, the SEC.
(e) Other Information. Promptly, such additional
financial and other information as either Administrative Agent, at the
request of any Lender, may from time to time reasonably request.
7.3 Notices.
Give notice to the Administrative Agents (which shall promptly transmit
such notice to each Lender) of:
(a) Defaults. Immediately (and in any event within five
(5) Business Days) after any Responsible Officer knows or has reason to
know thereof, the occurrence of any Default or Event of Default.
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(b) Contractual Obligations. Promptly (and in any event
within ten (10) Business Days) after any Responsible Officer knows or
has reason to know of the occurrence of any default or event of default
under any Contractual Obligation of any member of the Consolidated
Group which would reasonably be expected to have a Material Adverse
Effect.
(c) Legal Proceedings. Promptly (and in any event within
ten (10) Business Days) after any Responsible Officer knows or has
reason to know of any litigation, or any investigation or proceeding
(including without limitation, any environmental proceeding), or any
material development in respect thereof, affecting any member of the
Consolidated Group which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect.
(d) ERISA. Promptly (and in any event within thirty (30)
Business Days) after any Responsible Officer knows or has reason to
know of (i) any event or condition, including, but not limited to, any
Reportable Event, that constitutes, or might reasonably lead to, an
ERISA Event; (ii) with respect to any Multiemployer Plan, the receipt
of notice as prescribed in ERISA or otherwise of any withdrawal
liability assessed against any of their ERISA Affiliates, or of a
determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA); (iii) the
failure to make full payment on or before the due date (including
extensions) thereof of all amounts which the members of the
Consolidated Group or any ERISA Affiliate are required to contribute to
each Plan pursuant to its terms and as required to meet the minimum
funding standard set forth in ERISA and the Internal Revenue Code with
respect; or (iv) any change in the funding status of any Plan that
reasonably could be expected to have a Material Adverse Effect;
together with a description of any such event or condition or a copy of
any such notice and a statement by the chief financial officer of the
Domestic Borrower briefly setting forth the details regarding such
event, condition, or notice, and the action, if any, which has been or
is being taken or is proposed to be taken by the Credit Parties with
respect thereto. Promptly upon request, the members of the Consolidated
Group shall furnish the Administrative Agents and the Lenders with such
additional information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of each annual
report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and the Internal
Revenue Code, respectively, for each "plan year" (within the meaning of
Section 3(39) of ERISA).
(e) Canadian Pension Plans. Promptly (and in any event
within 30 Business Days) after the institution of any steps by a
Canadian Credit Party or any other Person to which such other Person is
subject to terminate any Canadian Pension Plan, or the failure to make
a required contribution to any Canadian Pension Plan if such failure is
sufficient to give rise to a Lien under applicable laws and
regulations, or the taking of any action with respect to such a
Canadian Pension Plan which could result in the requirement that the
such Person furnish a bond or other security to any applicable
Governmental
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Authority or such Canadian Pension Plan, or the occurrence of any event
with respect to any such Canadian Pension Plan which could result in
the incurrence by such Person of any material liability, fine or
penalty, or any material increase in the contingent liability of such
Person with respect to any post-retirement Canadian Pension Plan
benefit.
(f) Other. Promptly (and in any event within ten (10)
Business Days), any other development or event which a Responsible
Officer determines could reasonably be expected to have a Material
Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the relevant Credit Parties propose to take with respect
thereto.
7.4 Payment of Obligations.
Pay, discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, in accordance with prudent business
practice (subject, where applicable, to specified grace periods) all material
obligations of each Credit Party of whatever nature and any additional costs
that are imposed as a result of any failure to so pay, discharge or otherwise
satisfy such obligations, except when the amount or validity of such obligations
and costs is currently being contested in good faith by appropriate proceedings
and reserves, if applicable, in conformity with GAAP with respect thereto have
been provided on the books of the Consolidated Group, as the case may be.
7.5 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as conducted on
the Closing Date by the Domestic Borrower and the other Credit Parties, taken as
a whole, and similar or related businesses; preserve, renew and keep in full
force and effect its corporate existence except as otherwise permitted by this
Credit Agreement and take all reasonable action to maintain all rights,
privileges, licenses and franchises necessary or desirable in the normal conduct
of its business except to the extent that failure to comply therewith would not,
in the aggregate, have a Material Adverse Effect; and comply with all
Contractual Obligations, its certificate of incorporation or bylaws (or other
organizational or governing documents) and all Requirements of Law applicable to
it except to the extent that failure to comply therewith would not, in the
aggregate, have a Material Adverse Effect.
7.6 Maintenance of Property; Insurance.
Keep all material property useful and necessary in its business in
reasonably good working order and condition (ordinary wear and tear excepted)
except to the extent that failure to comply therewith would not, in the
aggregate, have a Material Adverse Effect; maintain with financially sound and
reputable insurance companies casualty, liability and such other insurance
(which may include plans of self-insurance) with such coverage and deductibles,
and in such
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amounts as may be consistent with prudent business practice and in any event
consistent with normal industry practice (except to any greater extent as may be
required by the terms of any of the other Credit Documents); and furnish to
either Administrative Agent or the Collateral Agent, upon written request, full
information as to the insurance carried.
7.7 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its businesses and
activities; and permit, during regular business hours and upon reasonable notice
to a Responsible Officer by the Domestic Administrative Agent, the Domestic
Administrative Agent, and its representatives, to visit and inspect any of its
properties and examine and make abstracts (including photocopies) from any of
its books and records (other than materials protected by the attorney-client
privilege and materials which the Credit Parties may not disclose without
violation of a confidentiality obligation binding upon them) and to discuss the
business, operations, properties and financial and other condition of the Credit
Parties with officers and employees of any Borrower and, so long as any
discussion takes place in the presence of a Responsible Officer, with officers
and employees of the Credit Parties and with any Borrower's independent
certified public accountants. The cost of the inspection referred to in the
preceding sentence shall be for the account of the Lenders unless an Event of
Default has occurred and is continuing, in which case the cost of such
inspection shall be for the account of the Credit Parties. The Credit Parties
agree that the Domestic Administrative Agent, on behalf of the Lenders, and its
representatives (including representatives of the Lenders), may conduct an
annual audit of the inventory and receivables of the Credit Parties, at the
expense of the Borrowers.
7.8 Environmental Laws.
(a) Comply in all material respects with, and take reasonable
actions to ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain and
comply in all material respects with and maintain, and take reasonable actions
to ensure that all tenants and subtenants obtain and comply in all material
respects with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws except to the
extent that failure to do so would not reasonably be expected to have a Material
Adverse Effect; and
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the failure to do or the pendency of such
proceedings would not reasonably be expected to have a Material Adverse Effect.
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7.9 Financial Covenants.
Comply with the following financial covenants (each of which shall be
computed in accordance with Section 1.3(b), to the extent applicable):
(a) Consolidated Total Leverage Ratio. As of the end of each
fiscal quarter of the members of the Consolidated Group, the Consolidated Total
Leverage Ratio shall not be greater than 4.0:1.0.
(b) Consolidated Senior Leverage Ratio. As of the end of each
fiscal quarter of the members of the Consolidated Group, the Consolidated Senior
Leverage Ratio shall not be greater than 2.5:1.0.
(c) Consolidated Net Worth. As of the end of each fiscal quarter
of the members of the Consolidated Group, Consolidated Net Worth shall be not
less than the sum of US$96,227,000 plus on the last day of each fiscal quarter
to end after March 31, 1999, seventy-five percent (75%) of Consolidated Net
Income for the fiscal quarter (but not less than zero), such increases to be
cumulative, plus one hundred percent (100%) of any increases in Consolidated Net
Worth resulting from Equity Transactions occurring after the Closing Date.
(d) Consolidated Fixed Charge Coverage Ratio. As of the end of
each fiscal quarter of the members of the Consolidated Group, the Consolidated
Fixed Charge Coverage Ratio shall not be less than 1.75:1.0.
(e) Consolidated Rent Expense. Consolidated Rent Expense for any
fiscal year shall not exceed three percent (3%) of revenues of the Consolidated
Group determined on a consolidated basis in accordance with GAAP.
(e) Consolidated Capital Expenditures. Consolidated Capital
Expenditures for any fiscal year shall not exceed an amount equal to the greater
of (a) five percent (5%) of revenues of the Consolidated Group determined on a
consolidated basis in accordance with GAAP for such fiscal year or (b)
US$25,000,000.
7.10 Administrative Fees.
Pay to each Administrative Agent the Administrative Agent's Fees and
comply with the other agreements provided for in the Administrative Agent's Fee
Letter.
7.11 Additional Guaranties and Stock Pledges.
(a) Domestic Subsidiaries. Where Domestic Subsidiaries which are
not Domestic Guarantors (the "Non-Guarantor Domestic Subsidiaries") shall at any
time (the "Domestic Threshold Requirement"):
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(i) in any instance for any such Non-Guarantor Domestic
Subsidiary, constitute more than five percent (5%) of consolidated
assets for the Consolidated Group as of the end of the immediately
preceding fiscal quarter or generate more than five percent (5%) of
consolidated revenues for the Consolidated Group for the period of four
consecutive fiscal quarters ending as of the end of the immediately
preceding fiscal quarter, or
(ii) in the aggregate for all such Non-Guarantor Domestic
Subsidiaries, constitute more than ten percent (10%) of consolidated
assets for the Consolidated Group as of the end of the immediately
preceding fiscal quarter or generate more than ten percent (10%) of
consolidated revenues for the Consolidated Group for the period of four
consecutive fiscal quarters ending as of the end of the immediately
preceding fiscal quarter,
then the Domestic Borrower shall (i) notify the Domestic Administrative Agent
thereof within 10 days after a Responsible Officer has knowledge thereof, and
(ii) within 45 days thereafter, (A) cause each such Domestic Subsidiary to
become a Domestic Guarantor by execution of a Joinder Agreement, such that
immediately after joinder as a Domestic Guarantor, the remaining Non-Guarantor
Domestic Subsidiaries shall not in any instance, or collectively, exceed the
Domestic Threshold Requirement, (B) deliver with the Joinder Agreement such
supporting resolutions, incumbency certificates, corporate formation and
organizational documentation and opinions of counsel as the Domestic
Administrative Agent may reasonably request, and (C) deliver stock certificates
and related pledge agreements or pledge joinder agreements evidencing the pledge
of 100% of the capital stock of each Domestic Subsidiary (whether or not it is a
Guarantor) of the Domestic Borrower and 66% (or such greater percentage which
would not result in material adverse tax consequences) of the issued and
outstanding capital stock entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) and 100% of the issued and outstanding Capital Stock not
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) of
each Foreign Subsidiary (including Canadian Subsidiaries) directly owned by each
such Domestic Subsidiary to secure the obligations of the Domestic Guarantors
under the Credit Documents, together with undated stock transfer powers executed
in blank.
(b) Canadian Subsidiaries. Where Canadian Subsidiaries which are
not Canadian Guarantors (the "Non-Guarantor Canadian Subsidiaries") shall at any
time (the "Canadian Threshold Requirement"):
(i) in any instance for any such Non-Guarantor Canadian
Subsidiary, constitute more than five percent (5%) of consolidated
assets for the Consolidated Group as of the end of the immediately
preceding fiscal quarter or generate more than five percent (5%) of
consolidated revenues for the Consolidated Group for the period of four
consecutive fiscal quarters ending as of the end of the immediately
preceding fiscal quarter, or
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(ii) in the aggregate for all such Non-Guarantor Canadian
Subsidiaries, constitute more than ten percent (10%) of consolidated
assets for the Consolidated Group as of the end of the immediately
preceding fiscal quarter or generate more than ten percent (10%) of
consolidated revenues for the Consolidated Group for the period of four
consecutive fiscal quarters ending as of the end of the immediately
preceding fiscal quarter,
then the Canadian Borrower shall (i) notify the Administrative Agents thereof
within 10 days after a Responsible Officer has knowledge thereof, and (ii)
within 45 days thereafter, (A) cause each such Canadian Subsidiary to become a
Canadian Guarantor (subject, in the case of any Canadian Non-Guarantor
Subsidiary which is an Ontario corporation, to the limitations set forth in
Section 4.1(a)(ii)) (and, so long as no adverse tax consequences in the
reasonable determination of the Domestic Borrower would be created thereby,
cause each such Canadian Subsidiary to become a Domestic Guarantor) by execution
of a Joinder Agreement, such that immediately after joinder as a Canadian
Guarantor, the remaining Non-Guarantor Canadian Subsidiaries shall not in any
instance, or collectively, exceed the Canadian Threshold Requirement, (B)
deliver with the Joinder Agreement such supporting resolutions, incumbency
certificates, corporate formation and organizational documentation and opinions
of counsel as the Administrative Agents may reasonably request, and (C) deliver
stock certificates and related pledge agreements or pledge joinder agreements
evidencing the pledge of (I) 66% (or such greater percentage which would not
result in material adverse tax consequences) of the issued and outstanding
capital stock entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) and 100% of the issued and outstanding Capital Stock not entitled
to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) of each direct
Canadian Subsidiary of a Domestic Credit Party to secure the obligations of the
Domestic Guarantors under the Credit Documents, (II) 34% (or the percentage not
pledged pursuant to the foregoing clause (I), if less) of the of the issued and
outstanding capital stock not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) of each direct Canadian Subsidiary of a Domestic
Credit Party to secure the obligations of the Canadian Guarantors under the
Credit Documents, and (III) 100% of the of the issued and outstanding capital
stock of each Foreign Subsidiary (including Canadian Subsidiaries) directly or
indirectly owned by each such Canadian Subsidiary to secure the obligations of
the Canadian Guarantors under the Credit Documents, in each case together with
undated stock transfer powers executed in blank and other ancillary documents
reasonably requested by the Collateral Agent.
(c) Other Foreign Subsidiaries. Where Foreign Subsidiaries (other
than Canadian Subsidiaries) shall at any time in the aggregate generate more
than ten percent (10%) of consolidated revenues for the Consolidated Group for
the period of four consecutive fiscal quarters ending as of the end of the
immediately preceding fiscal quarter or more than ten percent (10%) of
Consolidated EBITDA for the period of four consecutive fiscal quarters ending as
of the end of the immediately preceding fiscal quarter, then the Domestic
Borrower shall (a) notify the Domestic Administrative Agent thereof within 10
days after a Responsible Officer has knowledge thereof, and (b) within 45 days
thereafter, cause (i) delivery of supporting resolutions, incumbency
certificates, corporation formation and organizational documentation and
opinions
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of counsel as the Administrative Agents may reasonably request, and (ii)
delivery of stock certificates (where required for perfection under local law)
and a related pledge agreement or pledge joinder agreement evidencing the pledge
of (I) 66% (or such greater percentage which would not result in material
adverse tax consequences) of the issued and outstanding capital stock entitled
to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of
the issued and outstanding Capital Stock not entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) of each Foreign Subsidiary (other
than Canadian Subsidiaries) directly owned by a Domestic Credit Party to secure
the obligations of the Domestic Guarantors under the Credit Documents, (II) 34%
(or the percentage not pledged pursuant to the foregoing clause (I), if less) of
the of the issued and outstanding capital stock not entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) of each Foreign Subsidiary (other
than Canadian Subsidiaries) directly owned by a Domestic Credit Party to secure
the obligations of the Canadian Guarantors under the Credit Documents, and (III)
100% of the of the issued and outstanding capital stock of each other Foreign
Subsidiary (other than Canadian Subsidiaries) to secure the obligations of the
Canadian Guarantors under the Credit Documents, in each case together with
undated stock transfer powers executed in blank and other ancillary documents
reasonably requested by the Collateral Agent.
(d) Guaranties Given in respect of Other Indebtedness.
Notwithstanding anything to the contrary contained herein, the Domestic Borrower
will promptly provide, or cause to be provided, to the Administrative Agents,
appropriate Joinder Agreements in respect of the obligations of the Domestic
Guarantors and the Canadian Guarantors under the Credit Documents from any
Subsidiary or Affiliate which shall give a guaranty in respect of the Senior
Subordinated Notes, together with the other items referenced in subsections (a)
or (b) above, as appropriate.
7.12 Ownership of Subsidiaries.
Except to the extent otherwise permitted in Section 8.6, the Domestic
Borrower shall, directly or indirectly, own at all times 100% of the Voting
Stock of each of its Subsidiaries.
7.13 Use of Proceeds.
Extensions of Credit will be used solely for the purposes provided in
Section 6.15.
7.14 Year 2000 Compatibility.
Take all action reasonably necessary to assure that its computer based
systems are Year 2000 Compliant (within the meaning of Section 6.17), except to
the extent that a failure to do so would not have a Material Adverse Effect,
and, at the reasonable request of either Administrative Agent or the Required
Lenders, provide evidence to the Lenders that it is taking such action.
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7.15 Canadian Pension Plans.
Maintain and cause each Canadian Credit Party to maintain each Canadian
Pension Plan to which it is subject in compliance with all applicable
requirements of law and regulations, except to the extent the failure to do so
would not be reasonably expected to have a Material Adverse Effect.
SECTION 8
NEGATIVE COVENANTS
Each of the Credit Parties covenants and agrees that on the Closing
Date, and so long as this Credit Agreement is in effect and until the
Commitments have been terminated, no Obligations remain outstanding and all
amounts owing hereunder or in connection herewith, have been paid in full, no
member of the Consolidated Group shall (without the prior written consent of the
Required Lenders):
8.1 Indebtedness.
Contract, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness arising or existing under this Credit
Agreement and the other Credit Documents;
(b) Indebtedness set forth in Schedule 8.1, and renewals,
refinancings and extensions thereof on terms and conditions consistent
with then prevailing market standards for such existing Indebtedness;
(c) Capital Lease Obligations and Indebtedness incurred,
in each case, to provide all or a portion of the purchase price or
costs of construction of an asset or, in the case of a sale/leaseback
transaction as described in Section 8.9, to finance the value of such
asset owned by a member of the Consolidated Group, provided that (i)
such Indebtedness when incurred shall not exceed the purchase price or
cost of construction of such asset or, in the case of a sale/leaseback
transaction, the fair market value of such asset, (ii) no such
Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such
refinancing, and (iii) the aggregate amount of Capital Lease
Obligations shall not exceed US$10 million at any time outstanding and
the total amount of all such Indebtedness shall not exceed US$25
million at any time outstanding;
(d) Indebtedness and obligations owing under interest
rate protection agreements relating to the Obligations hereunder and
under interest rate, commodities and foreign currency exchange
protection agreements entered into in the ordinary course of business
to manage existing or anticipated risks and not for speculative
purposes;
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(e) unsecured intercompany Indebtedness owing by a member
of the Consolidated Group to another members of the Consolidated Group
(subject, however, to the limitations of Section 8.5 in the case of the
member of the Consolidated Group extending the intercompany loan,
advance or credit);
(f) Subordinated Debt of the Domestic Borrower consisting
of
(i) the Senior Subordinated Notes in an
aggregate principal amount of up to US$125 million (and
renewals, refinancing and refundings of the then outstanding
principal amount the terms of subordination of which shall be
identical in all material respects to the terms of
subordination under the Senior Subordinated Notes (and the
indenture relating thereto) and on other terms and conditions
no less favorable to the Lenders than the terms and conditions
contained in the Senior Subordinated Notes (and the indenture
relating thereto); and
(ii) other Subordinated Debt, provided that (A)
the Domestic Borrower shall demonstrate it will be in
compliance with the financial covenants in Section 7.9 after
giving effect thereto on a Pro Forma Basis, and (B) no Default
or Event of Default shall exist after giving effect thereto;
(g) Indebtedness in respect of financed insurance premium
obligations;
(h) purchase money Indebtedness (including Capital Lease
Obligations) assumed in connection with the Permitted Acquisitions in
an aggregate principal amount not to exceed US$15,000,000 at any time
outstanding;
(i) seller financing obligations incurred in connection
with the Permitted Acquisitions in an aggregate principal amount not to
exceed an amount equal to ten percent (10%) of Consolidated Net Worth
as of the end of the immediately preceding fiscal quarter;
(j) Indebtedness of Canadian Subsidiaries of up to US$10
million in the aggregate owing under a Canadian working capital credit
facility extended by one or more Canadian lenders, secured by personal
property of the Canadian Subsidiaries, guaranteed by the Domestic
Borrower and the Canadian Subsidiaries (but not the Domestic
Subsidiaries), and extensions and renewals thereof;
(k) other unsecured Indebtedness of any of the Credit
Parties of up to US$2,500,000 in the aggregate at any time outstanding;
(l) Support Obligations of Indebtedness permitted under
this Section 8.1; provided that any Support Obligations given in
support of Subordinated Debt shall be
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subordinated on the same basis as the Subordinated Debt which is the
subject thereof and Support Obligations given in support of the
Canadian credit facility referenced under clause (j) hereof shall be
limited as provided therein; and
(m) other Indebtedness consented to in writing by the
Required Lenders (provided that if the aggregate principal amount of
such Indebtedness equals or exceeds US$25,000,000, the Required Lenders
shall determine whether or not the instrument evidencing such
Indebtedness shall specifically designate that such Indebtedness is
"Designated Senior Debt" (as such term is defined in the Senior
Subordinated Notes)).
8.2 Liens.
Contract, create, incur, assume or permit to exist any Lien with
respect to any of their respective property or assets of any kind (whether real
or personal, tangible or intangible), whether now owned or hereafter acquired,
except for Permitted Liens.
8.3 Consolidation, Merger, Amalgamation Divestiture, etc.
(a) Enter into a transaction of merger, amalgamation or
consolidation, except
(i) a member of the Consolidated Group may be a
party to a transaction of merger, amalgamation or consolidation with
another member of the Consolidated Group, provided that (A) if the
Domestic Borrower is a party thereto, it shall be the surviving
corporation, (B) if a Domestic Guarantor is a party thereto and the
Domestic Borrower is not a party thereto, a Domestic Guarantor shall be
the surviving corporation or the surviving corporation shall be a
Domestic Subsidiary and shall become a Domestic Guarantor hereunder
pursuant to Section 7.11 concurrently therewith, (C) if a Canadian
Borrower is a party thereto and a Domestic Credit Party is not a party
thereto, a Canadian Borrower shall be the surviving corporation, (D) if
a Canadian Guarantor is a party thereto and neither a Canadian Borrower
nor a Domestic Credit Party is a party thereto, a Canadian Guarantor
shall be the surviving corporation or the surviving corporation shall
be a Canadian Subsidiary and shall become a Canadian Guarantor
hereunder pursuant to Section 7.11 concurrently therewith, and (E) no
Default or Event of Default shall exist either immediately prior to or
immediately after giving effect thereto; and
(ii) a member of the Consolidated Group (other
than the Domestic Borrower) may be a party to a transaction of merger,
amalgamation or consolidation with any other Person in connection with
an Acquisition permitted under Section 8.4 and a Divestiture permitted
under Section 8.3(b), provided that, in connection with an Acquisition,
the provisions of Section 7.11 regarding joinder of certain
Subsidiaries as Additional Credit Parties hereunder shall be complied
with.
(b) Make any Divestiture which:
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(i) in any instance (including any series of
related transactions comprising a Divestiture) shall be of Property (or
of a Person owning Property) constituting more than five percent (5%)
of consolidated assets at the end of the immediately preceding fiscal
year or generating more than five percent (5%) of Consolidated Net
Income for the immediately preceding fiscal year, or
(ii) in the aggregate in any fiscal year shall be
of Property (or of a Person owning Property) constituting more than ten
percent (10%) of consolidated assets at the end of the immediately
preceding fiscal year or generating more than ten percent (10%)
Consolidated Net Income for the immediately preceding fiscal year;
provided in the case of any Divestiture permitted under subsections (i)
and (ii) above, that no Default of Event of Default would exist after
giving effect thereto, determined in the case of financial covenant
compliance on a Pro Forma Basis and as otherwise set forth in Section
1.3(b).
(c) In the case of the Domestic Borrower, liquidate,
wind-up or dissolve, whether voluntarily or involuntarily (or suffer to permit
any such liquidation or dissolution).
Any consent of the Required Lenders requested by the Domestic Borrower
under this Section 8.3 shall not be arbitrarily withheld or unreasonably
delayed.
8.4 Acquisitions.
Make any Acquisition, unless
(a) in respect of any such Acquisition, total cash
consideration shall not exceed an amount equal to thirty percent (30%)
of Consolidated EBITDA on a Pro Forma Basis for the immediately
preceding fiscal year;
(b) in respect of all such Acquisitions in any fiscal
year, total cash consideration shall not exceed an amount equal to
sixty percent (60%) of Consolidated EBITDA on a Pro Forma Basis for the
immediately preceding fiscal year;
(c) the Board of Directors of the Person which is, or
whose Property is, the subject of the Acquisition shall have approved
the Acquisition; and
(d) no Default or Event of Default would exist after
giving effect thereto, determined in the case of financial covenant
compliance on a Pro Forma Basis and as otherwise set forth in Section
1.3(b).
Any consent of the Required Lenders requested by the Domestic Borrower
under this Section 8.4 shall not be arbitrarily withheld or unreasonably
delayed.
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8.5 Investments.
Make any Investment in any Person except for Permitted Investments.
8.6 Ownership of Equity Interests.
Issue, sell, transfer, pledge or otherwise dispose of any partnership
interests, shares of capital stock or other equity or ownership interests
("Equity Interests") in any member of the Consolidated Group, except (i)
issuance, sale or transfer of Equity Interests to a Credit Party by a Subsidiary
of such Credit Party, (ii) in connection with a transaction permitted by
Sections 8.3, 8.4 or 8.5, (iii) as needed to qualify directors under applicable
law and (iv) dispositions of Permitted Investments (other than Investments by a
Credit Party in another Credit Party).
8.7 Fiscal Year.
Change its fiscal year from a December 31 fiscal year end.
8.8 Restricted Payments.
Make or permit any Restricted Payments.
8.9 Sale Leasebacks.
Except as permitted pursuant to Section 8.1(c), directly or indirectly,
become or remain liable as lessee or as guarantor or other surety with respect
to any lease, whether an Operating Lease or a Capital Lease, of any Property,
whether now owned or hereafter acquired, (i) which such Person has sold or
transferred or is to sell or transfer to any other Person other than a Credit
Party or (ii) which such Person intends to use for substantially the same
purpose as any other Property which has been sold or is to be sold or
transferred by such Person to any other Person in connection with such lease.
8.10 No Further Negative Pledges.
Except with respect to (i) prohibitions against other encumbrances on
specific Property encumbered to secure payment of particular Indebtedness (which
Indebtedness relates solely to such specific Property, and improvements and
accretions thereto, and is otherwise permitted hereby) and (ii) the Senior
Subordinated Notes, enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation.
8.11 Modifications and Payments in respect of Subordinated Debt.
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(a) Amend or modify (or consent to, permit or acquiesce
to the amendment or modification of) the Subordinated Debt if the
effect thereof would be to (A) increase the interest rate on the
Subordinated Debt; (B) change the dates upon which payments of
principal or interest are due on the Subordinated Debt other than to
extend such dates; (C) change any default or event of default other
than to delete or make any default provision therein less restrictive;
(D) change or add any covenant with respect thereto other than to make
any covenant less restrictive; or (E) change the redemption or
prepayment provisions thereof other than to extend the dates therefor
or to reduce the premiums payable in connection therewith, in each case
without the prior written consent of the Required Lenders; provided,
however, that nothing contained in this Section 8.11(a) or elsewhere in
this Agreement shall be construed to require the consent of Required
Lenders to any waiver by the holders of Subordinated Debt of any
default or event of default under the Subordinated Debt documents or of
any of the rights and remedies of the holders of Subordinated Debt
thereunder;
(b) Make any payment in contravention of the terms of any
Subordinated Debt; or
(c) Except in connection with a refinancing or refunding
permitted hereunder, make any prepayment, redemption, defeasance or
acquisition for value of (including without limitation, by way of
depositing money or securities with the trustee with respect thereto
before due for the purpose of paying when due), or refund, refinance or
exchange of any Subordinated Debt, other than regularly scheduled
payments of principal and interest on such Subordinated Debt, without
the prior written consent of the Required Lenders hereunder.
8.12 Limitations on Transactions with Affiliates.
(a) Directly or indirectly enter into or permit to exist
any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any Property or
the rendering of any service) with, or for the benefit of, any of its
Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below and (y) Affiliate
Transactions on terms that are no less favorable than those that might
reasonably have been obtained in a comparable transaction at such time
on an arm's-length basis from a Person that is not an Affiliate of the
Domestic Borrower or other member of the Consolidated Group.
All Affiliate Transactions (and each series of related
Affiliate Transactions which are similar or part of a common plan)
involving aggregate payments or other Property with a fair market value
in excess of US$2,000,000 shall be approved by the Board of Directors
of the respective member of the Consolidated Group, as the case may be,
such approval to be evidenced by a Board Resolution stating that such
Board of Directors has determined that such transaction complies with
the foregoing provisions. If a member of the Consolidated Group enters
into an Affiliate Transaction (or a series of related Affiliate
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Transactions related to a common plan) that involves an aggregate fair
market value of more than US$5,000,000, the Domestic Borrower or other
member of the Consolidated Group, as the case may be, shall, prior to
the consummation thereof, obtain a favorable opinion as to the fairness
of such transaction or series of related transactions to the Domestic
Borrower or other relevant member of the Consolidated Group, as the
case may be, from a financial point of view, from an Independent
Financial Advisor and file the same with the Administrative Agents.
(b) The restrictions set forth in the first paragraph of
this covenant shall not apply to:
(1) reasonable fees and compensation (including
severance payments and compensation in the form of
securities) and customary expense, reimbursement paid
to and indemnity and reimbursement provided on behalf
of, officers, directors, employees or consultants of
the Domestic Borrower or any member of the
Consolidated Group as determined in good faith by the
Domestic Borrower's Board of Directors or senior
management;
(2) transactions exclusively between or among
the Domestic Borrower or any of the members of the
Consolidated Group or exclusively between or among
such members of the Consolidated Group, provided such
transactions are not otherwise prohibited hereunder;
(3) transactions pursuant to or contemplated by
any agreement as in effect as of the date of
Amendment No. 3 (being April 6, 1999) or any
amendment thereto or any replacement agreement so
long as any such amendment or replacement agreement
is not more disadvantageous to the Lenders hereunder
in any material respect than the original agreement
as in effect on the date of Amendment No. 3 (being
April 6, 1999);
(4) loans and advances to employees or officers
which constitute Permitted Investments hereunder; and
(5) Restricted Payments permitted hereunder.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
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(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal of
any of the Loans, or
(ii) default, and such default shall continue for three
(3) or more Business Days, in the payment when due of any reimbursement
obligations under Letters of Credit or Bankers' Acceptances, or of any
interest on the Loans or on any reimbursement obligations under Letters
of Credit or Bankers' Acceptances, or of any Fees or other amounts
owing hereunder, under any of the other Credit Documents or in
connection herewith or therewith; or
(b) Representations. Any representation, warranty or statement
made or deemed to be made herein, in any of the other Credit Documents, or in
any statement or certificate delivered or required to be delivered pursuant
hereto or thereto shall prove untrue in any material respect on the date as of
which it was made or deemed to have been made (other than those which are untrue
solely as a result of changes permitted by this Agreement); or
(c) Covenants.
(i) Default in the due performance or observance of any
term, covenant or agreement contained in Section 7.3(a), 7.9, 7.11,
7.13 or 8.1 through 8.12, inclusive; or
(ii) Default in the due performance or observance by it of
any term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) of this Section 9.1) contained in this
Credit Agreement and such default shall continue unremedied for a
period of at least 30 days after the earlier of a Responsible Officer
becoming aware of such default or notice thereof by the Administrative
Agent; or
(d) Other Credit Documents. (i) Any Credit Party shall default in
the due performance or observance of any material term, covenant or agreement in
any of the other Credit Documents (subject to applicable grace or cure periods,
if any), or (ii) except as to any Credit Party which is dissolved, released or
merged or consolidated out of existence as the result of or in connection with a
dissolution, merger or disposition permitted by Section 8.3 or Section 8.4, any
Credit Document shall fail to be in full force and effect or to give the
Administrative Agents and/or the Lenders any material part of the Liens, rights,
powers and privileges purported to be created thereby; or
(e) Guaranties. Except as to any Credit Party which is dissolved,
released or merged or consolidated out of existence as the result of or in
connection with a dissolution, merger or disposition permitted by Section 8.3 or
Section 8.4, the guaranty given by any Guarantor hereunder or any material
provision thereof shall cease to be in full force and effect, or any Guarantor
hereunder or any Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under such guaranty, or any Guarantor
shall default in the
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due performance or observance of any term, covenant or agreement on its part to
be performed or observed pursuant to any guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect
to any Material Credit Party; or
(g) Defaults under Other Agreements. With respect to any
Indebtedness (other than Indebtedness outstanding under this Credit Agreement)
in excess of US$3,000,000 in the aggregate for the Consolidated Group taken as a
whole, (A) (1) any Material Credit Party shall default in any payment (beyond
the applicable grace period with respect thereto, if any) with respect to any
such Indebtedness, or (2) the occurrence and continuance of a default in the
observance or performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event or condition shall occur or condition exist, the effect of which default
or other event or condition is to cause, or permit, the holder or holders of
such Indebtedness (or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of time is required),
any such Indebtedness to become due prior to its stated maturity; or (B) any
such Indebtedness shall be declared due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the stated
maturity thereof; or
(h) Judgments. Any Material Credit Party shall fail within 30 days
of the date due and payable to pay, bond or otherwise discharge any judgment,
settlement or order for the payment of money which judgment, settlement or
order, when aggregated with all other such judgments, settlements or orders due
and unpaid at such time, exceeds US$3,000,000, and which is not stayed on appeal
(or for which no motion for stay is pending) or is not otherwise being executed;
or
(i) ERISA. Any of the following events or conditions, if such
event or condition could reasonably be expected to have a Material Adverse
Effect: (1) any "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Internal Revenue Code, whether or
not waived, shall exist with respect to any Plan, or any Lien shall arise on the
assets of a member of the Consolidated Group or any ERISA Affiliate in favor of
the PBGC or a Plan; (2) an ERISA Event shall occur with respect to a Single
Employer Plan, which is, in the reasonable opinion of the Domestic
Administrative Agent, likely to result in the termination of such Plan for
purposes of Title IV of ERISA; (3) an ERISA Event shall occur with respect to a
Multiemployer Plan or Multiple Employer Plan, which is, in the reasonable
opinion of the Domestic Administrative Agent, likely to result in (i) the
termination of such Plan for purposes of Title IV of ERISA, or (ii) a member of
the Consolidated Group or any ERISA Affiliate incurring any liability in
connection with a withdrawal from, reorganization of (within the meaning of
Section 4241 of ERISA), or insolvency of (within the meaning of Section 4245 of
ERISA) such Plan; or (4) any prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Internal Revenue Code) or breach of
fiduciary responsibility shall occur which may subject a member of the
Consolidated Group or any ERISA Affiliate to any liability under Sections 406,
409, 502(i), or 502(l) of ERISA or Section 4975 of the Internal
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Revenue Code, or under any agreement or other instrument pursuant to which a
member of the Consolidated Group or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability; or
(j) Canadian Pension Laws. Any of the following events or
conditions, if such event or condition could reasonably be expected to have a
Material Adverse Effect: (1) the filing of a notice of intent to terminate or
wind-up any Canadian Pension Plan by a Canadian Credit Party; the institution of
proceedings to terminate, in whole or in part, a Canadian Pension Plan by any
applicable Governmental Authority; (2) a "solvency deficiency" exists under any
Canadian Pension Plan; (3) the withdrawal by a Canadian Credit Party from a
multi-employer Canadian Pension Plan; (4) the failure of a Canadian Credit Party
to make a required contribution to any Canadian Pension Plan, including, but not
limited to, any failure to pay any amount sufficient to give rise to liability
or constitute a material offense under any Canadian Pension Law; (5) the
occurrence of any other event with respect to any Canadian Pension Plan which
could result in the incurrence by a Canadian Credit Party of any material
liability, fine or penalty, including, but not limited to, liability pursuant to
any Canadian Pension Law; (6) the establishment of a new Canadian Pension Plan
or an amendment to any existing Canadian Pension Plan which will result in a
material increase in contributions or benefits under such Canadian Pension Plan
or the incurrence of any material increase in the liability of a Canadian Credit
Party with respect to any Canadian Pension Plan; or (7) the occurrence of any
event that constitutes a material breach of the terms of any Canadian Pension
Plan or a material breach of any Canadian Pension Law with respect to any
Canadian Pension Plan.
(k) Subordinated Debt. Any Governmental Authority determines that
(i) the Obligations do not constitute Senior Debt (as defined in the indenture
governing the Senior Subordinated Notes) or (ii) the obligations of the Credit
Parties with respect to the Senior Subordinated Notes are not fully subordinate
to the repayment of the Obligations and all other amounts owing under the Credit
Documents.
(l) Ownership. There shall occur a Change of Control.
9.2 Acceleration; Remedies.
Upon the occurrence and during the continuation of an Event of Default,
the Domestic Administrative Agent shall, upon the request and direction of the
Required Lenders, by written notice to the Credit Parties take any of the
following actions without prejudice to the rights of the Agents or any Lender to
enforce its claims against the Credit Parties, except as expressly provided for
herein:
(i) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(ii) Acceleration. Declare the unpaid principal of and any
accrued interest in respect of all Loans, any reimbursement obligations
arising from drawings under Letters
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of Credit and Bankers' Acceptances (based on the maximum face amount of
LOC Obligations and BA Obligations, respectively, then outstanding) and
any and all other indebtedness or obligations of any and every kind
owing by the Credit Parties to the Administrative Agent and/or any of
the Lenders hereunder to be due whereupon the same shall be immediately
due and payable without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by each of the Credit Parties.
(iii) Cash Collateral. Direct the Borrowers to pay (and
each Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), it will
immediately pay) to the respective Administrative Agent additional
cash, to be held by such Administrative Agent, for the benefit of the
respective Lenders, in a cash collateral account as additional security
for (i) LOC Obligations in respect of subsequent drawings under all
then outstanding Letters of Credit in an amount equal to the maximum
aggregate amount which may be drawn under all Letters of Credits and
(ii) BA Obligations in respect of subsequent maturities under all then
outstanding Bankers' Acceptances in an amount equal to the maximum
aggregate amount of all BA Obligations.
(iv) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents and all
rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit and Bankers'
Acceptances, all accrued interest in respect thereof, all accrued and unpaid
Fees and other indebtedness or obligations owing to any Agent and/or any of the
Lenders hereunder automatically shall immediately become due and payable without
presentment, demand, protest or the giving of any notice or other action by any
Agent or the Lenders, all of which are hereby waived by the Credit Parties.
9.3 Conversion and Redenomination of Certain Loans; Purchase of
Risk Participation.
(a) Conversion and Redenomination. Notwithstanding
anything herein to the contrary, upon the termination of Commitments hereunder
following the occurrence of an Event of Default (a "Commitment Termination
Event"), (i) all outstanding Loans denominated in foreign currency (including
Canadian Dollars) or bearing interest at a rate other than the Base Rate shall
be redenominated and/or converted into Base Rate Loans denominated in U.S.
Dollars, and (ii) all BA Obligations and other obligations, if any, denominated
in foreign currency (including Canadian Dollars) shall be redenominated into
U.S. Dollars, in each case on and with effect from the soonest practicable date
following the Commitment Termination Event as determined by the respective
Administrative Agents (the "Conversion Date") and at the exchange rate in effect
as of such Conversion Date as determined by the respective Administrative
Agents. The Borrowers hereby agree to pay to the Administrative Agents, for the
pro rata benefit of the respective Lenders, on the Conversion Date any
break-funding amounts owing pursuant to Section 3.11 as a result of any such
conversion occurring prior to the end of an Interest Period or
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the term of any Bankers' Acceptance. The Administrative Agent(s) will promptly
notify the respective Borrowers and the Lenders of any such redenomination and
conversion following a Commitment Termination Event.
(b) Purchase of Risk Participations. Each Lender hereby
agrees that it shall forthwith purchase, as of the Conversion Date (but adjusted
for any payments received from a Borrower on or after such date and prior to
such purchase), from the other Lenders such Participation Interests in the
outstanding Obligations hereunder (whether or not such Obligations have been
redenominated or converted pursuant to subsection 9.3(a)) as shall be necessary
to cause each such Lender to share in all such Obligations ratably based on its
share of Obligations (including Participation Interests therein), provided that
(i) all interest and fees payable on Obligations shall be for the account of the
Lender that originally extended such Obligation until the date as of which the
respective Participation Interest is funded, and (ii) if any purchase of a
Participation Interest required hereunder is not made on the Conversion Date,
then at the time such purchase is actually made the purchasing Lender shall be
required to pay to the selling Lender, to the extent not paid to such selling
Lender by the applicable Borrower in accordance with the terms of this Credit
Agreement, interest on the principal amount of the Participation Interest
purchased for each day from and including the day upon which such purchase of
the Participation Interest would otherwise have occurred to but excluding the
date of the actual payment for the purchase of such Participation Interest, at a
rate equal to the Federal Funds Rate.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
The Lenders hereby designate and appoint Bank of America, N.A., as
Domestic Administrative Agent and as Collateral Agent, and Bank of America
Canada, as Canadian Administrative Agent, in each case, of the Lenders to act as
specified herein and the other Credit Documents, and each of the Lenders hereby
authorizes the Agents to take such action on their behalf under the provisions
of this Credit Agreement and the other Credit Documents and to exercise such
powers and perform such duties as are expressly delegated to such Agents by the
terms hereof and of the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Each of the Lenders further directs and
authorizes the Administrative Agents and the Collateral Agent to execute
releases (or similar agreements) to give effect to the provisions of this Credit
Agreement and the other Credit Documents, including specifically, without
limitation, in connection with a Divestiture consented to or permitted pursuant
to the provisions of Section 8.3 or a sale, lease, transfer or other disposition
of Property not prohibited by this Credit Agreement. Notwithstanding any
provision to the contrary elsewhere herein and in the other Credit Documents,
the Agents shall not have any duties or responsibilities, except those expressly
set forth herein and therein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Credit Agreement or any of the other Credit
Documents, or shall otherwise exist against the Agents. The
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provisions of this Section 10 are solely for the benefit of the Agents and the
Lenders, and none of the Credit Parties shall have any rights as a third party
beneficiary of the provisions hereof (other than as set forth in the second
sentence hereof). In performing their functions and duties under this Credit
Agreement and the other Credit Documents, each Agent shall act solely as Agent
of the Lenders and do not assume and shall not be deemed to have assumed any
obligation or relationship of agency or trust with or for any Credit Party or
any of their respective Affiliates.
10.2 Delegation of Duties.
Each Agent may execute any of its duties hereunder or under the other
Credit Documents by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. No Agent
shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
10.3 Exculpatory Provisions.
No Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by them or such Person under or in connection
herewith or in connection with any of the other Credit Documents (except for its
or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any of the Credit Parties contained herein
or in any of the other Credit Documents or in any certificate, report, document,
financial statement or other written or oral statement referred to or provided
for in, or received by such Agent under or in connection herewith or in
connection with the other Credit Documents, or the enforceability or sufficiency
therefor of any of the other Credit Documents, or for any failure of any Credit
Party to perform its obligations hereunder or thereunder. No Agent shall be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Credit Agreement, or any
of the other Credit Documents or for any representations, warranties, recitals
or statements made herein or therein or made by any Borrower or any other Credit
Party in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection herewith
or therewith furnished or made available by such Agent to the Lenders or by or
on behalf of the Credit Parties to such Agent or any Lender or be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or the use of the Letters of Credit
or Bankers' Acceptances or of the existence or possible existence of any Default
or Event of Default or to inspect the properties, books or records of the Credit
Parties or any of their respective Affiliates.
10.4 Reliance on Communications.
Each Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order 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
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upon advice and statements of legal counsel (including, without limitation,
counsel to any of the Credit Parties, independent accountants and other experts
selected by the such Agent with reasonable care). Each Agent may deem and treat
the Lenders as the owners of their respective interests hereunder for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the appropriate Administrative Agent in accordance
with Section 11.3(b). Each Agent shall be fully justified in failing or refusing
to take any action under this Credit Agreement or under any of the other Credit
Documents unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, hereunder or under any of the other Credit Documents in accordance
with a request of the Required Lenders (or to the extent specifically provided
in Section 11.6, all the Lenders) and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders (including
their successors and assigns).
10.5 Notice of Default.
No Agent shall be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless such Agent has received
notice from a Lender or a Credit Party referring to the Credit Document,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that such Agent receives such a notice, such
Agent shall give prompt notice thereof to the other Agents and to the Lenders.
The Agents shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders.
10.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither any Agent nor any
officers, directors, employees, agents, attorneys-in-fact or affiliates of any
Agent has made any representations or warranties to it and that no act by the
Agents or any affiliate thereof hereinafter taken, including any review of the
affairs of any Credit Party or any of their respective Affiliates, shall be
deemed to constitute any representation or warranty by any Agent to any Lender.
Each Lender represents to the Agents that it has, independently and without
reliance upon the Agents or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the Borrowers, the other
Credit Parties or their respective Affiliates and made its own decision to make
its Revolving Loans hereunder and other financial accommodations hereunder and
enter into this Credit Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agents 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 analysis, appraisals and decisions in
taking or not taking action under this Credit Agreement, and to make such
investigation as it deems necessary to inform itself as to the business, assets,
operations, property, financial and other conditions, prospects and
creditworthiness of the Borrowers, the other
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Credit Parties and their respective Affiliates. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the Agents
hereunder, the Agents shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
assets, property, financial or other conditions, prospects or creditworthiness
of the Borrowers, the other Credit Parties or any of their respective Affiliates
which may come into the possession of the Agents or any of their officers,
directors, employees, agents, attorneys-in-fact or affiliates.
10.7 Indemnification.
The Lenders agree to indemnify each Agent in its capacity as such (to
the extent not reimbursed by the Borrowers and without limiting the obligation
of the Borrowers to do so), ratably according to their respective Commitments
(or if the Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Obligations and Participation
Interests of the Lenders), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the final payment of all of
the obligations of the Borrowers hereunder and under the other Credit Documents)
be imposed on, incurred by or asserted against such Agent in its capacity as
such in any way relating to or arising out of this Credit Agreement or the other
Credit Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by such Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of such Agent. If any indemnity furnished to an Agent for any purpose
shall, in the opinion of such Agent, be insufficient or become impaired, such
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this Section shall survive the repayment of the Loans, LOC
Obligations and other obligations under the Credit Documents and the termination
of the Commitments hereunder.
10.8 Administrative Agent in its Individual Capacity.
The Agents and their affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrowers, their
Subsidiaries or their respective Affiliates as though the Agents were not the
Agents hereunder. With respect to the Loans made by and all obligations of the
Borrowers hereunder and under the other Credit Documents, the Agents shall have
the same rights and powers under this Credit Agreement as any Lender and may
exercise the same as though it were not an Agent hereunder, and the terms
"Lender" and "Lenders" shall include the Agents in their individual capacity.
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10.9 Successor Administrative Agent.
Any Agent may, at any time, resign upon 20 days' written notice to the
Lenders, and may be removed, upon show of cause, by the Required Lenders upon 30
days' written notice to such Agent. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the notice of resignation
or notice of removal, as appropriate, then the retiring Agent shall select a
successor Agent provided that (a) in the case of the Domestic Administrative
Agent or the Collateral Agent, such successor is a Domestic Lender hereunder or
a commercial bank organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
US$400,000,000 and (b) in the case of the Canadian Administrative Agent, such
successor is a Canadian Lender hereunder or a commercial bank organized under
the laws of Canada and has a combined capital and surplus of at least
CD$200,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor, such successor Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations as Agent,
as appropriate, under this Credit Agreement and the other Credit Documents, and
the provisions of this Section 10 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Credit
Agreement.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to the
number set out below, (iii) the day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (iv)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address, in the case of a Borrower, the Guarantors and the Agents, set forth
below, and, in the case of the Lenders, set forth on Schedule 11.1, or at such
other address as such party may specify by written notice to the other parties
hereto:
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if to the Domestic Borrower, any Canadian Borrower or any Guarantor:
RailWorks Corporation
1104 Kenilworth Drive
Suite 301
Baltimore, MD 21204
Attn: Michael R. Azarela
Telephone: (410) 512-0501
Telecopy: (410) 825-6920
if to the Domestic Administrative Agent or the Collateral Agent:
Bank of America, N.A.
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Gregg Newland
Agency Services
Telephone: (704) 386-4218
Telecopy: (704) 388-9436
with a copy to:
Bank of America, N.A.
10 Light Street
Sixteenth Floor
MD4-302-16-01
Baltimore, MD 21202-1435
Attn: Monica Brandes
Telephone: (410) 605-8019
Telecopy: (410) 539-7508
if to the Canadian Administrative Agent:
Bank of America Canada
--------------------------
Toronto, Ontario
Attn:
Telephone:
Telecopy:
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11.2 Right of Set-Off.
In addition to any rights now or hereafter granted under applicable law
or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Lender (including, without
limitation branches, agencies or Affiliates of such Lender wherever located) to
or for the credit or the account of any Credit Party against obligations and
liabilities of such Person to such Lender hereunder, under the Notes, the other
Credit Documents or otherwise, irrespective of whether such Lender shall have
made any demand hereunder and although such obligations, liabilities or claims,
or any of them, may be contingent or unmatured, and any such set-off shall be
deemed to have been made immediately upon the occurrence of an Event of Default
even though such charge is made or entered on the books of such Lender
subsequent thereto. Any Person purchasing a participation in the Revolving Loans
and Commitments hereunder pursuant to Section 3.16 or Section 11.3(d) may
exercise all rights of set-off with respect to its participation interest as
fully as if such Person were a Lender hereunder.
11.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that, except as expressly provided
herein, none of the Credit Parties may assign or transfer any of its interests
without prior written consent of the Lenders; provided further that the rights
of each Lender to transfer, assign or grant participations in its rights and/or
obligations hereunder shall be limited as set forth in this Section 11.3,
provided however that nothing herein shall prevent or prohibit any Lender from
(i) pledging its Revolving Loans hereunder to a Federal Reserve Bank in support
of borrowings made by such Lender from such Federal Reserve Bank, or (ii)
granting assignments or selling participations in such Lender's Revolving Loans
and/or Commitments hereunder to its parent company and/or to any Affiliate or
Subsidiary of such Lender.
(b) Assignments. Each Lender may assign all or a portion of its
rights and obligations hereunder (including, without limitation, all or a
portion of its Commitments or its Loans), pursuant to an assignment agreement
substantially in the form of Schedule 11.3(b), to (i) a Lender, (ii) an
affiliate of a Lender or (iii) any other Person that (A) is a bank, financial
institution, commercial lender or institutional investor, (B) if such Person is
to be a Domestic Lender, such Person shall be reasonably acceptable to the
Domestic Administrative Agent, (C) if such Person is to be a Canadian Lender,
(i) such Person shall be reasonably acceptable to the Canadian Administrative
Agent and (ii) so long as no Default or Event of Default has occurred and is
continuing, such Person shall be a bank, financial institution, commercial
lender or institutional investor incorporated or organized under the laws of
Canada, and (D) so long as no Default or Event of Default has occurred and is
continuing, such Person shall be reasonably acceptance to the Borrowers (the
consent of the Borrowers shall not be unreasonably withheld or delayed);
provided that (i) any such assignment (other than any assignment to an existing
Lender) shall be in a minimum aggregate amount of
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US$5,000,000 (or CD$5,000,000, if applicable) (or, if less, the remaining amount
of the Commitment being assigned by such Lender) of the Commitments and in
integral multiples of US$1,000,000 (or CD$1,000,000, if applicable) above such
amount and (ii) each such assignment shall be of a constant, not varying,
percentage of all such Lender's rights and obligations under this Credit
Agreement. Any assignment hereunder shall be effective upon delivery to the
appropriate Administrative Agent of written notice of the assignment together
with a transfer fee of US$3,500 (or CD$3,500, if applicable) payable to the
appropriate Administrative Agent for its own account from and after the later of
(i) the effective date specified in the applicable assignment agreement and (ii)
the date of recording of such assignment in appropriate Register pursuant to the
terms of subsection (c) below. The assigning Lender will give prompt notice to
the Administrative Agent and the Borrower of any such assignment. Upon the
effectiveness of any such assignment (and after notice to, and (to the extent
required pursuant to the terms hereof), with the consent of, the Borrower as
provided herein), the assignee shall become a "Lender" for all purposes of this
Credit Agreement and the other Credit Documents and, to the extent of such
assignment, the assigning Lender shall be relieved of its obligations hereunder
to the extent of the Loans and Commitment components being assigned. Along such
lines the Borrowers agree that upon notice of any such assignment and surrender
of the appropriate Note or Notes, it will promptly provide to the assigning
Lender and to the assignee separate promissory notes in the amount of their
respective interests substantially in the form of the original Note (but with
notation thereon that it is given in substitution for and replacement of the
original Note or any replacement notes thereof). By executing and delivering an
assignment agreement in accordance with this Section 11.3(b), the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim; (ii) except
as set forth in clause (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Credit
Agreement, any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement, any
of the other Credit Documents or any other instrument or document furnished
pursuant hereto or thereto or the financial condition of any Credit Party or any
of their respective Affiliates or the performance or observance by any Credit
Party of any of its obligations under this Credit Agreement, any of the other
Credit Documents or any other instrument or document furnished pursuant hereto
or thereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such assignment agreement; (iv) such assignee confirms
that it has received a copy of this Credit Agreement, the other Credit Documents
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such assignment agreement;
(v) such assignee will independently and without reliance upon the Agents, such
assigning Lender 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 this Credit Agreement and
the other Credit Documents; (vi) such assignee appoints and authorizes the
Agents to take such action on its behalf and to exercise such powers under this
Credit Agreement or any other Credit Document as are delegated to the Agents by
the terms hereof or thereof, together with such powers as are reasonably
incidental thereto; and (vii)
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such assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Credit Agreement and the other Credit
Documents are required to be performed by it as a Lender.
(c) Maintenance of Register.
(i) Domestic Register. The Domestic Administrative Agent
shall maintain at one of its offices in Charlotte, North Carolina a
copy of each Domestic Lender assignment agreement delivered to it in
accordance with the terms of subsection (b) above and a register for
the recordation of the identity of the principal amount, type and
Interest Period of each Domestic Loan outstanding hereunder, the names,
addresses and the Commitments of the Domestic Lenders pursuant to the
terms hereof from time to time (the "Domestic Register"). The Domestic
Administrative Agent will make reasonable efforts to maintain the
accuracy of the Domestic Register and to promptly update the Domestic
Register from time to time, as necessary. The entries in the Domestic
Register shall be conclusive in the absence of manifest error and the
Borrowers, the Agents and the Lenders may treat each Person whose name
is recorded in the Domestic Register pursuant to the terms hereof as a
Domestic Lender hereunder for all purposes of this Credit Agreement.
The Domestic Register shall be available for inspection by the
Borrowers and each Lender, at any reasonable time and from time to time
upon reasonable prior notice.
(ii) Canadian Register. The Canadian Administrative Agent
shall maintain at one of its offices in Toronto, Canada a copy of each
Canadian Lender assignment agreement delivered to it in accordance with
the terms of subsection (b) above and a register for the recordation of
the identity of the principal amount, type and Interest Period of each
Canadian Loan outstanding hereunder, the names, addresses and the
Commitments of the Canadian Lenders pursuant to the terms hereof from
time to time (the "Canadian Register"). The Canadian Administrative
Agent will make reasonable efforts to maintain the accuracy of the
Canadian Register and to promptly update the Canadian Register from
time to time, as necessary. The entries in the Canadian Register shall
be conclusive in the absence of manifest error and the Borrowers, the
Agents and the Lenders may treat each Person whose name is recorded in
the Canadian Register pursuant to the terms hereof as a Canadian Lender
hereunder for all purposes of this Credit Agreement. The Canadian
Register shall be available for inspection by the Borrowers and each
Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(d) Participations. Each Lender may sell, transfer, grant or
assign participations in all or a portion of such Lender's rights, obligations
or rights and obligations hereunder (including all or a portion of its
Commitments or its Loans); provided that (i) such selling Lender shall remain a
"Lender" for all purposes under this Credit Agreement (such selling Lender's
obligations under the Credit Documents remaining unchanged) and the participant
shall not constitute a Lender hereunder, (ii) no such participant shall have, or
be granted, rights to approve any amendment or waiver relating to this Credit
Agreement or the other Credit Documents except to the extent any such amendment
or waiver would (A) reduce the principal of or rate of interest on or Fees in
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respect of any Loans in which the participant is participating, (B) postpone the
date fixed for any payment of principal (including extension of the Termination
Date or the date of any mandatory prepayment), interest or Fees in which the
participant is participating, (C) except as the result of or in connection with
a dissolution, merger or disposition of a Subsidiary permitted under Section
8.3, release any Borrower or substantially all of the Guarantors from its or
their obligations under the Credit Documents, or (D) except as the result of or
in connection with a Divestiture permitted under Section 8.3(b), release all or
substantially all of the collateral, and (iii) sub-participations by the
participant (except to an affiliate, parent company or affiliate of a parent
company of the participant) shall be prohibited. In the case of any such
participation, the participant shall not have any rights under this Credit
Agreement or the other Credit Documents (the participant's rights against the
selling Lender in respect of such participation to be those set forth in the
participation agreement with such Lender creating such participation) and all
amounts payable by the Borrowers hereunder shall be determined as if such Lender
had not sold such participation, provided, however, that such participant shall
be entitled to receive additional amounts under Sections 3.6, 3.9, 3.10, 3.11
and 11.2 on the same basis as if it were a Lender.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of any Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between any Agent or any Lender and any of the
Credit Parties shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which any Agent or any Lender would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle the Borrowers or any other
Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agents or the Lenders
to any other or further action in any circumstances without notice or demand.
11.5 Payment of Expenses, etc.
The Borrowers agree to: (i) pay all reasonable out-of-pocket costs and
expenses (A) of the Agents in connection with the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the other
Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of Moore & Van
Allen, PLLC and Borden & Elliot, special counsel to the Domestic Administrative
Agent and the Collateral Agent) and any amendment, waiver or consent relating
hereto and thereto including, but not limited to, any such amendments, waivers
or consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Credit Parties under this Credit
Agreement and (B) of the Agents and the Lenders in connection with enforcement
of the Credit Documents and the documents and instruments referred to therein
(including, without limitation, in connection with any such enforcement, the
reasonable fees and disbursements of counsel for the Agents and each of the
Lenders); (ii) permit the Administrative Agents to perform inventory and
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accounts receivable field audits at the Borrowers' expense, provided that unless
an Event of Default shall be in existence the Borrowers' obligation to reimburse
the Administrative Agents for such field audits shall be limited to one such
field audit each fiscal year; (iii) pay and hold each of the Lenders harmless
from and against any and all present and future stamp and other similar taxes
with respect to the foregoing matters and save each of the Lenders harmless from
and against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to such Lender) to pay such
taxes; and (iv) indemnify each Lender, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of (A)
any investigation, litigation or other proceeding (whether or not any Lender is
a party thereto) related to the entering into and/or performance of any Credit
Document or the use of proceeds of any Loans or other Extensions of Credit
hereunder or the consummation of any other transactions contemplated in any
Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding or (B) the presence or Release of any Materials
of Environmental Concern at, under or from any Property owned, operated or
leased by the Borrowers or any of their Subsidiaries, or the failure by the
Borrowers or any of their Subsidiaries to comply with any Environmental Law (but
excluding, in the case of either of clause (A) or (B) above, any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
gross negligence or willful misconduct on the part of the Person to be
indemnified).
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Credit Parties, provided, however, that:
(a) without the consent of each Lender affected thereby, neither
this Credit Agreement nor any of the other Credit Documents may be
amended to
(i) except as contemplated by Section 2.1(g),
extend the final maturity of any Loan or the time of payment
of any reimbursement obligation, or any portion thereof,
arising from drawings under Letters of Credit, or any portion
thereof,
(ii) reduce the rate or extend the time of
payment of interest thereon or Fees hereunder (other than as a
result of waiving the applicability of any increase in
interest rates or Fees after the occurrence of an Event of
Default or on account of a failure to deliver financial
statements on a timely basis),
(iii) reduce or waive the principal amount of any
Loan or of any reimbursement obligation, or any portion
thereof, arising from drawings under Letters of Credit,
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(iv) increase the Commitment of a Lender over the
amount thereof in effect (it being understood and agreed that
a waiver of any Default or Event of Default shall not
constitute an increase in the Commitment of any Lender),
(v) except as the result of or in connection
with a dissolution, merger or disposition of a member of the
Consolidated Group permitted under Section 8.3, release the
Domestic Borrower, any Canadian Borrower or substantially all
of the Guarantors from its or their obligations under the
Credit Documents,
(vi) except as the result of or in connection
with a Divestiture permitted under Section 8.3(b), release all
or substantially all of the collateral,
(vii) amend, modify or waive any provision of this
Section 11.6 or Section 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.13,
3.14, 3.15, 3.16, 3.17, 9.1(a), 11.2, 11.3, 11.5 or 11.9,
(viii) reduce any percentage specified in, or
otherwise modify, the definition of Required Lenders, or
(ix) consent to the assignment or transfer by the
Domestic Borrower, any Canadian Borrower or any Guarantor of
any of its rights and obligations under (or in respect of) the
Credit Documents except as permitted thereby;
(b) (i) without the consent of Domestic Required
Lenders, waive the provisions of Section 5.2 (including any
representation, covenant or default referenced therein) or the
applicability thereof in respect of further Extensions of Credit by the
Domestic Lenders or the Issuing Lender; and
(ii) without the consent of Canadian Required
Lenders, waive the provisions of Section 5.2 (including any
representation, covenant or default referenced therein) or the
applicability thereof in respect of further Extensions of Credit by the
Canadian Lenders;
(c) (i) with respect to matters affecting only the
Domestic Obligations and the Domestic Lenders (and not affecting the
Canadian Obligations or the Canadian Lenders), the consent of only the
Domestic Required Domestic Lenders shall be required (and the consent
of the Canadian Required Lenders, or the Required Lenders, shall not be
required); and
(ii) with respect to matters affecting only the
Canadian Obligations and the Canadian Lenders (and not affecting the
Domestic Obligations or the Domestic Lenders), the consent of only the
Canadian Required Lenders shall be required (and the
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consent of the Domestic Required Lenders, or the Required Lenders,
shall not be required);
(d) without the consent of the Agents, no provision of
Section 10 may be amended;
(e) without the consent of the Issuing Lender, no
provision of Section 2.1(b), 2.2(a)(ii), 2.6 or 3.5(b)(ii) may be
amended.
Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (x) each Lender is
entitled to vote as such Lender sees fit on any bankruptcy reorganization plan
that affects the Loans, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersede the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to allow a
Credit Party to use cash collateral in the context of a bankruptcy or insolvency
proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart.
11.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 Survival.
All indemnities set forth herein, including, without limitation, in
Section 2.6(h), 3.9, 3.11, 10.7 or 11.5 shall survive the execution and delivery
of this Credit Agreement, the making of the Loans, the issuance of the Letters
of Credit, the repayment of the Loans, LOC Obligations, BA Obligations and other
obligations under the Credit Documents and the termination of the Commitments
hereunder, and all representations and warranties made by the Credit Parties
herein shall survive delivery of the Notes and the making of the Loans
hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
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<PAGE> 123
(b) Any legal action or proceeding with respect to this Credit
Agreement or any other Credit Document may be brought in the courts of the State
of North Carolina in Mecklenburg County, or of the United States for the Western
District of North Carolina, and, by execution and delivery of this Credit
Agreement, each of the Credit Parties hereby irrevocably accepts for itself and
in respect of its property, generally and unconditionally, the nonexclusive
jurisdiction of such courts. Each of the Credit Parties further irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set out for notices
pursuant to Section 11.1, such service to become effective three (3) days after
such mailing. Nothing herein shall affect the right of the Agents to serve
process in any other manner permitted by law or to commence legal proceedings or
to otherwise proceed against any Credit Party in any other jurisdiction.
(c) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement or any other Credit Document brought in the courts referred to
in subsection (a) hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
(d) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENTS, THE
LENDERS, THE BORROWER AND THE OTHER CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
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<PAGE> 124
11.13 Binding Effect; Termination.
(a) This Credit Agreement shall become effective at such time on
or after the Closing Date when it shall have been executed by the Borrower, the
Guarantors and the Agents, and the Administrative Agent shall have received
copies hereof (telefaxed or otherwise) which, when taken together, bear the
signatures of each Lender, and thereafter this Credit Agreement shall be binding
upon and inure to the benefit of the Borrower, the Guarantors, the Agents and
each Lender and their respective successors and assigns.
(b) The term of this Credit Agreement shall commence on the
effective date pursuant to subsection (a) above and shall continue until no
Loans, LOC Obligations or any other amounts payable hereunder or under any of
the other Credit Documents shall remain outstanding and until all of the
Commitments hereunder shall have expired or been terminated.
11.14 Confidentiality.
The Agents and the Lenders agree to keep confidential (and to cause
their respective affiliates, officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to the Agents or any such Lender by or on behalf of any Credit Party
(whether before or after the Closing Date) which relates to the Borrower or any
of its Subsidiaries (the "Information"). Notwithstanding the foregoing, the
Agents and each Lender shall be permitted to disclose Information (i) to its
affiliates, officers, directors, employees, agents and representatives in
connection with its participation in any of the transactions evidenced by this
Credit Agreement or any other Credit Documents or the administration of this
Credit Agreement or any other Credit Documents, subject to the provisions of
this Section 11.14; (ii) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process, or requested by any
Governmental Authority; (iii) to the extent such Information (A) becomes
publicly available other than as a result of a breach of this Credit Agreement
or any agreement entered into pursuant to clause (iv) below, (B) becomes
available to the Agent or such Lender on a non-confidential basis from a source
other than a Credit Party or (C) was available to the Agent or such Lender on a
non-confidential basis prior to its disclosure to the Agent or such Lender by a
Credit Party; (iv) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee or
participant) first specifically agrees in a writing furnished to and for the
benefit of the Credit Parties to be bound by the terms of this Section 11.14; or
(v) to the extent that the Borrower shall have consented in writing to such
disclosure. Nothing set forth in this Section 11.14 shall obligate the Agent or
any Lender to return any materials furnished by the Credit Parties.
11.15 Source of Funds.
Each of the Lenders hereby represents and warrants to the Borrower that
at least one of the following statements is an accurate representation as to the
source of funds to be used by such Lender in connection with the financing
hereunder:
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<PAGE> 125
(a) no part of such funds constitutes assets allocated to
any separate account maintained by such Lender in which any employee
benefit plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes
assets allocated to any separate account maintained by such Lender,
such Lender has disclosed to the Borrower the name of each employee
benefit plan whose assets in such account exceed 10% of the total
assets of such account as of the date of such purchase (and, for
purposes of this subsection (b), all employee benefit plans maintained
by the same employer or employee organization are deemed to be a single
plan);
(c) to the extent that any part of such funds constitutes
assets of an insurance company's general account, such insurance
company has complied with all of the requirements of the regulations
issued under Section 401(c)(1)(A) of ERISA; or
(d) such funds constitute assets of one or more specific
benefit plans which such Lender has identified in writing to the
Borrower.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.16 Judgment Currency.
(a) Each Credit Party's obligations hereunder and under
the other Credit Documents to make payments in U.S. Dollars or applicable
foreign currency (the "Obligation Currency") shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any currency other than the Obligation Currency, except to the
extent that such tender or recovery results in the effective receipt by the
Administrative Agents, the Collateral Agent or a Lender of the full amount of
the Obligation Currency expressed to be payable to such Administrative Agents,
Collateral Agent or Lender hereunder or under any other of the Credit Documents.
If, for the purpose of obtaining or enforcing a judgment against any Credit
Party in any court or in any jurisdiction, it becomes necessary to convert into
or from any currency other than the Obligation Currency (such other currency
being hereafter revered to as the "Judgment Currency") an amount due in the
Obligation Currency, the conversion shall be made, at the Dollar Equivalent
determined as of the Business Day immediately preceding the day on which the
judgment is given (such Business Day hereafter being referred to as the
"Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange
prevailing between the Judgment Currency Conversion Date and the date of actual
payment of the amount due, such amount payable by the applicable Credit Party
shall be reduced or increased, as applicable, such that the amount paid in the
Judgment Currency, when converted at the rate of exchange prevailing on the date
of payment, will produce the amount of the Obligation Currency which
120
<PAGE> 126
could have been purchased with the amount of Judgment Currency stipulated in the
judgment or judicial award at the rate of exchange prevailing on the Judgment
Currency Conversion Date.
11.17 Conflict.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Page to Follow]
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<PAGE> 127
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Credit Agreement to be duly executed and delivered as of the date first
above written.
DOMESTIC
BORROWER: RAILWORKS CORPORATION,
a Delaware corporation
By: /s/ Michael R. Azarela
---------------------------------
Name: Michael R. Azarela
Title: Executive Vice President and
Chief Financial Officer
CANADIAN
BORROWERS: GANTREX RW COMPANY,
a Nova Scotia unlimited liability company
By: /s/ Michael R. Azarela
---------------------------------
Name: Michael R. Azarela
Title: Executive Vice President and
Chief Financial Officer
RAILWORKS CANADA COMPANY,
a Nova Scotia unlimited liability company
By: /s/ Michael R. Azarela
---------------------------------
Name: Michael R. Azarela
Title: Executive Vice President and
Chief Financial Officer
<PAGE> 128
DOMESTIC
GUARANTORS: ALPHA-KEYSTONE ENGINEERING, INC.,
a Pennsylvania corporation
ANNEX RAILROAD BUILDERS, INC.,
an Indiana corporation
ARMCORE ACQUISITION CORP.,
a Delaware corporation
ARMCORE RAILROAD CONTRACTORS, INC.,
an Illinois corporation
BIRMINGHAM WOOD, INC.,
an Alabama corporation
COMSTOCK HOLDINGS INC.,
a Delaware corporation
COMTRAK CONSTRUCTION, INC.,
a Georgia corporation
CONDON BROTHERS, INC.,
a Washington corporation
CPI CONCRETE PRODUCTS INCORPORATED,
a Tennessee corporation
EARL CAMPBELL CONSTRUCTION COMPANY, INC.,
a Texas corporation
FCM RAIL, LTD., a Michigan corporation
F&V METRO CONTRACTING CORP.,
a New York corporation
GANTREX CORPORATION,
a Pennsylvania corporation
H.P. MCGINLEY INC.,
a Pennsylvania corporation
IMPULSE ENTERPRISES OF NEW YORK, INC.,
a New York corporation
KENNEDY RAILROAD BUILDERS, INC.,
a Pennsylvania corporation
M-TRACK ENTERPRISES, INC.,
a New York corporation
MCCORD TREATED WOOD, INC.,
an Alabama corporation
MERIT RAILROAD CONTRACTORS, INC.,
a Missouri corporation
By: /s/
------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President of each
of the foregoing Domestic Guarantors
[Signature Pages Continue]
<PAGE> 129
MIDWEST CONSTRUCTION SERVICES, INC.,
an Indiana corporation
MIDWEST RAILROAD CONSTRUCTION & MAINTENANCE
CORPORATION OF WYOMING, a Wyoming corporation
MIDWEST RW, INC.,
a Delaware corporation
MINNESOTA RAILROAD SERVICE, INC.,
a Tennessee corporation
NEOSHO ASIA, INC.,
a Kansas corporation
NEOSHO CENTRAL AMERICA, INC.,
a Kansas corporation
NEOSHO CONSTRUCTION COMPANY, INCORPORATED,
a Kansas corporation
NEOSHO CONTRACTORS, INC.,
a Wyoming corporation
NEOSHO INCORPORATED,
a Kansas corporation
NEOSHO INTERNATIONAL, INC.,
a Kansas corporation
NEW ENGLAND RAILROAD CONSTRUCTION CO., INC.,
a Connecticut corporation
NORTHERN RAIL SERVICE AND SUPPLY COMPANY, INC.,
a Michigan corporation
PARSONS RAILWAY SHOPS, INC.,
a Kansas corporation
R. & M. B. RAIL CO., INC.,
an Indiana corporation
RAILCORP, INC.,
an Ohio corporation
RAILROAD RESOURCES, INC.,
a Missouri corporation
RAILROAD SERVICE, INC.,
a Nevada corporation
RAILROAD SPECIALTIES, INC.,
an Indiana corporation
By: /s/
-----------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President of each
of the foregoing Domestic Guarantors
[Signature Pages Continue]
<PAGE> 130
SOUTHERN INDIANA WOOD PRESERVING CO., INC.,
an Indiana corporation
U.S. RAILWAY SUPPLY, INC.,
an Indiana corporation
U.S. TRACKWORKS, INC.,
a Michigan corporation
V&R ELECTRICAL CONTRACTORS, INC.,
a New York corporation
WM. A. SMITH CONSTRUCTION CO., INC.,
a Texas corporation
WM. A. SMITH RERAILING SERVICES, INC.,
a Texas corporation
By: /s/
------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President of each
of the foregoing Domestic Guarantors
L.K. COMSTOCK & COMPANY, INC.,
a New York corporation
By: /s/
------------------------------------------
Name: C. William Moore
Title: Chief Executive Officer and President
F&V METRO RW, INC.,
a Delaware corporation
By: /s/
------------------------------------------
Name: John P. Nuzzo
Title: Assistant Secretary
GANTREX RW, INC.,
a Delaware corporation
GANTREX SYSTEMS, INC.,
a Delaware corporation
RAILWORKS CANADA, INC.
a Delaware corporation
By: /s/
------------------------------------------
Name: John P. Nuzzo
Title: Secretary of each of the foregoing
Domestic Guarantors
By: /s/
------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President of each
of the foregoing Domestic Guarantors
[Signature Pages Continue]
<PAGE> 131
CANADIAN
GUARANTORS: GANTREX GROUP, LTD.,
an Ontario corporation
GANTREX HOLDINGS-CANADA, INC.,
a Nova Scotia corporation
GANTREX LIMITED,
an Ontario corporation
GANTREX SYSTEMS LIMITED,
an Ontario corporation
PACIFIC NORTHERN RAIL CONTRACTORS CORP.,
a British Columbia company
PACIFIC NORTHERN RAIL HOLDINGS LTD.,
a British Columbia company
PACIFIC NORTHERN RAIL RW, INCORPORATED,
a Nova Scotia corporation
PNR LEASING LTD.,
a British Columbia company
PNR INVESTMENTS LTD.,
a British Columbia company
By: /s/
---------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President of each
of the foregoing Canadian Guarantors
[Signature Pages Continue]
<PAGE> 132
LENDERS: BANK OF AMERICA, N.A.,
individually in its capacity as a
Lender and in its capacity as Domestic Administrative Agent
By:
-----------------------------------
Name:
Title:
BANK OF AMERICA CANADA
individually in its capacity as a
Lender and in its capacity as Canadian Administrative Agent
By:
-----------------------------------
Name:
Title:
<PAGE> 133
Schedule 2.1
Schedule of Lenders and Commitments
Domestic Revolving Commitments
<TABLE>
<CAPTION>
Domestic Revolving Domestic Revolving LOC
Lender Commitment Percentage Committed Amount Committed Amount
------ --------------------- ---------------- ----------------
<S> <C> <C> <C>
Bank of America, N.A. 22.22222222% $20,000,000 $ 4,444,444.46
First Union National Bank 16.66666667% $15,000,000 $ 3,333,333.33
Summit Bank 11.11111111% $10,000,000 $ 2,222,222.22
Fleet Bank, N.A. 11.11111111% $10,000,000 $ 2,222,222.22
KeyBank National Association 11.11111111% $10,000,000 $ 2,222,222.22
Bank One 11.11111111% $10,000,000 $ 2,222,222.22
M&T Bank 16.66666667% $15,000,000 $ 3,333,333.33
------------ ----------- --------------
Total: 100.00% $90,000,000 $20,000,000.00
</TABLE>
Canadian Revolving Commitments
<TABLE>
<CAPTION>
Canadian Revolving Canadian Revolving
Lender Commitment Percentage Committed Amount
------ --------------------- ----------------
<S> <C> <C>
Bank of America Canada 33.33333333% $ 5,000,000
Congress Financial Corporation [Canada] 66.66666667% $10,000,000
------------ ----------
Total: 100.00% $15,000,000
</TABLE>
<PAGE> 134
Schedule 2.2(a)(i)
FORM OF NOTICE OF BORROWING FOR DOMESTIC REVOLVING LOANS
Bank of America, N.A.
as Domestic Administrative Agent
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
RE: Amended and Restated Credit Agreement dated as of August 5,
1999 (as amended and modified, the "Credit Agreement") among
RailWorks Corporation, a Delaware corporation, the
Subsidiaries identified therein, the lenders identified
therein, First Union National Bank, as documentation agent for
the Lenders, Bank of America Canada, as administrative agent
for the Canadian Lenders and Bank of America, N.A., as
administrative agent for the Domestic Lenders
Ladies and Gentlemen:
The undersigned hereby gives notice of a request for a Domestic Revolving Loan
pursuant to Section 2.1(a) of the Credit Agreement as follows:
<TABLE>
<S> <C> <C>
(A) Date of Borrowing
(which is a Business Day) --------------------------------
(B) Principal Amount of
Borrowing --------------------------------
(C) Interest rate basis
--------------------------------
(D) Interest Period and the
last day thereof --------------------------------
</TABLE>
In accordance with the requirements of Section 5.2 of the Credit Agreement, the
undersigned Borrower hereby certifies that:
(a) The representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all material
respects as of the date of this request, and will be true and correct after
giving effect to the requested Extension of Credit (except for those which
expressly related to an earlier date).
(b) No Default or Event of Default exists, or will exist after giving
effect to the requested Extension of Credit.
(c) All conditions set forth in Section 2 as to the making of Domestic
Revolving Loans have been satisfied.
Very truly yours,
RAILWORKS CORPORATION
By:
-----------------------
Name:
Title:
<PAGE> 135
Schedule 2.2(a)(ii)
Form of Notice of Request for Letter of Credit
[Date]
Bank of America, N.A. Bank of America, N.A.
as Issuing Lender under the as Domestic Administrative Agent under
Credit Agreement referred to below the Credit Agreement referred to below
101 N. Tryon Street 101 N. Tryon Street
Independence Center, 15th Floor Independence Center, 15th Floor
NC1-001-15-04 NC1-001-15-04
Charlotte, North Carolina 28255 Charlotte, North Carolina 28255
Attention: Agency Services
RE: Amended and Restated Credit Agreement dated as of August 5,
1999 (as amended and modified, the "Credit Agreement") among
RailWorks Corporation, a Delaware corporation, the
Subsidiaries identified therein, the lenders identified
therein, First Union National Bank, as documentation agent for
the Lenders, Bank of America Canada, as administrative agent
for the Canadian Lenders and Bank of America, N.A., as
administrative agent for the Domestic Lenders. Terms used but
not otherwise defined herein shall have the meanings provided
in the Credit Agreement.
Ladies and Gentlemen:
The undersigned, pursuant to Section 2.1(b) of the Credit Agreement,
hereby requests that the following Letters of Credit be issued on [Date] as
follows:
(1) Account Party:
(2) For use by:
(3) Beneficiary:
(4) Face Amount of Letter of Credit:
(5) Date of Issuance:
Delivery of Letter of Credit should be made as follows:
This Notice of Request of Letter of Credit shall be delivered together
with an Application and Agreement for Letter of Credit.
In accordance with the requirements of Section 5.2 of the Credit
Agreement, the undersigned Borrower hereby certifies that:
(a) The representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all material
respects as of the date of this request, and will be
<PAGE> 136
true and correct after giving effect to the requested Extension of Credit
(except for those which expressly relate to an earlier date).
(b) No Default or Event of Default exists, or will exist after
giving effect to the requested Extension of Credit.
(c) All conditions set forth in Section 2 as to the issuance of a
Letter of Credit have been satisfied.
Very truly yours,
RAILWORKS CORPORATION
By: /s/
------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President and
Chief Financial Officer
<PAGE> 137
Schedule 2.2(a)(iii)
Form of Notice of Borrowing for Swingline Loans
Bank of America, N.A., as Swingline Lender
under the Credit Agreement referred to below
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
RE: Amended and Restated Credit Agreement dated as of August 5,
1999 (as amended and modified, the "Credit Agreement") among
RailWorks Corporation, a Delaware corporation, the
Subsidiaries identified therein, the lenders identified
therein, First Union National Bank, as documentation agent for
the Lenders, Bank of America Canada, as administrative agent
for the Canadian Lenders and Bank of America, N.A., as
administrative agent for the Domestic Lenders
Ladies and Gentlemen:
The undersigned hereby gives notice of a request for a Swingline Loan pursuant
to Section 2.1(c) of the Credit Agreement as follows:
<TABLE>
<S> <C> <C>
(A) Date of Borrowing ----------------------------------
(which is a Business Day)
(B) Principal Amount of
Borrowing ----------------------------------
(C) Interest rate basis
----------------------------------
(D) Interest Period and the
last day thereof ----------------------------------
</TABLE>
In accordance with the requirements of Section 5.2 of the Credit Agreement, the
undersigned Borrower hereby certifies that:
(a) The representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all material
respects as of the date of this request, and will be true and correct after
giving effect to the requested Extension of Credit (except for those which
expressly related to an earlier date).
(b) No Default or Event of Default exists, or will exist after giving
effect to the requested Extension of Credit.
(c) All conditions set forth in Section 2 as to the making of Swingline
Loans have been satisfied.
Very truly yours,
RAILWORKS CORPORATION
By:
-----------------------
Name:
Title:
<PAGE> 138
Schedule 2.2(a)(iv)
FORM OF NOTICE OF BORROWING FOR CANADIAN REVOLVING LOANS
Bank of America Canada,
as Canadian Administrative Agent under the
Credit Agreement referred to below
[address]
Toronto, Ontario
Attention:
RE: Amended and Restated Credit Agreement dated as of August 5,
1999 (as amended and modified, the "Credit Agreement") among
RailWorks Corporation, a Delaware corporation, the
Subsidiaries identified therein, the lenders identified
therein, First Union National Bank, as documentation agent for
the Lenders, Bank of America Canada, as administrative agent
for the Canadian Lenders and Bank of America, N.A., as
administrative agent for the Domestic Lenders
Ladies and Gentlemen:
The undersigned hereby gives notice of a request for a Canadian Revolving Loan
pursuant to Section 2.1(d) of the Credit Agreement as follows:
<TABLE>
<S> <C> <C>
(A) Date of Borrowing
(which is a Business Day) --------------------------------
(B) Principal Amount of
Borrowing --------------------------------
(C) Currency of Borrowing
--------------------------------
(D) Interest rate basis --------------------------------
(E) Interest Period and the
last day thereof --------------------------------
</TABLE>
In accordance with the requirements of Section 5.2 of the Credit Agreement, the
undersigned Borrower hereby certifies that:
(a) The representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct in all material
respects as of the date of this request, and will be true and correct after
giving effect to the requested Extension of Credit (except for those which
expressly related to an earlier date).
(b) No Default or Event of Default exists, or will exist after giving
effect to the requested Extension of Credit.
(c) All conditions set forth in Section 2 as to the making of Domestic
Revolving Loans have been satisfied.
Very truly yours,
[CANADIAN BORROWER]
By:
-------------------------------
Name:
Title:
<PAGE> 139
Schedule 2.2(a)(v)
FORM OF NOTICE OF REQUEST FOR ISSUANCE OF
CANADIAN BANKERS' ACCEPTANCES
[TO BE PROVIDED]
<PAGE> 140
Schedule 2.5-1
FORM OF DOMESTIC REVOLVING NOTE
August 5, 1999
FOR VALUE RECEIVED, RAILWORKS CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of ______________________, its
successors and permitted assigns (the "Lender"), on or before the Termination
Date to the office of the Domestic Administrative Agent in immediately available
funds as provided in the Credit Agreement,
(i) in the case of Domestic Revolving Loans, the Lender's Domestic
Revolving Committed Amount or, if less, the aggregate unpaid principal amount of
all Domestic Revolving Loans owing to the Lender, and
(ii) in the case of Swingline Loans, if the Lender is the Swingline
Lender, the Swingline Committed Amount or, if less, the aggregate unpaid
principal amount of all Swingline Loans owing to the Lender,
together with interest thereon at the rates and as provided in the Credit
Agreement.
This Note is one of the Domestic Revolving Notes referred to in the
Amended and Restated Credit Agreement dated as of August 5, 1999 (as amended and
modified, the "Credit Agreement") among the Borrower, the Subsidiaries
identified therein, the lenders identified therein, First Union National Bank,
as Documentation Agent, Bank of America Canada, as Canadian Administrative
Agent, and Bank of America, N.A., as Domestic Administrative Agent. Terms used
but not otherwise defined herein shall have the meanings provided in the Credit
Agreement.
The holder may endorse and attach a schedule to reflect borrowings
evidenced by this Note and all payments and prepayments thereon; provided that
any failure to endorse such information shall not affect the obligation of the
Borrower to pay amounts evidenced hereby.
Upon the occurrence of an Event of Default, all amounts evidenced by
this Note may, or shall, become immediately due and payable as provided in the
Credit Agreement without presentment, demand, protest or notice of any kind, all
of which are waived by the Borrower. In the event payment of amounts evidenced
by this Note is not made at any stated or accelerated maturity, the Borrower
agrees to pay, in addition to principal and interest, all costs of collection,
including reasonable attorneys' fees.
This Note and the Loans and amounts evidenced hereby may be transferred
only as provided in the Credit Agreement.
This Note shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.
<PAGE> 141
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed as of the date first above written.
RAILWORKS CORPORATION,
a Delaware corporation
By: /s/
-------------------------------
Name: Michael R. Azarela
Title: Executive Vice President and
Chief Financial Officer
<PAGE> 142
Schedule 2.5-2
FORM OF CANADIAN REVOLVING NOTE
August 5, 1999
FOR VALUE RECEIVED, [NAME OF FOREIGN BORROWER], a [__________]
corporation (the "Canadian Borrower"), hereby promises to pay to the order of
______________________, its successors and permitted assigns (the "Lender"), on
or before the Termination Date to the office of the Canadian Administrative
Agent in immediately available funds as provided in the Credit Agreement, the
Lender's Canadian Revolving Committed Amount or, if less, the aggregate unpaid
principal amount of all Canadian Revolving Loans owing to the Lender, together
with interest thereon at the rates and as provided in the Credit Agreement.
This Note is one of the Canadian Revolving Notes referred to in the
Amended and Restated Credit Agreement dated as of August 5, 1999 (as amended and
modified, the "Credit Agreement") among the RailWorks Corporation, a Delaware
corporation, the Subsidiaries identified therein, including the Canadian
Borrower, the lenders identified therein, First Union National Bank, as
Documentation Agent, Bank of America Canada, as Canadian Administrative Agent,
and Bank of America, N.A., as Domestic Administrative Agent. Terms used but not
otherwise defined herein shall have the meanings provided in the Credit
Agreement.
The holder may endorse and attach a schedule to reflect borrowings
evidenced by this Note and all payments and prepayments thereon; provided that
any failure to endorse such information shall not affect the obligation of the
Canadian Borrower to pay amounts evidenced hereby.
Upon the occurrence of an Event of Default, all amounts evidenced by
this Note may, or shall, become immediately due and payable as provided in the
Credit Agreement without presentment, demand, protest or notice of any kind, all
of which are waived by the Canadian Borrower. In the event payment of amounts
evidenced by this Note is not made at any stated or accelerated maturity, the
Canadian Borrower agrees to pay, in addition to principal and interest, all
costs of collection, including reasonable attorneys' fees.
This Note and the Loans and amounts evidenced hereby may be transferred
only as provided in the Credit Agreement.
This Note shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the Canadian Borrower has caused this Note to be
duly executed as of the date first above written.
GANTREX RW COMPANY,
a Nova Scotia unlimited liability company
By:
--------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President and
Chief Financial Officer
RAILWORKS CANADA COMPANY,
a Nova Scotia unlimited liability company
By: /s/
--------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President and
Chief Financial Officer
<PAGE> 143
Schedule 2.6(b)
Existing Letters of Credit
<PAGE> 144
Schedule 3.2
Form of Notice of Extension/Conversion
Bank of America, N.A., Bank of America Canada, as
as Domestic Administrative Agent Canadian Administrative Agent
101 N. Tryon Street [address]
Independence Center, 15th Floor [address]
NC1-001-15-04 [address]
Charlotte, North Carolina 28255 Ontario, Canada
Attention: Agency Services] Attention: [____]]
RE: Amended and Restated Credit Agreement dated as of August 5,
1999 (as amended and modified, the "Credit Agreement") among
RailWorks Corporation, a Delaware corporation, the
Subsidiaries identified therein, the lenders identified
therein, First Union National Bank, as documentation agent for
the Lenders, Bank of America Canada, as administrative agent
for the Canadian Lenders and Bank of America, N.A., as
administrative agent for the Domestic Lenders. Terms used but
not otherwise defined herein shall have the meanings provided
in the Credit Agreement.
Ladies and Gentlemen:
The undersigned hereby gives notice pursuant to Section 3.2 of the
Credit Agreement that it requests an extension or conversion of a [Domestic
Revolving Loan][Canadian Revolving Loan] outstanding under the Credit Agreement,
and in connection therewith sets forth below the terms on which such extension
or conversion is requested to be made:
<TABLE>
<S> <C> <C>
(A) Date of Extension or Conversion
(which is the last day of the -------------------------
applicable Interest Period)
(B) Principal Amount of
Extension or Conversion -------------------------
(C) Currency of Revolving Loan
(in the case of Canadian Revolving Loans) -------------------------
(D) Interest rate basis -------------------------
(E) Interest Period and the
last day thereof -------------------------
</TABLE>
In accordance with the requirements of Section 3.2 of the Credit
Agreement, the undersigned Borrower hereby certifies that, in the case of an
extension of a Eurodollar Loan or the conversion of a Base Rate Loan into a
Eurodollar Loan:
(a) The representations and warranties contained in the
Credit Agreement and the other Credit Documents are true and correct in
all material respects as of the date of this request,
<PAGE> 145
and will be true and correct after giving effect to the requested
Extension of Credit (except for those which expressly relate to an
earlier date).
(b) No Default or Event of Default exists, or will exist
after giving effect to the requested Extension of Credit.
(c) All conditions set forth in Section 3.2 as to the
extension of a Eurodollar Loan or the conversion of a Base Rate Loan
into a Eurodollar Loan have been satisfied.
Very truly yours,
BORROWER]
By:
-------------------------------
Name:
Title:
<PAGE> 146
Schedule 5.1(f)(iii)-1
Secretary's Certificate
Pursuant to Section 5.1(f)(iii) of the Amended and Restated Credit
Agreement (the "Credit Agreement"; capitalized used herein an not otherwise
defined shall have the meanings given to such terms in the Credit Agreement),
dated as of August 5, 1999, among RailWorks Corporation, a Delaware corporation,
the Subsidiaries identified therein, the lenders identified therein, First Union
National Bank, as Documentation Agent, Bank of America Canada, as Canadian
Administrative Agent, and Bank of America, N.A., as Domestic Administrative
Agent, the undersigned, John P. Nuzzo, Secretary of each of those companies
listed on Schedule 1 and Assistant Secretary of each of those companies listed
on Schedule 2 hereto (each "Corporation"), hereby certifies as follows:
1. Attached hereto as Annex I is a true and complete copy of
resolutions duly adopted by the board of directors of each Corporation on
_________________, 199__. The attached resolutions have not been rescinded or
modified and remain in full force and effect. The attached resolutions are the
only corporate proceedings of each Corporation now in force relating to or
affecting the matters referenced to therein.
2. The Articles of Incorporation or Certificate of Incorporation, as
the case may be, and Bylaws of each Company listed on Schedule 3, true and
correct copies of which were previously delivered in certified form to
NationsBank N.A., as Administrative Agent under the Original Credit Agreement,
have not been amended, rescinded, modified or revoked and remain in full force
and effect.
3. Attached hereto as Annex II is a true and complete copy of the
By-laws of each Corporation listed on Schedule 4 as in effect on the date
hereof.
4. Attached hereto as Annex III is a true and complete copy of the
Articles of Certificate of Incorporation, as the case may be, of each
Corporation listed on Schedule 4 and all amendments thereto as in effect on the
date hereof.
5. Each of the following persons is now a duly elected and qualified
officer of the Corporation, holding the office(s) indicated, and the signature
opposite his/her name below is his/her true and genuine signature, and such
officer is duly authorized to execute and deliver, on behalf of each
Corporation, the Credit Agreement, the Notes and the other Credit Documents and
to act as a Responsible Officer, on behalf of the Corporation, under the Credit
Agreement.
<TABLE>
<CAPTION>
Name Office Signature
- ---- ------ ---------
<S> <C> <C>
Michael R. Azarela Executive Vice President
-----------------
John P. Nuzzo Secretary or
Assistant Secretary -----------------
</TABLE>
<PAGE> 147
IN WITNESS WHEREOF, the undersigned, in his aforesaid capacity, has
hereunto set his name this ___ of _____, 1999.
------------------------------
Secretary/Assistant Secretary
The undersigned, Executive Vice President of the Corporation,
does hereby certify that (i) John P. Nuzzo has been duly elected by the Board of
Directors of each Corporation to serve as Secretary or Assistant Secretary, as
the case may be, (ii) he has been duly qualified and is presently serving each
Corporation in such capacity, and (iii) the signature set forth above is his
genuine signature.
/s/
-----------------------------
Michael R. Azarela
Executive Vice President
<PAGE> 148
SCHEDULE 1
1. Birmingham Wood, Inc.
2. Gantrex RW, Inc.
3. Gantrex Corporation
4. Gantrex RW Company
5. Gantrex Holdings - Canada, Inc.
6. Gantrex Group Ltd.
7. Gantrex Limited
8. Gantrex Systems Limited
9. Gantrex Systems, Inc.
10. McCord Treated Wood, Inc.
11. MidWest RW, Inc.
12. Pacific Northern Rail RW, Incorporated
13. Pacific Northern Rail Contractors Holdings Ltd.
14. Pacific Northern Rail Contractors Corp.
15. PNR Investments Ltd.
16. PNR Leasing Ltd.
<PAGE> 149
SCHEDULE 2
1. Armcore Acquisition Corp.
2. Armcore Railroad Contractors, Inc.
3. Earl Campbell Construction Company, Inc.
4. F&V Metro RW, Inc.
5. F&V Metro Contracting Corp.
6. FCM Rail, Ltd.
7. Impulse Electric Enterprises of New York, Inc.
8. M-Track Enterprises, Inc.
9. MidWest Railroad Construction and Maintenance Corporation of Wyoming
10. Neosho Incorporated
11. Neosho Construction Company, Incorporated
12. Neosho International, Inc.
13. Neosho Asia, Inc.
14. Neosho Central America, Inc.
15. Neosho Contractors, Inc.
16. New England Railroad Construction Co., Inc.
17. Parson Railway Shops, Inc.
18. Railroad Resources, Inc.
19. Railroad Service, Inc.
20. Railroad Specialties, Inc.
21. RailWorks Canada, Inc.
22. RailWorks of Canada Company
23. Sheldon Electric, Inc.
24. Southern Indiana Wood Preserving Co., Inc.
25. U.S. Railway Supply, Inc.
26. U.S. Trackworks, Inc.
27. V&R Electrical Contractors, Inc.
<PAGE> 150
SCHEDULE 3
1. Armcore Acquisition Corp.
2. Armcore Railroad Contractors, Inc.
3. F&V Metro RW, Inc.
4. F&V Metro Contracting Corp.
5. FCM Rail, Ltd.
6. Gantrex RW, Inc.
7. Gantrex Corporation
8. Impulse Electric Enterprises of New York, Inc.
9. M-Track Enterprises, Inc.
10. McCord Treated Wood, Inc.
11. MidWest RW, Inc.
12. MidWest Railroad Construction and Maintenance Corporation of Wyoming
13. Neosho Incorporated
14. Neosho Construction Company, Incorporated
15. Neosho International, Inc.
16. Neosho Asia, Inc.
17. Neosho Central America, Inc.
18. Neosho Contractors, Inc.
19. New England Railroad Construction Co., Inc.
20. Railroad Service, Inc.
21. Railroad Specialties, Inc.
22. Sheldon Electric, Inc.
23. Southern Indiana Wood Preserving Co., Inc.
24. U.S. Railway Supply, Inc.
25. U.S. Trackworks, Inc.
26. V&R Electrical Contractors, Inc.
<PAGE> 151
SCHEDULE 4
1. Birmingham Wood, Inc.
2. Earl Campbell Construction Company, Inc.
3. Gantrex RW Company
4. Gantrex Holdings - Canada, Inc.
5. Gantrex Group Ltd.
6. Gantrex Limited
7. Gantrex Systems Limited
8. Gantrex Systems, Inc.
9. Pacific Northern Rail RW, Incorporated
10. Pacific Northern Rail Contractors Holdings Ltd.
11. Pacific Northern Rail Contractors Corp.
12. PNR Investments Ltd.
13. PNR Leasing Ltd.
14. Railroad Resources, Inc.
15. RailWorks Canada, Inc.
16. RailWorks of Canada Company
<PAGE> 152
Schedule 5.1(f)(iii)-2
Secretary's Certificate
Pursuant to Section 5.1(f)(iii) of the Amended and Restated Credit
Agreement (the "Credit Agreement"; capitalized used herein an not otherwise
defined shall have the meanings given to such terms in the Credit Agreement),
dated as of August 5, 1999, among RailWorks Corporation, a Delaware corporation,
the Subsidiaries identified therein, the lenders identified therein, First Union
National Bank, as Documentation Agent, Bank of America Canada, as Canadian
Administrative Agent, and Bank of America, N.A., as Domestic Administrative
Agent, the undersigned, John Kennedy, Secretary of each of those companies
listed on Schedule 1 and Assistant Secretary of each of those companies listed
on Schedule 2 hereto (each a "Corporation"), hereby certifies as follows:
1. Attached hereto as Annex I is a true and complete copy of
resolutions duly adopted by the board of directors of each Corporation on
_________________, 199__. The attached resolutions have not been rescinded or
modified and remain in full force and effect. The attached resolutions are the
only corporate proceedings of each Corporation now in force relating to or
affecting the matters referenced to therein.
2. The Articles of Incorporation or Certificate of Incorporation,
as the case may be, and Bylaws of each Company listed on Schedule 3, true and
correct copies of which were previously delivered in certified form to
NationsBank N.A., as Administrative Agent under the Original Credit Agreement,
have not been amended, rescinded, modified or revoked and remain in full force
and effect.
3. Each of the following persons is now a duly elected and
qualified officer of each Corporation, holding the office(s) indicated, and the
signature opposite his/her name below is his/her true and genuine signature, and
such officer is duly authorized to execute and deliver, on behalf of each
Corporation, the Credit Agreement, the Notes and the other Credit Documents and
to act as a Responsible Officer, on behalf of the Corporation, under the Credit
Agreement.
<TABLE>
<CAPTION>
Name Office Signature
- ---- ------ ---------
<S> <C> <C>
Michael R. Azarela Executive Vice President
---------------------
John Kennedy Secretary or
Assistant Secretary ---------------------
</TABLE>
<PAGE> 153
IN WITNESS WHEREOF, the undersigned, in his aforesaid capacity, has
hereunto set his name this ___ of _____, 1999.
------------------------------
Secretary/Assistant Secretary
The undersigned, Executive Vice President of the Corporation,
does hereby certify that (i) John Kennedy has been duly elected by the Board of
Directors of each Corporation to serve as Secretary or Assistant Secretary, as
the case may be, (ii) he has been duly qualified and is presently serving each
Corporation in such capacity, and (iii) the signature set forth above is his
genuine signature.
-----------------------------
Michael R. Azarela
Executive Vice President
<PAGE> 154
SCHEDULE 1
1. RailWorks Corporation
<PAGE> 155
SCHEDULE 2
1. Alpha-Keystone Engineering, Inc.
2. Annex Railroad Builders, Inc.
3. Comstock Holdings, Inc.
4. Comtrack Construction, Inc.
5. Condon Brothers, Inc.
6. CPI Concrete Products, Incorporated
7. H.P. McKinley, Inc.
8. Kennedy Railroad Builders
9. Merit Railroad Contractors, Inc.
10. MidWest Construction Services, Inc.
11. Minnesota Railroad Service, Inc.
12. Northern Rail Service and Supply Company, Inc.
13. R. & M.B. Rail Co., Inc.
14. Railcorp, Inc.
15. Wm. A. Smith Construction Co., Inc.
16. Wm. A Rerailing Services, Inc.
27
<PAGE> 156
Schedule 5.1(f)(iii)-3
Secretary's Certificate
Pursuant to Section 5.1(f)(iii) of the Amended and Restated Credit
Agreement (the "Credit Agreement"; capitalized used herein an not otherwise
defined shall have the meanings given to such terms in the Credit Agreement),
dated as of August__, 1999, among RailWorks Corporation, a Delaware corporation,
the Subsidiaries identified therein, the lenders identified therein, First Union
National Bank, as Documentation Agent, Bank of America Canada, as Canadian
Administrative Agent, and Bank of America, N.A., as Domestic Administrative
Agent, the undersigned, John Kennedy, Assistant Secretary of L.K. Comstock &
Company, Inc. (the "Corporation"), hereby certifies as follows:
1. Attached hereto as Annex I is a true and complete copy of
resolutions duly adopted by the board of directors of the Corporation on
_________________, 199__. The attached resolutions have not been rescinded or
modified and remain in full force and effect. The attached resolutions are the
only corporate proceedings of the Corporation now in force relating to or
affecting the matters referenced to therein.
2. The Articles of Incorporation or Certificate of Incorporation,
as the case may be, and Bylaws of the Company, true and correct copies of which
were previously delivered in certified form to NationsBank N.A., as
Administrative Agent under the Original Credit Agreement, have not been amended,
rescinded, modified or revoked and remain in full force and effect.
3. Each of the following persons is now a duly elected and
qualified officer of the Corporation, holding the office(s) indicated, and the
signature opposite his/her name below is his/her true and genuine signature, and
such officer is duly authorized to execute and deliver, on behalf of the
Corporation, the Credit Agreement, the Notes and the other Credit Documents and
to act as a Responsible Officer, on behalf of the Corporation, under the Credit
Agreement.
<TABLE>
<CAPTION>
Name Office Signature
- ---- ------ ---------
<S> <C> <C>
C. William Moore Chief Executive Officer &
President -----------------
John Kennedy Assistant Secretary
-----------------
</TABLE>
28
<PAGE> 157
IN WITNESS WHEREOF, the undersigned, in his aforesaid capacity, has
hereunto set his name this ___ of _____, 1999.
----------------------------------
Secretary
The undersigned, Chief Executive Officer and President of the
Corporation, does hereby certify that (i) John Kennedy has been duly elected by
the Board of Directors of the Corporation to serve as Secretary, (ii) he has
been duly qualified and is presently serving the Corporation in such capacity,
and (iii) the signature set forth above is his genuine signature.
/s/
----------------------------------
C. William Moore
Chief Executive Officer & President
29
<PAGE> 158
Schedule 6.8
Existing Liens
30
<PAGE> 159
Schedule 6.14
Subsidiaries
31
<PAGE> 160
Schedule 7.2(b)
Form of Officer's Compliance Certificate
This Certificate is delivered in accordance with the provisions of
Section 7.2(b) of that Credit Agreement dated as of August 5, 1999 (as amended,
modified and supplemented, the "Credit Agreement") among RailWorks Corporation,
a Delaware corporation, the Subsidiaries identified therein, the lenders
identified therein, First Union National Bank, as Documentation Agent, Bank of
America Canada, as Canadian Administrative Agent and Bank of America, N.A., as
Domestic Administrative Agent. Terms used but not otherwise defined herein shall
have the same meanings provided in the Credit Agreement.
The undersigned, being a Responsible Officer of RailWorks Corporation,
a Delaware corporation, hereby certifies, in my official capacity and not in my
individual capacity, that to the best of my knowledge and belief:
(a) the financial statements accompanying this Certificate fairly
present the financial condition of the parties covered by such financial
statements in all material respects;
(b) during the period covered by the financial statements the Credit
Parties have observed or performed all of their covenants and other agreements
in all material respects, and satisfied in all material respects every material
condition, contained in this Credit Agreement to be observed, performed or
satisfied by them;
(c) no Default or Event of Default has occurred and is continuing; and
(d) detailed calculations demonstrating compliance with the financial
covenants set out in Section 7.9 of the Credit Agreement accompany this
Certificate.
This the _______________ day of ________________________, 199__.
RAILWORKS CORPORATION
By:
--------------------------------
Name:
Title:
32
<PAGE> 161
Attachment to Officer's Certificate
Computation of Financial Covenants
33
<PAGE> 162
Schedule 7.11-1
Form of Joinder Agreement for Domestic Subsidiaries
THIS JOINDER AGREEMENT (the "Agreement"), dated as of
___________________, ____, is by and among _______________________, a
__________________ (the "Applicant Guarantor"), BANK OF AMERICA CANADA, in its
capacity as Canadian Administrative Agent, and BANK OF AMERICA, N.A., in its
capacity as Domestic Administrative Agent and as Collateral Agent, under that
certain Amended and Restated Credit Agreement dated as of July __, 1999 (as
amended and modified, the "Credit Agreement") by and among RailWorks
Corporation, a Delaware corporation, the Subsidiaries identified therein, the
lenders identified therein, First Union National Bank, as Documentation Agent,
Bank of America Canada, as Canadian Administrative Agent, and Bank of America,
N.A., as Domestic Administrative Agent. All of the defined terms in the Credit
Agreement are incorporated herein by reference.
The Applicant Guarantor has indicated its desire to become a Domestic
Guarantor or is required by the terms of Section 7.11 of the Credit Agreement to
become a Domestic Guarantor.
Accordingly, the Applicant Guarantor hereby agrees with the Agents, for
the benefit of the Lenders, as follows:
1. The Applicant Guarantor hereby acknowledges, agrees and
confirms that, by its execution of this Agreement, the Applicant Guarantor will
be deemed to be a party to the Credit Agreement and a "Domestic Guarantor" for
all purposes of the Credit Agreement and the other Credit Documents, and shall
have all of the obligations of a Domestic Guarantor thereunder as if it had
executed the Credit Agreement and the other Credit Documents. The Applicant
Guarantor agrees to be bound by all of the terms, provisions and conditions
contained in the Credit Documents, including without limitation (i) all of the
affirmative and negative covenants set forth in Sections 7 and 8 of the Credit
Agreement applicable to a Domestic Guarantor and (ii) all of the undertakings
and waivers applicable to a Domestic Guarantor set forth in Section 4 of the
Credit Agreement. Without limiting the generality of the foregoing terms of this
paragraph 1, the Applicant Guarantor hereby (A) jointly and severally together
with the other Domestic Guarantors, guarantees to each Lender (including the
Issuing Lender), each Affiliate of a Lender which enters into a Hedging
Agreement with a Credit Party relating to the Obligations and the Agents, as
provided in Section 4 of the Credit Agreement, the prompt payment and
performance of the Guaranteed Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) strictly in accordance with the terms thereof,
(B) agrees that if any of the Guaranteed Obligations are not paid or performed
in full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise), the Applicant
Guarantor will, jointly and severally together with the other Domestic
Guarantors, promptly pay and perform the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or renewal
of any of the Guaranteed Obligations, the same will be promptly paid in full
when due (whether at extended maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise) in accordance
with the terms of such extension or renewal, (C) grants to the Collateral Agent,
for the benefit of the Lenders, a security interest in its Collateral as
referred in, and pursuant to the terms of, the Domestic Security Agreement, and
(D) pledges and grants a security interest to the Collateral Agent, for the
benefit of the Lenders, in the Collateral as referred in, and pursuant to the
terms of, the Pledge Agreement, including the Pledged Stock identified in
Schedule A attached hereto, if any.
34
<PAGE> 163
2. The Applicant Guarantor acknowledges and confirms that it has
received a copy of the Credit Agreement and the other Credit Documents
(including the Schedules and Exhibits thereto). The information on Schedule 1 to
the Domestic Security Agreement and Schedule 1 to the Domestic Pledge Agreement
is amended to provide the information shown on the attached Schedule A with
respect to the Applicant Guarantor.
3. The Applicant Guarantor hereby waives acceptance by the Agents
and the Lenders of the guaranty by the Applicant Guarantor under Section 4 of
the Credit Agreement upon the execution of this Joinder Agreement by the
Applicant Guarantor.
4. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute one contract.
5. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, each of the parties hereto has caused this Joinder
Agreement to be duly executed by its authorized officer as of the day and year
first above written.
APPLICANT GUARANTOR
By:
---------------------------------
Name:
Title:
Acknowledged and accepted:
BANK OF AMERICA, N.A.,
as Domestic Administrative Agent
and as Collateral Agent
By:
---------------------------------
Name:
Title:
BANK OF AMERICA CANADA,
as Canadian Administrative Agent
By:
---------------------------------
Name:
Title:
35
<PAGE> 164
Schedule A
to
Joinder Agreement for Domestic Subsidiaries
Schedule 1 to Domestic Security Agreement
Chief Executive Office
Chief Executive
Applicant Guarantor Office
Schedule 1 to Domestic Pledge Agreement
Description of Pledged Shares
<TABLE>
<CAPTION>
No. of Certificate
Pledgor/Applicant Guarantor Issuer Shares No. Percentage
- --------------------------- ------ ------ --- ----------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 165
Schedule 7.11-2
Form of Joinder Agreement for Canadian Subsidiaries
THIS JOINDER AGREEMENT (the "Agreement"), dated as of
___________________, ____, is by and between _______________________, a
__________________ (the "Applicant Guarantor"), BANK OF AMERICA, N.A., in its
capacity as Collateral Agent, and BANK OF AMERICA CANADA, in its capacity as
Canadian Administrative Agent, under that certain Credit Agreement dated as of
July __, 1999 (as amended and modified, the "Credit Agreement") by and among
RailWorks Corporation, a Delaware corporation, the Subsidiaries identified
therein, the lenders identified therein, First Union National Bank, as
Documentation Agent, Bank of America Canada, as Canadian Administrative Agent,
and Bank of America, N.A., as Domestic Administrative Agent. All of the defined
terms in the Credit Agreement are incorporated herein by reference.
The Applicant Guarantor has indicated its desire to become a Canadian
Guarantor or is required by the terms of Section 7.11 of the Credit Agreement to
become a Canadian Guarantor.
Accordingly, the Applicant Guarantor hereby agrees with the Collateral
Agent and the Canadian Administrative Agent, for the benefit of the Canadian
Lenders, as follows:
1. The Applicant Guarantor hereby acknowledges, agrees and
confirms that, by its execution of this Agreement, the Applicant Guarantor will
be deemed to be a party to the Credit Agreement and a "Canadian Guarantor" for
all purposes of the Credit Agreement and the other Credit Documents, and shall
have all of the obligations of a Canadian Guarantor thereunder as if it had
executed the Credit Agreement and the other Credit Documents. The Applicant
Guarantor agrees to be bound by all of the terms, provisions and conditions
contained in the Credit Documents, including without limitation (i) all of the
affirmative and negative covenants set forth in Sections 7 and 8 of the Credit
Agreement applicable to a Canadian Guarantor and (ii) all of the undertakings
and waivers applicable to a Canadian Guarantor set forth in Section 4 of the
Credit Agreement. Without limiting the generality of the foregoing terms of this
paragraph 1, the Applicant Guarantor hereby (A) jointly and severally together
with the other Canadian Guarantors, guarantees to each Canadian Lender, each
Affiliate of a Canadian Lender which enters into a Hedging Agreement with a
Canadian Credit Party relating to the Canadian Obligations, the Collateral Agent
and the Canadian Administrative Agent as provided in Section 4 of the Credit
Agreement, the prompt payment and performance of the Guaranteed Obligations in
full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise) strictly in
accordance with the terms thereof, (B) agrees that if any of the Guaranteed
Obligations are not paid or performed in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Applicant Guarantor will, jointly and
severally together with the other Canadian Guarantors, promptly pay and perform
the same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) in accordance with the terms of such extension
or renewal, (C) grants to the Collateral Agent, for the benefit of the Canadian
Lenders, a security interest in its Collateral as referred in, and pursuant to
the terms of, the Canadian Security Agreement, and (D) pledges and grants a
security interest to the Collateral Agent, for the benefit of the Canadian
Lenders, in the Collateral as referred in, and pursuant to the terms of, the
Canadian Pledge Agreement, including the Pledged Stock identified in Schedule A
attached hereto, if any.
37
<PAGE> 166
2. The Applicant Guarantor acknowledges and confirms that it has
received a copy of the Credit Agreement and the other Credit Documents
(including the Schedules and Exhibits thereto). The information on Schedule 1 to
the Canadian Security Agreement and Schedule 1 to the Canadian Pledge Agreement
is amended to provide the information shown on the attached Schedule A with
respect to the Applicant Guarantor.
3. The Applicant Guarantor hereby waives acceptance by the Agents
and the Lenders of the guaranty by the Applicant Guarantor under Section 4 of
the Credit Agreement upon the execution of this Joinder Agreement by the
Applicant Guarantor.
4. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute one contract.
5. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, each of the parties hereto has caused this Joinder
Agreement to be duly executed by its authorized officer as of the day and year
first above written.
APPLICANT GUARANTOR
By:
------------------------------
Name:
Title:
Acknowledged and accepted:
BANK OF AMERICA N.A.,
as Collateral Agent
By:
------------------------------
Name:
Title:
BANK OF AMERICA CANADA,
as Canadian Administrative Agent
By:
------------------------------
Name:
Title:
38
<PAGE> 167
Schedule A
to
Joinder Agreement for Canadian Subsidiaries
Schedule 1 to Canadian Security Agreement
Chief Executive Office
Chief Executive
Applicant Guarantor Office
Schedule 1 to Canadian Pledge Agreement
Description of Pledged Shares
<TABLE>
<CAPTION>
No. of Certificate
Pledgor/Applicant Guarantor Issuer Shares No. Percentage
- --------------------------- ------ ------ --- ----------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 168
Schedule 8.1
Indebtedness
<PAGE> 169
Schedule 11.1
Schedule of Lenders' Addresses
<PAGE> 170
Schedule 11.3(b)
Form of Assignment and Acceptance
THIS ASSIGNMENT AND ACCEPTANCE dated as of ____________, 199_ (this
"Assignment") is entered into between THE LENDER IDENTIFIED ON THE SIGNATURE
PAGES HERETO AS THE "ASSIGNOR" (the "Assignor") and THE PARTY IDENTIFIED ON THE
SIGNATURE PAGES HERETO AS "ASSIGNEE" (the "Assignee").
Reference is made to that Amended and Restated Credit Agreement dated
as of August 4, 1998 (as amended and modified, the "Credit Agreement") among
RailWorks Corporation, a Delaware corporation, the Subsidiaries identified
therein, the lenders identified therein, First Union National Bank, as
Documentation Agent, Bank of America Canada, as Canadian Administrative Agent,
and Bank of America, N.A., as Domestic Administrative Agent. Terms defined in
the Credit Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to
the Assignee, and the Assignee hereby purchases and assumes, without recourse,
from the Assignor, effective as of the Effective Date shown below, those rights
and interests of the Assignor under the Credit Agreement identified below (the
"Assigned Interests"), including the Obligations and Commitments relating
thereto, together with unpaid interest and fees relating thereto accruing from
the Effective Date. The Assignor represents and warrants that it owns interests
assigned hereby free and clear of liens, encumbrances or other claims. The
Assignee represents that it is a permitted assignee under Section 11.3(c) of the
Credit Agreement. The Assignor and the Assignee hereby make and agree to be
bound by all the representations, warranties and agreements set forth in Section
11.3 of the Credit Agreement, a copy of which has been received by each such
party. From and after the Effective Date (i) each Assignee, if it is not already
a Lender under the Credit Agreement, shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the interests assigned
by this Assignment, have the rights and obligations of a Lender thereunder and
(ii) each Assignor shall, to the extent of the interests assigned by this
Assignment, relinquish its rights and be released from its obligations under the
Credit Agreement (other than the rights of indemnification referenced in Section
11.9 of the Credit Agreement). Schedule 2.1 is deemed modified and amended to
the extent necessary to give effect to this Assignment.
2. This Assignment shall be governed by and construed in
accordance with the laws of the State of New York.
3. Terms of Assignment
(a) Date of Assignment: ________________ , __
(b) Legal Name of Assignor: SEE SIGNATURE PAGE
(c) Legal Name of Assignee: SEE SIGNATURE PAGE
(d) Effective Date of Assignment: ________________ , __
See Schedule I attached for a description of the Loans, Obligations and
Commitments (and the percentage interests therein and relating thereto) which
are the subject of this Assignment.
4. The fee payable to the relevant Administrative Agent in
connection with this Assignment is enclosed.
<PAGE> 171
IN WITNESS WHEREOF, the parties hereto have caused the execution of
this Assignment by their duly authorized officers as of the date first above
written.
ASSIGNOR: ASSIGNEE:
By: By:
------------------------------ -------------------------------
Name: Name:
Title: Title:
Address for Notices:
ACKNOWLEDGMENT AND ACCEPTANCE:
BANK OF AMERICA, N.A.
as Domestic Administrative Agent]
BANK OF AMERICA CANADA
as Canadian Administrative Agent]
By:
--------------------------------
Name:
Title:
ACKNOWLEDGMENT AND CONSENT:
RAILWORKS CORPORATION,
a Delaware corporation
By:
--------------------------------
Name:
Title:
<PAGE> 172
SCHEDULE I
TO ASSIGNMENT AND ACCEPTANCE
RAILWORKS CORPORATION
[DOMESTIC][CANADIAN]REVOLVING LOANS [AND LETTERS OF CREDIT] PRIOR TO ASSIGNMENT
<TABLE>
<CAPTION>
Revolving Revolving Revolving LOC LOC
Committed Commitment Loans Committed Obligations
Amount Percentage Outstanding Amount Outstanding
------ ---------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C>
ASSIGNOR
ASSIGNEE
------------ ---------- ------------ ----------- -----------
$ $ $ $
</TABLE>
<PAGE> 173
SCHEDULE I
TO ASSIGNMENT AND ACCEPTANCE
RAILWORKS CORPORATION
[DOMESTIC][CANADIAN]REVOLVING LOANS [AND LETTERS OF CREDIT]
SUBJECT TO THIS ASSIGNMENT
<TABLE>
<CAPTION>
Revolving Revolving Revolving LOC LOC
Committed Commitment Loans Committed Obligations
Amount Percentage Outstanding Amount Outstanding
------ ---------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C>
ASSIGNOR
ASSIGNEE
------------ ---------- ------------ ----------- -----------
$ $ $ $
</TABLE>
<PAGE> 174
SCHEDULE I
TO ASSIGNMENT AND ACCEPTANCE
RAILWORKS CORPORATION
[DOMESTIC][CANADIAN]REVOLVING LOANS [AND LETTERS OF CREDIT] AFTER ASSIGNMENT
<TABLE>
<CAPTION>
Revolving Revolving Revolving LOC LOC
Committed Commitment Loans Committed Obligations
Amount Percentage Outstanding Amount Outstanding
------ ---------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C>
ASSIGNOR
ASSIGNEE
------------ ---------- ------------ ----------- -----------
$ $ $ $
</TABLE>
<PAGE> 1
EXHIBIT 10.2
AMENDMENT NO. 1
THIS AMENDMENT NO. 1 (this "Amendment") dated as of September 29, 1999,
to the Credit Agreement referenced below, is by and among RAILWORKS CORPORATION,
a Delaware corporation (the "Domestic Borrower"), the Subsidiaries of the
Borrower identified herein, the Lenders identified herein, BANK OF AMERICA
CANADA, as Canadian Administrative Agent, and BANK OF AMERICA, N.A., as Domestic
Administrative Agent. Terms used herein but not otherwise defined herein shall
have the meanings provided to such terms in the Credit Agreement.
W I T N E S S E T H
WHEREAS, a $90 million credit facility has been extended to the
Borrower and certain of its Subsidiaries pursuant to the terms of that Amended
and Restated Credit Agreement dated as of August 5, 1999 (as amended and
modified, the "Credit Agreement") among the Domestic Borrower, Gantrex RW
Company and RailWorks Canada Company, as Canadian Borrowers, certain other
Subsidiaries of the Domestic Borrower identified therein, the Lenders identified
therein, First Union National Bank, as Documentation Agent, Bank of America
Canada, as Canadian Administrative Agent, and Bank of America, N.A., as Domestic
Administrative Agent;
WHEREAS, the Domestic Borrower issued $125 million in Senior
Subordinated Notes on April 15, 1999 pursuant to the Senior Subordinated Note
Indenture (as defined below);
WHEREAS, the Domestic Borrower has made arrangements to issue an
additional $50 million in Senior Subordinated Notes pursuant to the Senior
Subordinated Note Indenture;
WHEREAS, the Credit Parties have requested certain modifications to the
Credit Agreement in connection with the issuance of the additional $50 million
in Senior Subordinated Notes;
WHEREAS, the requested modifications require the consent of the
Required Lenders;
WHEREAS, the Required Lenders have agreed to the requested
modifications on the terms and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Subclause (i) of clause (f) of Section 8.1 of the Credit
Agreement is amended to read as follows:
(i) the Senior Subordinated Notes in an aggregate
principal amount of up to US$175 million (and renewals,
refinancing and refundings of the then outstanding principal
amount the terms of subordination of which shall be identical
in all material respects to the terms of subordination under
the Senior Subordinated Notes (and the indenture relating
thereto) and
<PAGE> 2
on other terms and conditions no less favorable to the Lenders than
the terms and conditions contained in the Senior Subordinated Notes
(and the indenture relating thereto); and
2. The additional $50 million in Senior Subordinated Notes will be
issued by the Domestic Borrower pursuant to the Indenture dated as of April 7,
1999 among RailWorks Corporation, the guarantors named therein and First Union
National Bank, as Trustee ("Senior Subordinated Note Indenture"). As required in
the definition of "Subordinated Debt," consent is given hereby to the terms of
subordination, and the other terms and conditions, of the additional $50 million
in Senior Subordinated Notes as set forth in the Senior Subordinated Note
Indenture.
3. Certain Property of certain of the Domestic Credit Parties is
subject to the UCC-1 financing statements identified on Schedule A hereto. The
Credit Parties hereby represent and warrant to the Agents and the Lenders that
the Indebtedness secured by such Liens has been paid and satisfied in full. In
reliance on such representation and warranty, the Required Lenders agree to
allow the Credit Parties until December 15, 1999 to deliver to the Domestic
Administrative Agent original UCC-3 termination statements (executed by the
Secured Party) for each of the UCC-1 financing statements identified on Schedule
A hereto. The Credit Parties agree that the failure of the Credit Parties to
deliver such UCC-3 termination statements or to otherwise resolve the issues
relating thereto to the satisfaction of the Domestic Administrative Agent on or
before December 15, 1999 shall constitute an Event of Default under the terms of
the Credit Agreement.
4. Certain Property of Neosho Construction Company, Inc., a Domestic
Subsidiary of the Domestic Borrower, is subject to the UCC-1 financing
statements identified on Schedule B hereto. The Required Lenders agree to allow
the Credit Parties until October 29, 1999 to deliver to the Administrative Agent
original UCC-3 releases (executed by the Secured Party) for each of the UCC-1
financing statements identified on Schedule B hereto. Such UCC-3 releases shall
expressly release from the security interest of the Secured Party all Property
of the Debtor other than fixed assets financed by the Indebtedness secured by
such security interest. The Credit Parties agree that the failure of the Credit
Parties to deliver such UCC-3 releases or to otherwise resolve the issues
relating thereto to the satisfaction of the Domestic Administrative Agent on or
before October 29, 1999 shall constitute an Event of Default under the terms of
the Credit Agreement.
5. Pursuant to that Post-Closing Letter dated as of August 4, 1999 (the
"Post-Closing Letter") between the Domestic Borrower, the Canadian
Administrative Agent and the Domestic Administrative Agent, the Domestic
Administrative Agent, on behalf of the Domestic Lenders, and the Canadian
Administrative Agent, on behalf of the Canadian Lenders, agreed to allow the
Credit Parties until September 3, 1999 to satisfy certain conditions set forth
in the Post-Closing Letter and the Domestic Borrower agreed that the failure to
satisfy all of the conditions set forth in the Post-Closing letter by September
3, 1999 would constitute an Event of Default under the Credit Agreement. The
Credit Parties have not satisfied certain of the conditions set forth in the
Post-Closing Letter; the conditions which have not been satisfied are set forth
on Schedule B hereto. The Required Lenders agree (a) to waive any Default or
Event of Default which may have existed solely as a result of the Credit
Parties' failure to satisfy all of the conditions set forth in the Post-Closing
Letter by September 3, 1999 and (b) to allow the Credit Parties until October
29, 1999 to satisfy the conditions set forth on Schedule B hereto. The Credit
Parties agree that
2
<PAGE> 3
the failure of the Credit Parties to satisfy the conditions set forth on
Schedule B hereto or to otherwise resolve the issues relating thereto to the
satisfaction of the Domestic Administrative Agent on or before October 29, 1999
shall constitute an Event of Default under the terms of the Credit Agreement.
6. Certain Property of certain of the Canadian Credit Parties is
subject to the PPSA financing statements identified on Schedule C hereto. The
Credit Parties hereby represent and warrant to the Agents and the Lenders that
the Indebtedness secured by such Liens has been paid and satisfied in full. In
reliance on such representation and warranty, the Required Lenders agree to
allow the Credit Parties until December 15, 1999 to deliver to the Domestic
Administrative Agent original, executed PPSA termination statements for each of
the PPSA financing statements identified on Schedule C hereto. The Credit
Parties agree that the failure of the Credit Parties to deliver such PPSA
termination statements or to otherwise resolve the issues relating thereto to
the satisfaction of the Domestic Administrative Agent on or before December 15,
1999 shall constitute an Event of Default under the terms of the Credit
Agreement.
7. This Amendment shall be effective upon satisfaction of the following
conditions:
(a) execution of this Amendment by the Credit Parties and the
Required Lenders; and
(b) receipt by the Administrative Agent of a certificate
executed by a Responsible Officer of the Domestic Borrower (i)
demonstrating that, after giving effect to the issuance of the
additional $50 million in Senior Subordinated Notes, the Domestic
Borrower will be in compliance with each of the financial covenants in
Section 7.9 of the Credit Agreement and (ii) certifying that, after
giving effect to the issuance of the additional $50 million in Senior
Subordinated Notes, no Default or Event of Default will exist.
8. The Credit Parties hereby affirm (i) the representations and
warranties set out in Section 6 of the Credit Agreement are true and correct as
of the date hereof (except those which expressly relate to an earlier period)
and (ii) no Default or Event of Default presently exists.
9. Each of the Guarantors (i) acknowledges and consents to all of the
terms and conditions of this Amendment, (ii) affirms all of its obligations
under the Credit Documents and (iii) agrees that this Amendment and all
documents executed in connection herewith do not operate to reduce or discharge
the Guarantors' obligations under the Credit Agreement or the other Credit
Documents.
10. The Borrower and the Guarantors, as applicable, affirm the liens
and security interests created and granted in the Credit Agreement and the
Credit Documents and agree that this Amendment shall in no manner adversely
affect or impair such liens and security interests.
11. Except as modified hereby, all of the terms and provisions of the
Credit Agreement (including Schedules and Exhibits) shall remain in full force
and effect.
3
<PAGE> 4
12. The Borrower agrees to pay all reasonable costs and expenses of the
Administrative Agent in connection with the preparation, execution and delivery
of this Amendment, including without limitation the reasonable fees and expenses
of Moore & Van Allen, PLLC.
13. This Amendment may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original and it shall
not be necessary in making proof of this Amendment to produce or account for
more than one such counterpart.
14. This Amendment shall be deemed to be a contract made under, and for
all purposes shall be construed in accordance with the laws of the State of New
York.
[Remainder of Page Intentionally Left Blank]
4
<PAGE> 5
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment No. 1 to be duly executed and delivered as of the date first
above written.
DOMESTIC
BORROWER: RAILWORKS CORPORATION,
a Delaware corporation
By: /s/ Michael R. Azarela
----------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President and
Chief Financial Officer
CANADIAN
BORROWERS: GANTREX RW COMPANY,
a Nova Scotia unlimited liability company
By: /s/ Michael R. Azarela
----------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President and
Chief Financial Officer
RAILWORKS CANADA COMPANY,
a Nova Scotia unlimited liability company
By: /s/ Michael R. Azarela
----------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President and
Chief Financial Officer
[Signature Pages Continue]
<PAGE> 6
DOMESTIC
GUARANTORS:
ALPHA-KEYSTONE ENGINEERING, INC.,
a Pennsylvania corporation
ANNEX RAILROAD BUILDERS, INC.,
an Indiana corporation
ARMCORE ACQUISITION CORP.,
a Delaware corporation
ARMCORE RAILROAD CONTRACTORS, INC.,
an Illinois corporation
BIRMINGHAM WOOD, INC.,
an Alabama corporation
COMSTOCK HOLDINGS INC.,
a Delaware corporation
COMTRAK CONSTRUCTION, INC.,
a Georgia corporation
CONDON BROTHERS, INC.,
a Washington corporation
CPI CONCRETE PRODUCTS INCORPORATED,
a Tennessee corporation
EARL CAMPBELL CONSTRUCTION COMPANY, INC.,
a Texas corporation
FCM RAIL, LTD., a Michigan corporation
F&V METRO CONTRACTING CORP.,
a New York corporation
GANTREX CORPORATION,
a Pennsylvania corporation
H.P. MCGINLEY INC.,
a Pennsylvania corporation
IMPULSE ENTERPRISES OF NEW YORK, INC.,
a New York corporation
KENNEDY RAILROAD BUILDERS, INC.,
a Pennsylvania corporation
M-TRACK ENTERPRISES, INC.,
a New York corporation
MCCORD TREATED WOOD, INC.,
an Alabama corporation
MERIT RAILROAD CONTRACTORS, INC.,
a Missouri corporation
By: /s/ Michael R. Azarela
----------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President of each
of the foregoing Domestic Guarantors
[Signature Pages Continue]
<PAGE> 7
MIDWEST CONSTRUCTION SERVICES, INC.,
an Indiana corporation
MIDWEST RAILROAD CONSTRUCTION & MAINTENANCE
CORPORATION OF WYOMING, a Wyoming corporation
MIDWEST RW, INC.,
a Delaware corporation
MINNESOTA RAILROAD SERVICE, INC.,
a Tennessee corporation
NEOSHO ASIA, INC.,
a Kansas corporation
NEOSHO CENTRAL AMERICA, INC.,
a Kansas corporation
NEOSHO CONSTRUCTION COMPANY, INCORPORATED,
a Kansas corporation
NEOSHO CONTRACTORS, INC.,
a Wyoming corporation
NEOSHO INCORPORATED,
a Kansas corporation
NEOSHO INTERNATIONAL, INC.,
a Kansas corporation
NEW ENGLAND RAILROAD CONSTRUCTION CO., INC.,
a Connecticut corporation
NORTHERN RAIL SERVICE AND SUPPLY COMPANY, INC.,
a Michigan corporation
PARSONS RAILWAY SHOPS, INC.,
a Kansas corporation
R. & M. B. RAIL CO., INC.,
an Indiana corporation
RAILCORP, INC.,
an Ohio corporation
RAILROAD RESOURCES, INC.,
a Missouri corporation
RAILROAD SERVICE, INC.,
a Nevada corporation
RAILROAD SPECIALTIES, INC.,
an Indiana corporation
SOUTHERN INDIANA WOOD PRESERVING CO., INC.,
an Indiana corporation
By: /s/ Michael R. Azarela
------------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President of each
of the foregoing Domestic Guarantors
[Signature Pages Continue]
<PAGE> 8
U.S. RAILWAY SUPPLY, INC.,
an Indiana corporation
U.S. TRACKWORKS, INC.,
a Michigan corporation
V&R ELECTRICAL CONTRACTORS, INC.,
a New York corporation
WM. A. SMITH CONSTRUCTION CO., INC.,
a Texas corporation
WM. A. SMITH RERAILING SERVICES, INC.,
a Texas corporation
By: /s/ Michael R. Azarela
----------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President of each
of the foregoing Domestic Guarantors
L.K. COMSTOCK & COMPANY, INC.,
a New York corporation
By: /s/ C. William Moore
----------------------------------------
Name: C. William Moore
Title: Chief Executive Officer and President
F&V METRO RW, INC.,
a Delaware corporation
By: /s/ John P. Nuzzo
----------------------------------------
Name: John P. Nuzzo
Title: Assistant Secretary
GANTREX RW, INC.,
a Delaware corporation
GANTREX SYSTEMS, INC.,
a Delaware corporation
RAILWORKS CANADA, INC.
a Delaware corporation
By: /s/ John P. Nuzzo
----------------------------------------
Name: John P. Nuzzo
Title: Secretary of each of the foregoing
Domestic Guarantors
By: Michael R. Azarela
----------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President of each
of the foregoing Domestic Guarantors
[Signature Pages Continue]
<PAGE> 9
CANADIAN
GUARANTORS:
GANTREX GROUP, LTD.,
an Ontario corporation
GANTREX HOLDINGS-CANADA, INC.,
a Nova Scotia corporation
GANTREX LIMITED,
an Ontario corporation
GANTREX SYSTEMS LIMITED,
an Ontario corporation
PACIFIC NORTHERN RAIL CONTRACTORS CORP.,
a British Columbia company
PACIFIC NORTHERN RAIL HOLDINGS LTD.,
a British Columbia company
PACIFIC NORTHERN RAIL RW, INCORPORATED,
a Nova Scotia corporation
PNR LEASING LTD.,
a British Columbia company
PNR INVESTMENTS LTD.,
a British Columbia company
By: Michael R. Azarela
----------------------------------------
Name: Michael R. Azarela
Title: Executive Vice President of each
of the foregoing Canadian Guarantors
[Signature Pages Continue]
<PAGE> 10
LENDERS: BANK OF AMERICA, N.A.,
individually in its capacity as a Lender
and in its capacity as Domestic Administrative Agent
By: /s/ Monica Brandes
----------------------------------------
Name: Monica Brandes
Title: Senior Vice President
BANK OF AMERICA CANADA,
individually in its capacity as a Lender
and in its capacity as Canadian Administrative Agent
By: /s/ Monica Brandes
----------------------------------------
Name: Monica Brandes
Title: Senior Vice President
FIRST UNION NATIONAL BANK
By: /s/ Barbara Gell Carroll
----------------------------------------
Name: Barbara Gell Carroll
Title: Senior Vice President
SUMMIT BANK
By:
----------------------------------------
Name:
Title:
FLEET BANK, N.A.
By:
----------------------------------------
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By:
----------------------------------------
Name:
Title:
BANK ONE OF MICHIGAN
By:
----------------------------------------
Name:
Title:
[Signature Pages Continue]
<PAGE> 11
M&T BANK
By: /s/ Michael Weinstock
----------------------------------
Name: Michael Weinstock
Title: Vice President
CONGRESS FINANCIAL CORPORATION [CANADA]
By:
----------------------------------
Name:
Title:
<PAGE> 12
Schedule A
to Amendment No. 1
RailWorks Corporation
UCC-1 Financing Statements to be Terminated
1. Filing Jurisdiction: Indiana Secretary of State
Debtor: Annex Railroad Builders, Inc.
Secured Party: First Bank and Trust Company
Filing No.: 1308428
Filing Date: 11/7/86
2. Filing Jurisdiction: Alabama Secretary of State
Debtor: Birmingham Wood, Inc.
Secured Party: First Commercial Bank
Filing No.: B89-01225
Filing Date: 7/27/89
3. Filing Jurisdiction: New York Secretary of State
Debtors: F&V Metro Contracting Corp.
Impulse Enterprises of New York, Inc.
V&R Electrical Contractors, Inc.
Secured Party: Fleet Bank, N.A.
Filing No.: 087915
Filing Date: 4/29/97
4. Filing Jurisdiction: New York Secretary of State
Debtors: F&V Metro Contracting Corp.
Impulse Enterprises of New York, Inc.
V&R Electrical Contractors, Inc.
Secured Party: Atlantic Bank of New York
Filing No.: 097835
Filing Date: 5/14/97
5. Filing Jurisdiction: Suffolk County, New York
Debtors: F&V Metro Contracting Corp.
Impulse Enterprises of New York, Inc.
V&R Electrical Contractors, Inc.
Secured Party: Fleet Bank, N.A.
Filing No.: 97-07583
Filing Date: 5/1/97
6. Filing Jurisdiction: Suffolk County, New York
Debtors: F&V Metro Contracting Corp.
Impulse Enterprises of New York, Inc.
V&R Electrical Contractors, Inc.
Secured Party: Atlantic Bank of New York
Filing No.: 97-08392
Filing Date: 5/14/97
<PAGE> 13
7. Filing Jurisdiction: Alabama Secretary of State
Debtor: McCord Treated Wood, Inc.
Secured Party: First Commercial Bank
Filing No.: B92-23428
Filing Date: 6/30/92
8. Filing Jurisdiction: Wyoming Secretary of State
Debtors: MidWest Railroad Construction
and Maintenance Corporation of
Wyoming
Secured Party: Grand National Bank
Filing No.: 96163131B09
Filing Date: 6/11/96
9. Filing Jurisdiction: Indiana Secretary of State
Debtor: Railroad Specialties, Inc.
Secured Party: National City Bank, Indiana
Filing No.: 2219576
Filing Date: 10/21/98
10. Filing Jurisdiction: Queens County, New York
Debtor: Sheldon Electric, Inc.
Secured Party: Bernard Herman
Filing No.: 94PQ14500
Filing Date: 9/8/94
11. Filing Jurisdiction: Indiana Secretary of State
Debtor: Southern Indiana Wood Preserving
Secured Party: Key Bank National Association
Filing No.: 2202862
Filing Date: 7/13/98
<PAGE> 14
Schedule B
to Amendment No. 1
RailWorks Corporation
UCC-1 Financing Statements to be Terminated
1. Filing Jurisdiction: Kansas Secretary of State
Debtor: Neosho Construction Company, Inc.
Secured Party: Commerce Bank and Trust
Filing No.: 2059797
Filing Date: 9/13/94
2. Filing Jurisdiction: Kansas Secretary of State
Debtor: Neosho Construction Company, Inc.
Secured Party: Commerce Bank and Trust
Filing No.: 2221291
Filing Date: 2/26/96
3. Filing Jurisdiction: Kansas Secretary of State
Debtor: Neosho Construction Company, Inc.
Secured Party: Commerce Bank and Trust
Filing No.: 2508924
Filing Date: 11/25/98
<PAGE> 15
Schedule B
to Amendment No. 1
RailWorks Corporation
Unsatisfied Conditions in Post-Closing Letter
1. Receipt by the Domestic Administrative Agent of opinions of counsel to the
Canadian Credit Parties relating to the Credit Documents and the transactions
contemplated thereby, in each case in form and substance reasonably satisfactory
to the Domestic Administrative Agent and each of the Canadian Lenders.
2. Receipt by the Domestic Administrative Agent of the corporate documents
required by Section 5.1(f) of the Credit Agreement for each of the Canadian
Credit Parties (other than the Domestic Borrower).
3. Receipt by the Collateral Agent of original stock certificates and related
stock powers (in each case conforming to the requirements of the Canadian Pledge
Agreement) evidencing the Pledged Stock (as defined in the Canadian Pledge
Agreement) of Gantrex Group, Ltd. (the issuer thereof is Gantrex Systems Ltd.).
<PAGE> 16
Schedule C
to Amendment No. 1
RailWorks Corporation
PPSA Financing Statements to be Terminated
1. Filing Jurisdiction: Ontario
Debtors: Gantrex Limited
Gantrex Systems Limited
Secured Party: London Guarantee Insurance Company
File No.: 838814292
Reg. No.: 19990309 1358 6055 0050
Expiry Date: 3/9/08
2. Filing Jurisdiction: Ontario
Debtor: Pacific Northern Rail Contractors Holdings Ltd.
Secured Party: Royal Bank of Canada
File No.: 840049029
Reg. No.: 19980422 1808 1531 5074
Expiry Date: 4/22/03
3. Filing Jurisdiction: Ontario
Debtor: Pacific Northern Rail Contractors Corp.
Secured Party: Royal Bank of Canada
File No.: 840049011
Reg. No.: 19980422 1808 1531 5073
Expiry Date: 4/22/03
4. Filing Jurisdiction: British Columbia
Debtor: Pacific Northern Rail Contractors Holdings Ltd.
Secured Party: Royal Bank of Canada
Base Reg. No.: 7472141
Reg. Date: 1/29/98
Expiry Date: 1/29/03
5. Filing Jurisdiction: British Columbia
Debtor: Pacific Northern Rail Contractors Corp.
Secured Party: Pacific Northern Rail Contractors Holdings Ltd.
Base Reg. No.: 6530385
Reg. Date: 8/6/96
Expiry Date: 8/6/11
6. Filing Jurisdiction: British Columbia
Debtor: Pacific Northern Rail Contractors Corp.
Secured Party: Pacific Northern Rail Contractors Holdings Ltd.
Base Reg. No.: 6907125
Reg. Date: 3/13/97
Expiry Date: 3/13/12
<PAGE> 17
7. Filing Jurisdiction: British Columbia
Debtor: Pacific Northern Rail Contractors Corp.
Secured Party: Royal Bank of Canada
Base Reg. No.: 7472134
Reg. Date: 1/29/98
Expiry Date: 1/29/03
<PAGE> 1
EXHIBIT 10.3
RAILWORKS CORPORATION
1104 KENILWORTH DRIVE
SUITE 301
BALTIMORE, MD 21204
September 20, 1999
Mr. Michael R. Azarela
12310 Cleghorn Road
Cockeysville, MD 21030
RE: AMENDED AND RESTATED EMPLOYMENT AGREEMENT DATED
AUGUST 4, 1998 ("AGREEMENT") BETWEEN MICHAEL R. AZARELA
AND RAILWORKS CORPORATION ("CORPORATION")
Dear Mr. Azarela:
This letter serves as an amendment ("Amendment") to the Agreement.
Commencing as of June 1, 1999, on the second and third lines of Section 3.1(a)
of the Agreement "Two Hundred Thousand Dollars ($200,000.00) per annum" is
deemed deleted, and replaced with the following: "Two Hundred Seventy-Five
Thousand Dollars ($275,000.00) per annum". This Amendment is deemed retroactive
and effective as of June 1, 1999.
Except as specifically provided herein, the Agreement remains in full
force and effect, and is neither amended nor modified.
Please acknowledge your agreement to the Amendment by signing and
returning a copy to the undersigned.
Very truly yours,
RAILWORKS CORPORATION
By: /s/ Michael R. Azarela
-----------------------------------
/jdc Name: Michael R. Azarela
Title: Executive Vice President and
Chief Financial Officer
AGREED TO:
/s/ John G. Larkin 9/99
- ----------------------------------
John G. Larkin
<PAGE> 1
EXHIBIT 10.4
RAILWORKS CORPORATION
1104 KENILWORTH DRIVE
SUITE 301
BALTIMORE, MD 21204
September 20, 1999
Mr. John G. Larkin
403 Somerset Road
Baltimore, MD 28280
RE: AMENDED AND RESTATED EMPLOYMENT AGREEMENT DATED
AUGUST 4, 1998 ("AGREEMENT") BETWEEN JOHN G. LARKIN
AND RAILWORKS CORPORATION ("CORPORATION")
Dear Mr. Larkin:
This letter serves as an amendment ("Amendment") to the Agreement.
Commencing as of June 1, 1999, on the second line of Section 3.1(a) of the
Agreement "Two Hundred Seventy-Five Thousand Dollars ($275,000.00) per annum"
is deemed deleted, and replaced with the following: "Three Hundred Twenty-Five
Thousand Dollars ($325,000.00) per annum". This Amendment is deemed retroactive
and effective as of June 1, 1999.
Except as specifically provided herein, the Agreement remains in full
force and effect, and is neither amended nor modified.
Please acknowledge your agreement to the Amendment by signing and
returning a copy to the undersigned.
Very truly yours,
RAILWORKS CORPORATION
By: /s/ John G. Larkin
-----------------------------------
/jdc Name: John G. Larkin
Title: Chief Executive Officer and
Chairman of the Board
AGREED TO:
/s/ Michael R. Azarela 9/99
- -----------------------------
Michael R. Azarela
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EXHIBIT 10.5
Adopted June_, 1998
Amended effective January 1, 1999
RAILWORKS CORPORATION
1998 INCENTIVE STOCK PLAN
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SS. 1
BACKGROUND AND PURPOSE
The purpose of this Plan is to promote the interest of
RailWorks by authorizing the Committee to grant Options to Key Employees,
Consultants and Directors and to grant Restricted Stock to Key Employees in
order (1) to attract and retain Key Employees, Consultants and Directors, (2) to
provide an additional incentive to each Key Employee, Consultants or Director to
work to increase the value of Stock and (3) to provide each Key Employee,
Consultants or Director with a stake in the future of RailWorks which
corresponds to the stake of each of RailWorks' stockholders.
SS. 2
DEFINITIONS
Each term set forth in this ss. 2 shall have the meaning set
forth opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular.
2.1 Affiliate -- means any organization (other than a
Subsidiary) that would be treated as under common control with RailWorks under
ss. 414(c) of the Code if "50 percent" were substituted for "80 percent" in the
income tax regulations under ss. 414(c) of the Code.
2.2 Board -- means the Board of Directors of RailWorks.
2.3 Change in Control -- means (1) a "change in control" of
RailWorks of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A for proxy statement filed under Section 14(a) of the
Securities Exchange Act of 1934, as amended ("1934 Act"), (2) a "person" (as
that term is used in 14(d)(2) of the 1934 Act) becomes the beneficial owner (as
defined
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in Rule 13d-3 under the 1934 Act) directly or indirectly of securities
representing 20% or more of the combined voting power for election of directors
of the then outstanding securities of RailWorks, (3) the individuals who at the
beginning of any period of two consecutive years or less constitute the Board
cease for any reason during such period to constitute at least a majority of the
Board, unless the election or nomination for election of each new member of the
Board was approved by vote of at least two-thirds of the members of the Board
then still in office who were members of the Board at the beginning of such
period, (4) the stockholders of RailWorks approve any dissolution or liquidation
of RailWorks or any sale or disposition of 50% or more of the assets or business
of RailWorks, (5) the stockholders of RailWorks approve a merger or
consolidation to which RailWorks is a party (other than a merger or
consolidation with a wholly-owned subsidiary of RailWorks) or a share exchange
in which RailWorks shall exchange RailWorks shares for shares of another
corporation as a result of which the persons who were stockholders of RailWorks
immediately before the effective date of such merger, consolidation or share
exchange shall have beneficial ownership of less than 50% of the combined voting
power for election of directors of the surviving corporation following the
effective date of such merger, consolidation or share exchange.
2.4 Code -- means the Internal Revenue Code of 1986, as
amended.
2.5 Committee -- means a committee of the Board which shall
have at least 2 members, each of whom shall be appointed by and shall serve at
the pleasure of the Board and shall come within the definition of a
"non-employee director" under Rule 16b-3 and an "outside director" under
ss. 162(m) of the Code.
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2.6 Director -- means any member of the Board who is not an
employee of RailWorks or a Parent or Subsidiary or "affiliate"(as such term is
defined in Rule 405 of the 1933 Act) of RailWorks.
2.7 Fair Market Value -- means (1) the closing price on any
date for a share of Stock as reported by The Wall Street Journal under the
Nasdaq Stock Market's quotation system (or under any successor quotation system)
or, if Stock is no longer traded on the Nasdaq Stock Market, under the quotation
system under which such closing price is reported or, if The Wall Street Journal
no longer reports such closing price, such closing price as reported by a
newspaper or trade journal selected by the Committee or, if no such closing
price is available on such date, (2) such closing price as so reported in
accordance with ss. 2.7(1) for the immediately preceding business day, or, if no
newspaper or trade journal reports such closing price or if no such price
quotation is available, (3) the price which the Committee acting in good faith
determines through any reasonable valuation method that a share of Stock might
change hands between a willing buyer and a willing seller, neither being under
any compulsion to buy or to sell and both having reasonable knowledge of the
relevant facts.
2.8 ISO -- means an option granted under this Plan to purchase
Stock which is intended to satisfy the requirements of ss. 422 of the Code.
2.9 Key Employee -- means an employee of RailWorks or any
Subsidiary or Parent or Affiliate designated by the Committee who, in the
judgment of the Committee acting in its absolute discretion, is key directly or
indirectly to the success of RailWorks.
2.10 1933 Act -- means the Securities Act of 1933, as amended.
2.11 1934 Act -- means the Securities Exchange Act of 1934, as
amended.
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2.12 Non-ISO -- means an option granted under this Plan to
purchase Stock which is intended to fail to satisfy the requirements of ss. 422
of the Code.
2.13 Option -- means an ISO or a Non-ISO which is granted
under ss. 7 of this Plan.
2.14 Option Certificate -- means the written certificate which
sets forth the terms and conditions of an Option granted to a Key Employee,
Consultant or Director under this Plan.
2.15 Option Price -- means the price which shall be paid to
purchase one share of Stock upon the exercise of an Option granted under this
Plan.
2.16 Parent -- means any corporation which is a parent of
RailWorks within the meaning of ss. 424(e) of the Code.
2.17 Plan -- means this RailWorks Corporation 1998 Incentive
Stock Plan as effective as of the date adopted by the Board in 1998 and as
amended from time to time thereafter.
2.18 RailWorks -- means RailWorks Corporation and any
successor RailWorks Corporation.
2.19 Restricted Stock -- means Stock granted to a Key Employee
under ss.8 of this Plan.
2.20 Restricted Stock Certificate -- means the written
certificate which sets forth the terms and conditions of a Restricted Stock
grant to a Key Employee.
2.21 Rule 16b-3 -- means the exemption under Rule 16b-3 to
Section 16(b) of the 1934 Act or any successor to such rule.
2.22 Stock -- means $.01 par value common stock of RailWorks.
2.23 Subsidiary -- means a corporation which is a subsidiary
corporation (within the meaning of ss. 424(f) of the Code) of RailWorks.
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2.24 Ten Percent Stockholder -- means a person who owns (after
taking into account the attribution rules of ss. 424(d) of the Code) more than
ten percent of the total combined voting power of all classes of stock of either
RailWorks, a Subsidiary or Parent.
2.25 Consultant -- means a natural person who is not an
employee of RailWorks, a Subsidiary or a Parent and who provides bona fide
services to RailWorks, a Subsidiary or a Parent except where such services (i)
are in connection with the offer or sale of securities in a capital-raising
transaction; (ii) directly or indirectly promote or maintain a market for
RailWork's securities or the securities of a Parent or Subsidiary; or (iii)
relate to investor relations or shareholder communications.
SS. 3
SHARES RESERVED UNDER PLAN
There shall be 2,000,000 shares of Stock reserved for use
under this Plan. Such shares of Stock shall be reserved to the extent that
RailWorks deems appropriate from authorized but unissued shares of Stock and
from shares of Stock which have been reacquired by RailWorks. Any shares of
Stock subject to an Option which remain unissued after the cancellation,
expiration or exchange of such Option or any shares of Restricted Stock which
are forfeited or canceled thereafter shall again become available for use under
this Plan, but any shares of Stock used to exercise an Option or to satisfy a
withholding obligation shall not again become available for use under this Plan.
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SS. 4
EFFECTIVE DATE
The effective date of this Plan shall be the date of its
adoption by the Board, provided the stockholders of RailWorks (acting at a duly
called meeting of such stockholders) approve such adoption within twelve (12)
months of such effective date. Any Option or Restricted Stock granted before
such stockholder approval automatically shall be granted subject to such
approval.
SS. 5
COMMITTEE
This Plan shall be administered by the Committee. The
Committee acting in its absolute discretion shall exercise such powers and take
such action as expressly called for under this Plan and, further, the Committee
shall have the power to interpret this Plan and (subject to ss. 13, ss. 14 and
ss. 15 and Rule 16b-3) to take such other action in the administration and
operation of this Plan as the Committee deems equitable under the circumstances,
which action shall be binding on RailWorks, on each affected Key Employee,
Consultant or Director and on each other person directly or indirectly affected
by such action.
SS. 6
ELIGIBILITY AND ANNUAL GRANT CAPS
Only Key Employees who are employed by RailWorks or a
Subsidiary or Parent shall be eligible for the grant of ISOs under this Plan,
and Key Employees, Consultants and Directors shall be eligible for the grant of
Non-ISOs under this Plan. Only Key Employees shall be eligible for the grant of
Restricted Stock under this Plan. No Key Employee, with the exception of any
person who was not previously employed by RailWorks or a Subsidiary or Parent
and whose grant is made in
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connection with such new employment, in any calendar year shall be granted an
Option to purchase more than 100,000 shares of Stock.
SS. 7
OPTIONS
7.1 Committee Action. The Committee acting in its absolute
discretion shall have the right to grant Options to Key Employees under this
Plan from time to time to purchase shares of Stock; provided, however, that the
Committee shall not grant new Options in exchange for the cancellation of
outstanding Options which have a higher Option Price than the new Options. Each
grant of an Option to a Key Employee shall be evidenced by an Option
Certificate, and each Option Certificate shall set forth whether the Option is
an ISO or a Non-ISO and shall set forth such other terms and conditions of such
grant as the Committee acting in its absolute discretion deems consistent with
the terms of this Plan; however, if the Committee grants an ISO and a Non-ISO to
a Key Employee on the same date, the right of the Key Employee to exercise the
ISO shall not be conditioned on his or her failure to exercise the Non-ISO. The
Committee shall have the right to grant a Non-ISO and Restricted Stock to a Key
Employee at the same time and to condition the exercise of the Non-ISO on the
forfeiture of the Restricted Stock grant.
7.2 $100,000 Limit. To the extent that the aggregate Fair
Market Value of Stock (determined as of the date the ISO is granted) with
respect to which ISOs first become exercisable in any calendar year exceeds
$100,000, such Options shall be treated as Non -ISO's. The Fair Market Value of
Stock subject to any other option (determined as of the date such option was
granted) which (1) satisfies the requirements of ss. 422 of the Code and (2) is
granted to a Key Employee under a plan maintained by RailWorks, a Subsidiary or
a Parent shall be treated (for purposes of this $100,000
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limitation) as if granted under this Plan. The Committee shall interpret and
administer the limitation set forth in this ss. 7.2 in accordance with ss.
422(d) of the Code, and the Committee shall treat this ss. 7.2 as in effect only
for those periods for which ss. 422(d) of the Code is in effect.
7.3 Grants to Consultants and Directors. The Board acting in
its absolute discretion shall have the right to grant Options to Consultants or
Directors under this Plan from time to time to purchase shares of Stock;
provided, however, that the Board shall not grant new Options in exchange for
the cancellation of outstanding Options which have a higher Option Price than
the new Options. Each grant of an Option to a Consultant or Director shall be
evidenced by an Option Certificate, and each Option Certificate shall set forth
such terms and conditions of such grant as the Board acting in its absolute
discretion deems consistent with the terms of this Plan. Each Non-ISO granted
under this Plan to a Director shall be evidenced by an Option Certificate, shall
expire 90 days after a Director ceases to serve as such or, if earlier, on the
tenth anniversary of the date of the grant of the Non-ISO. Each Non-ISO granted
to a Consultant under this Plan shall be evidenced by an Option Certificate and
shall expire on such date (not to be later than the tenth anniversary of the
date of the grant of the Non-ISO) as the Committee shall determine in its action
making such grant. A Non-ISO granted to a Consultant or Director under this ss.
7.3 shall conform in all other respects to the terms and conditions of a Non-ISO
under this Plan, and no Consultant or Director shall be eligible to receive an
Option under this Plan except as provided in this ss. 7.3. A grant of a Non-ISO
to a Director under this ss. 7.3 is intended to be granted in a manner which
continues to allow such Director to be a "non-employee director's within the
meaning of Rule 16b-3 and an "outside directions within the meaning of ss.
162(m) of the Code, and all Non-ISOs granted to Directors under this ss. 7.3
shall be construed to effect such intent.
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7.4 Option Price. The Option Price for each share of Stock
subject to an Option which is granted to a Key Employee, Consultant or a
Director shall be no less than the Fair Market Value of a share of Stock on the
date the Option is granted; provided, however, if the Option is an ISO granted
to a Key Employee who is a Ten Percent Stockholder, the Option Price for each
share of Stock subject to such ISO shall be no less than 110% of the Fair Market
Value of a share of Stock on the date such ISO is granted. The Option Price
shall be payable in full upon the exercise of any Option, and at the discretion
of the Committee an Option Certificate can provide for the payment of the Option
Price either in cash, by check or in Stock which has been held for at least six
months and which is acceptable to the Committee or in any combination of cash,
check and such Stock. The Option Price in addition may be paid through any
broker facilitated cashes exercise procedure acceptable to the Committee or its
delegate. Any payment made in Stock shall be treated as equal to the Fair Market
Value of such Stock on the date the properly endorsed certificate for such Stock
is delivered to the Committee or its delegate.
7.5 Exercise Period. Each Option granted under this Plan to a
Key Employee shall be exercisable whole or in part at such time or times as set
forth in the related Option Certificate, but no Option Certificate shall make an
Option granted to a Key Employee exercisable after the earlier of:
(1) the date such Option is exercised in full, or
(2) the date which is the fifth anniversary of the date the
Option is granted, if the Option is an ISO and the Key
Employee is a Ten Percent Stockholder an the date the
Option is granted, or
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(3) the date which is the tenth anniversary of the date
the Option is granted, if the Option is (a) a Non-ISO
or (b) an ISO which is granted to a Key Employee who
is not a Ten Percent Stockholder on the date the
Option is granted.
An Option Certificate may provide for the exercise of an Option after the
employment of a Key Employee has terminated for any reason whatsoever, including
death or disability.
SS. 8
RESTRICTED STOCK
8.1 Committee Action. The Committee acting in its absolute
discretion shall have the right to grant Restricted Stock to Key Employees under
this Plan from time to time and, further, shall have the right to make new
Restricted Stock grants in exchange for the cancellation of an outstanding
Restricted Stock grant to such Key Employee. Each Restricted Stock grant shall
be evidenced by a Restricted Stock Certificate, and each Restricted Stock
Certificate shall set forth the conditions, if any, under which the grant will
be effective and the conditions under which the Key Employee's interest in the
underlying Stock will become nonforfeitable.
8.2 Effective Date. A Restricted Stock grant shall be
effective (1) as of the date set by the Committee when the grant is made or, if
the grant is made subject to one, or more than one, condition, (2) as of the
date such conditions have been timely satisfied.
8.3 Conditions.
(a) Conditions to Issuance of Stock. The Committee acting in
its absolute discretion may make the issuance of Restricted Stock to a Key
Employee subject to the satisfaction of one, or more than one, condition which
the Committee deems appropriate under the circumstances for Key Employees
generally or for a Key Employee in particular, and the related Restricted Stock
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Certificate shall set forth each such condition, if any, and the deadline, if
any, for satisfying each such condition. Stock subject to a Restricted Stock
grant shall be issued in the name of a Key Employee only after each such
condition, if any, has been timely satisfied or has expired in accordance with
the terms of the related Restricted Stock Certificate, and any Stock which is so
issued shall be held by RailWorks pending the satisfaction of the forfeiture
conditions, if any, under ss. 8.3(b) for the related Restricted Stock grant.
(b) Forfeiture Conditions. The Committee acting in its
absolute discretion may make Restricted Stock issued in the name of a Key
Employee subject to forfeiture upon a failure to satisfy one, or more then one,
condition that the Committee acting in its absolute discretion deems appropriate
under the circumstances for Key Employees generally or for a Key Employee in
particular, and the related Restricted Stock Certificate shall set forth each
such condition, If any, and the deadline, if any, for satisfying each such
forfeiture condition or the expiration date, if any, for each such condition.
Stock issued in the name of a Key Employee shall be forfeited unless each such
forfeiture condition, if any, has been satisfied or has expired in accordance
with the terms of the related Restricted Stock Certificate. Each share of Stock
underlying a Restricted Stock grant shall be unavailable under ss. 3 after such
grant is effective unless such share is forfeited as a result of a failure to
timely satisfy a forfeiture condition, in which event such share of Stock shall
again become available under ss. 3 as of the date of such failure.
8.4 Dividends and Voting Rights. Each Restricted Stock
Certificate shall specify what rights, if any, a Key Employee shall have with
respect to the Stock issued in the name of a Key Employee, including rights to
receive dividends and to vote, pending the forfeiture of such Stock or the
satisfaction or expiration of each forfeiture condition, if any, with respect to
such Stock.
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Furthermore, the Committee may grant dividend equivalent rights on Restricted
Stock while such Stock remains subject to an issuance condition under ss. 8.3(a)
under which cash equivalent to a dividend shall be paid to the Key Employee by
RailWorks when a dividend is paid, and any such dividend equivalent right shall
be set forth in the related Restricted Stock Certificate.
8.5 Satisfaction of All Conditions. A share of Stock issued in
the name of a Key Employee shall cease to be Restricted Stock at such time as a
Key Employee's interest in such Stock becomes nonforfeitable, and the
certificate representing such share shall be released by RailWorks (or
RailWorks' delegate) and transferred to the Key Employee as soon as practicable
thereafter.
8.6 Section 162(m). Except where the Committee deems it in the
best interests of RailWorks, the Committee shall use its best efforts to grant
Restricted Stock either (1) subject to at least one condition which can result
in the Restricted Stock qualifying as "performance-based compensation" under ss.
162(m) of the Code if the stockholders of RailWorks approve such condition and
the Committee takes such other action as the Committee deems necessary or
appropriate for such grant to so qualify under 162(m) or (2) under such other
circumstances as the Committee deems likely to result in an income tax deduction
for the grant.
SS. 9
NONTRANSFERABILITY
No ISO granted to a Key Employee, and no Non-ISO granted to a
Consultant or an Outside Director or Restricted Stock grant shall be
transferable by a Key Employee, Consultant or Outside Director other than by
will or by the laws of descent and distribution, and any ISO granted
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to a Key Employee and Non-ISO granted to a Consultant or an Outside Director
shall be exercisable during a Key Employee's or Consultant's or Outside
Director's lifetime only by the Key Employee, Consultant or Outside Director. No
Non-ISO granted to a Key Employee shall be transferable other than (1) under
circumstances that would permit the Non-ISO or the underlying Stock to be
registered on a Form S-8 and (2) by will or by the laws of descent and
distribution. The person or persons to whom an Option or Restricted Stock is
transferred thereafter shall be treated as the Key Employee, Consultant or
Outside Director.
SS.10
SECURITIES REGISTRATION AND RESTRICTIONS
Each Option Certificate or Restricted Stock Certificate shall
provide that, upon the receipt of shares of Stock as a result of the exercise of
an Option or the satisfaction or expiration of the forfeiture conditions, if
any, on any Restricted Stock, the Key Employee, Consultant or Outside Director
shall, if so requested by RailWorks, agree to hold such shares of stock for
investment and not with a view of resale or distribution to the public and, if
so requested by RailWorks, shall deliver to RailWorks a written statement
satisfactory to RailWorks to that effect. Each Option Certificate and Restricted
Stock Certificate also shall provide that, if so requested by RailWorks, the Key
Employee, Consultant or Outside Director shall make a written representation to
RailWorks that he or she will not sell or offer for sale any of such Stock
unless a registration statement shall be in
effect with respect to such Stock under the 1933 Act and any applicable state
securities law or he or she shall have furnished to RailWorks an opinion in form
and substance satisfactory to RailWorks of legal counsel satisfactory to
RailWorks that such registration is not required. Certificates representing the
Stock transferred upon the exercise of an Option or upon the lapse of the
forfeiture
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conditions, if any, on any Restricted Stock may at the discretion of
RailWorks bear a legend to the effect that such Stock has not been registered
under the 1933 Act or any applicable state securities law and that such Stock
cannot be sold or offered for sale in the absence of an effective registration
statement as to such Stock under the 1933 Act and any applicable state
securities law or an opinion in form and substance satisfactory to RailWorks of
legal counsel satisfactory to RailWorks that such registration is not required.
SS. 11
LIFE OF PLAN
No Option or Restricted Stock shall be granted under this Plan
on or after the earlier of
(1) the tenth anniversary of the effective date of this
Plan (as determined under ss. 4 of this Plan), in
which event this Plan otherwise thereafter shall
continue in effect until all outstanding Options have
been exercised in full or no longer are exercisable
and all Restricted Stock grants under this Plan have
been forfeited or the forfeiture conditions, if any,
on such Stock have been satisfied in full, or
(2) the date on which all of the Stock reserved under ss.
3 of this Plan has (as a result of the exercise of
Options granted under this Plan or the satisfaction
of the forfeiture conditions, if any, on Restricted
Stock) been issued or no longer is available for use
under this Plan, in which event this Plan also shall
terminate on such date.
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SS. 12
ADJUSTMENT
12.1 Capital Structure. The number, kind or class (or any
combination thereof) of shares of Stock reserved under ss. 3 of this Plan, the
number, kind or class (or any combination thereof) of shares of Stock subject to
Options granted under this Plan and the Option Price of such Options as well as
the number, kind or class of shares of Restricted Stock granted under this Plan
shall be adjusted by the Committee in an equitable manner to reflect any change
in the capitalization of RailWorks, including, but not limited to, such changes
as stock dividends or stock splits.
12.2 Mergers. The Committee as part of any corporate
transaction described in ss. 424(a) of the Code shall have the right to adjust
(in any manner which the Committee in its discretion deems consistent with ss.
424(a) of the Code) the number, kind or class (or any combination thereof) of
shares of Stock reserved under ss. 3 of this Plan. Furthermore, the Committee
as part of any corporate transaction described in ss. 424(a) of the Code. shall
have the right to adjust (in any manner which the Committee in its discretion
deems consistent with ss.424(a)of the Code) the number, kind or class (or any
combination thereof) of shares of stock underlying any Restricted Stock grants
previously made under this plan and any related grant conditions and forfeiture
conditions, and the number, kind or class (or any combination thereof) of
shares subject Option grants previously made under this Plan and related Option
Price for each such Option, and, further, shall have the right (in any manner
which the Committee in its discretion deems consistent with ss.424(a) of the
Code) to make Restricted Stock and Option grants to effect the assumption of,
or the substitution for, restricted stock and option grants previously made by
any other corporation to the
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extent that such corporate transaction calls for such substitution or assumption
of such restricted stock or option grants.
12.3 Fractional Shares. If any adjustment under this ss.12
would create a fractional share of Stock or right acquire a fractional share of
initial Stock, such fractional share shall be disregarded and the number of
shares of Stock reserved under this Plan and the number subject to any Options
grants and Restricted Stock grants shall be the next lower number of shares of
Stock, rounded all fractions downward. An adjustment made under this ss.12 by
the Committee shall be conclusive and binding on all affected persons and,
further, shall not constitute an increase in the "the number of shares reserved
under ss.3" within the meaning of ss.14 of this Plan.
SS. 13
SALE, MERGER OR CHANGE IN CONTROL
If on any date RailWorks agrees to sell all or substantially
all of its assets or agrees to any merger, consolidation, reorganization,
division or other corporate transaction in which Stock is converted into another
security or into the right to receive securities or property or if a tender
offer is made which could lead to a Change in Control (other than a tender offer
by RailWorks or an employee benefit plan established and maintained by
RailWorks), the Board shall waive any conditions to the exercise of all then
outstanding Options and waive any then outstanding issuance and forfeiture
conditions on any Restricted Stock and shall have the right to cancel such
Options and Restricted Stock grants after providing each Key Employee,
Consultant and Director a reasonable opportunity to exercise his or her Options
and to take such other action as necessary or appropriate to receive the Stock
subject to any Restricted Stock grants.
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SS. 14
AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the
extent that the Board deems necessary, or appropriate; provided, however, no
such amendment shall be made absent the approval of the stockholders of
RailWorks required under ss. 422 of the Code (1) to increase the number of
shares of stock reserved under ss. 3, or (2) to change the class of employees
eligible for Options. The Board also may suspend the granting of Options or
Restricted Stock under this Plan at any time and may terminate this Plan at any
time provided, however, the Board shall not have the right unilaterally to
modify, amend or cancel any Option or Restricted Stock granted before such
suspension or termination unless (1) the Key Employee or Director consents in
writing to such modification, amendment or cancellation or (2) there is a
dissolution or liquidation of RailWorks or a transaction described in ss. 12 or
ss. 13 of this Plan.
SS. 15
MISCELLANEOUS
15.1 Stockholder Rights. No Key Employee, Consultant or
Director shall have any rights as a stockholder of RailWorks as a result of the
grant of an Option granted to him or her under this Plan or his or her exercise
of such Option pending the actual delivery of the Stock subject to such Option
to such Key Employee or Director. Subject to ss. 8.4, a Key Employee's rights as
a stockholder in the shares of Stock underlying a Restricted Stock grant which
is effective shall be set forth in the related Restricted Stock Certificate.
15.2 No Contract of Employment. The grant of an Option or
Restricted Stock to a Key Employee, Consultant or Director under this Plan shall
not constitute a contract of
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employment or a right to continue to serve on the Board and shall not confer on
a Key Employee, Consultant or Director any rights upon his or her termination of
employment or service in addition to those rights, if any, expressly set forth
in the related Option Certificate or Restricted Stock Certificate.
15.3 Withholding. Each Option and Restricted Stock grant shall
be made subject to the condition that the Key Employee, Consultant or Director
consents to whatever action the Committee directs to satisfy the federal and
state tax withholding requirements, if any, which the Committee in its
discretion deems applicable to the exercise of such Option or the satisfaction
of any. forfeiture conditions with respect to Restricted Stock issued in the
name of the Key Employee, Consultant or Director. The Committee also shall have
the right to provide in an Option Certificate or a Restricted Stock Certificate
that a Key Employee, Consultant or Director may elect to satisfy federal and
state tax withholding requirements through a reduction in the cash or the number
of shares of Stock actually transferred to him or to her under this Plan.
15.4 Construction. All references to sections (ss.) are to
sections (ss.) of this Plan unless otherwise indicated. This Plan shall be
construed under the laws of the State of Delaware.
15.5 Other Conditions. Each Option Certificate or Restricted
Stock Certificate may require that a Key Employee, Consultant or Director (as a
condition to the exercise of an Option or a Restricted Stock grant) enter into
any agreement or make such representations prepared by RailWorks, including any
agreement which restricts the transfer of Stock acquired pursuant to the
exercise of an Option or Restricted Stock grant or provides for the repurchase
of such Stock by RailWorks under certain circumstances.
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15.6 Rule 16b-3. The Committee shall have the right to amend
any Option or Restricted Stock, grant or to withhold or otherwise restrict the
transfer of any Stock or cash under this Plan to a Key Employee, Consultant or
Director as the Committee deems appropriate in order to satisfy any condition or
requirement under Rule 16b-3 to the extent Rule 16 of the 1934 Act might be
applicable to such grant or transfer.
15.7 Loans. If approved by the Committee, RailWorks may lend
money to, or guarantee loans made by a third party to, any Key Employee to
finance the exercise of any Option granted under this Plan, and the exercise of
an Option with the proceeds of any such loan shall be treated as an exercise for
cash under this Plan. If approved by the Committee, RailWorks also may, in
accordance with a Key Employee's instructions, transfer Stock upon the exercise
of an Option directly to a third party in connection with any arrangement made
by the Key Employee for financing the exercise of such Option.
IN WITNESS WHEREOF, RailWorks Corporation has caused
authorized officer to execute this Plan to evidence its adoption of this Plan.
RAILWORKS CORPORATION
BY: /s/ Michael R. Azarela
---------------------------------
DATE: October 26, 1999
-------------------------------
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<LEGEND>
EXHIBIT 27.1
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RAILWORKS CORPORATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 5,318,000
<SECURITIES> 0
<RECEIVABLES> 134,359,000
<ALLOWANCES> 491,000
<INVENTORY> 17,846,000
<CURRENT-ASSETS> 216,893,000
<PP&E> 75,201,000
<DEPRECIATION> 9,192,000
<TOTAL-ASSETS> 481,409,000
<CURRENT-LIABILITIES> 107,129,000
<BONDS> 0
0
14,000
<COMMON> 139,000
<OTHER-SE> 126,126,000
<TOTAL-LIABILITY-AND-EQUITY> 481,409,000
<SALES> 325,908,000
<TOTAL-REVENUES> 325,908,000
<CGS> (258,043,000)
<TOTAL-COSTS> (258,043,000)
<OTHER-EXPENSES> (35,662,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (12,370,000)
<INCOME-PRETAX> 21,546,000
<INCOME-TAX> (8,080,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,466,000
<EPS-BASIC> .97
<EPS-DILUTED> .88
</TABLE>
