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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
[ ] 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 0-17124
GRANITE CONSTRUCTION INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 77-0239383
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
585 WEST BEACH STREET, WATSONVILLE, CALIFORNIA 95076
(Address of principal executive offices) Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 724-1011
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which registered
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Common Stock, $0.01 par value New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]
The aggregate market value of voting and non-voting stock held by non-affiliates
of the registrant was approximately $343,429,000 as of March 20, 1998 based upon
the average of the high and low sales prices per share of the registrant's
Common Stock as reported on the New York Stock Exchange on such date. Shares of
Common Stock held by each officer and director and by each person who owns 5% or
more of the outstanding Common Stock have been excluded in that such persons may
be deemed to be affiliates. This determination of affiliates status is not
necessarily a conclusive determination for other purposes.
At March 20, 1998, 18,255,266 shares of Common Stock, par value $0.01 of the
registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The information called for by Part III is incorporated by reference to the
definitive Proxy Statement for the Annual Meeting of Stockholders of the Company
to be held May 18, 1998, which will be filed with the Securities and Exchange
Commission not later than 120 days after December 31, 1997.
This report, including all exhibits and attachments, contains 462 pages. The
exhibit index is on pages 24-25.
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TABLE OF CONTENTS
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Page
No.
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PART I.......................................................................................................... 3
Item 1. BUSINESS........................................................................................ 3
Item 2. PROPERTIES ..................................................................................... 9
Item 3. LEGAL PROCEEDINGS .............................................................................. 9
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................................. 9
PART II......................................................................................................... 11
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.............................................................................. 11
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA............................................................ 11
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............................................................................ 13
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................................ 18
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES....................................................................... 19
PART III........................................................................................................ 20
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.............................................. 20
Item 11. EXECUTIVE COMPENSATION.......................................................................... 20
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT...................................................................................... 20
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................................. 20
PART IV......................................................................................................... 21
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K................................. 21
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PART I
ITEM 1. BUSINESS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of the changes in the
composition of applicable federal and state legislation appropriation
committees; federal and state appropriation changes for infrastructure spending;
the general state of the economy; competition and pricing pressures; state
referendums and initiatives; and other risks detailed from time to time in the
Company's filings with the Securities and Exchange Commission.
INTRODUCTION
Granite Construction Incorporated, the "Company", is one of the largest
heavy civil construction contractors and is the largest transportation
contractor in the United States as ranked by Engineering News-Record magazine,
May 1997. Granite operates throughout the United States, focusing primarily in
the west, southwest and southeast and serves both public and private sector
clients. Within the public sector, the Company concentrates on infrastructure
projects, including the construction of roads, highways, bridges, dams, tunnels,
canals, mass transit facilities and airports. Within the private sector, the
Company performs site preparation services for buildings, plants, subdivisions
and other facilities. Granite's participation in both the public and private
sectors and its diverse mix of project types and sizes have contributed to the
Company's revenue growth and profitability in various economic environments.
Granite also owns and leases substantial aggregate reserves and owns 108
construction materials processing plants and one of the largest heavy
construction contractor equipment fleets in the United States. The Company
believes that the ownership of these assets enables it to compete more
effectively by ensuring availability of these resources at a favorable cost.
Granite Construction Incorporated was incorporated in Delaware in January
1990 as the holding company for Granite Construction Company, which was
incorporated in California in 1922. Granite operates primarily through its
wholly owned subsidiary, Granite Construction Company and has ten less
significant wholly-owned subsidiaries.
RECENT DEVELOPMENT
During 1997, the Company completed the purchase of a 30% minority interest
in T.I.C. Holdings Inc. ("TIC") as part of its diversification strategy (See
Business Strategy). The transaction included a 10% ownership interest acquired
in 1996.
TIC, founded in 1974, is one of the leading merit shop, general heavy
industrial contractors in the U.S., and is ranked in the Top 20 in both the
industrial and power marketplaces by Engineering News-Record Magazine. TIC
performs all major disciplines including civil, structural steel erection, heavy
mechanical, process piping and electrical/instrumentation. TIC has offices in
Colorado, Georgia, California, Texas, Louisiana, Kansas, Nevada, Oregon and
Wyoming.
TIC operates both nationally and internationally. TIC had annual revenues
of $420.5 million in 1997. By market sector, 57% of its 1997 revenue came from
industrial/petrochemical projects, 24% from water/sewer/wastewater projects, 12%
from power-related projects, and the remaining 7% derived from
transportation-related and other work.
OPERATING STRUCTURE
The principal operating company, Granite Construction Company, is
organized into two operating divisions. The Branch Division is comprised of
branch offices which serve local markets, while the Heavy Construction Division
pursues major infrastructure projects throughout the nation. The Heavy
Construction Division ("HCD") generally has large heavy civil projects with
contract amounts in excess of $15 million and contract durations greater than
two years, while the Branch Division projects are typically smaller in size and
shorter in duration.
The two divisions complement each other in a variety of ways. The Heavy
Construction Division is a major user of large construction equipment and
employs sophisticated techniques on complex projects. The branches draw on these
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resources which are generally not available to smaller, local competitors.
Conversely, the Branch Division has greater knowledge of local markets and
provides the Heavy Construction Division with valuable information regarding
larger projects in the branches' areas. The two divisions sometimes jointly
perform projects when a project in a particular region exceeds the local
branch's capabilities.
As decentralized profit centers, the branch offices and the Heavy
Construction Division independently estimate, bid and complete contracts. Both
divisions are supported by centralized functions, including finance, accounting,
tax, human resources, labor relations, safety, legal, insurance, surety and
management information services. The Company believes that centralized support
for decentralized profit centers results in a more market responsive business
with effective controls and reduced overhead.
In addition to cost and profitability estimates, Granite considers the
availability of estimating and project building personnel as key factors when
determining whether to bid on a project. Other factors considered include the
client, the geographic location, Granite's competitive advantages and
disadvantages relative to likely competitors for the project, current and
projected workload, and the likelihood of follow-up work. Both operating
divisions use a proprietary computer-based project estimating system which
reflects Granite's significant accumulated experience. Granite believes that an
exhaustive, detailed approach to a project's estimate and bid is important in
order to best identify the project's risks and opportunities. The Company's
estimates are comprehensive in nature, sometimes totaling hundreds of pages of
analysis. Each project is broken into phases and line items, for which separate
labor, equipment and material estimates are made. Once a project begins, the
estimate provides Granite with a budget against which actual project cost is
regularly measured, enabling Granite to manage its projects more effectively.
The Branch Division. In 1997, Branch Division contract revenue and sales
of aggregate products were $831.9 million (81% of Company revenue) as compared
with $715.6 million (77% of Company revenue) in 1996. The Branch Division has
both public and private sector clients. Public sector activities include both
new construction and improvement of streets, roads, highways and bridges. For
example, the branches widen and re-pave roads and modify and replace bridges.
Major private sector contracts include site preparation for housing, including
excavation, grading and street paving, and installation of curbs, gutters,
sidewalks and underground utilities.
The Company currently has 11 branch offices with 13 satellite operations.
The Company's branch offices in California are located in Bakersfield, Hanford
(Central Valley), Monterey Bay Area, Palm Springs (Southern California Region),
Sacramento, San Jose, Santa Barbara and Stockton. The Company's branch offices
outside of California are located in Arizona, Nevada and Utah. Each branch
effectively operates as a local or regional construction company and its
management is encouraged to participate actively in the local community. While
individual branch revenues vary from year to year, in 1997 these revenues ranged
from $33 million to $158 million.
As part of the Company's strategy, many of Granite's branches mine
aggregates and operate plants which process aggregates into construction
materials for internal use and for sale to others. These activities provide both
a source of profits and a competitive advantage to the Company's construction
business. More than half of the aggregate products are used in the Company's
construction projects. The remainder is sold to unaffiliated parties and
accounted for $127.1 million of revenue in 1997, representing 12.4% of the
Company's total 1997 revenue. The Company has significant aggregate reserves
which it has acquired by ownership in fee or through long-term leases. It is the
Company's objective to continue to own or lease adequate aggregate reserves.
Heavy Construction Division. In 1997, revenue from HCD was $196.3 million
(19% of Company revenue) as compared with $213.2 million (23% of Company
revenue) in 1996. HCD projects are usually larger and more complex than those
performed by the Branch Division. The Division has completed projects throughout
the nation, including mass transit projects in the metropolitan areas of
Atlanta, Baltimore, Los Angeles, San Francisco and Washington, D.C., and 27
major dam and tunnel projects in eight states.
HCD builds infrastructure projects, including major highways, large dams,
mass transit facilities, bridges, pipelines, canals, tunnels, waterway locks and
dams and airport runways, and has engaged in contract mine stripping and
reclamation and large site preparation. It also performs activities such as
demolition, clearing, excavation, de-watering, drainage, embankment fill,
structural concrete, concrete and asphalt paving, and tunneling.
The Division markets, estimates, bids and provides management overview of
its projects from its Watsonville headquarters and satellite estimating offices
in Texas, Georgia, Florida and Maryland. Project staffs located at job sites
have the managerial, technical, and clerical capacity to meet on-site project
management requirements. HCD
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has the ability, if appropriate, to process locally sourced aggregates into
construction materials using its own portable crushing, concrete and asphalt
processing plants.
HCD participates in joint ventures with other large construction companies
from time to time. Joint ventures are used for large, technically complex
projects where it is desirable to share risk and resources. Joint ventures
provide independently prepared estimates, and shared financing, equipment and
expertise.
Privatization as a new market sector for the Division emerged in 1995 as
the Company pioneered the use of public/private partnerships to fund the
construction of public infrastructure projects which are not supported by
traditional tax-based revenue sources. Two such projects have been successfully
completed in joint venture - in 1995, the SR91 congestion relieving toll lanes
project and, in 1996, the San Joaquin Hills Transportation Corridor. As an
investor in the SR91 project, the Company participates in the partnership that
will operate the toll road under a 35 year franchise agreement with the State of
California. Except for these initial significant successes, the pursuit by HCD
of additional contracts in this market has been frustrated by a public sector
which is not yet ready to mix public and private sources of financing to produce
needed transportation facilities. Granite has turned its attention to private
sector projects where there appears to be potential to develop, design and
build.
BUSINESS STRATEGY
Granite's fundamental objective is to increase long-term shareholder value
by focusing on consistent profitability from carefully managed revenue growth.
Shareholder value is measured by the appreciation of the value of Granite stock
over a period of years, and to a minor degree, a return from dividends. Further,
it is a specific measure of the Company's financial success to achieve a Return
on Net Assets ("RONA") greater than the cost of capital, creating "Granite Value
Added". To accomplish these objectives, Granite employs the following
strategies:
Heavy/Highway Construction Focus - Granite concentrates its core
competencies on this segment of the construction industry: the building of
roads, highways, bridges, dams and tunnels, mass transit facilities and
site preparation. This focus emphasizes the Company's specialized
strengths which include earth moving, grading, paving and concrete
structures.
Vertical Integration of Aggregate Materials into Construction - Granite
owns aggregate reserves and processing plants and by ensuring availability
of these resources at favorable cost believes it has significant bidding
advantages in many of its markets.
Selective Bidding - Once Granite selects a job that meets our bidding
criteria, the project is estimated using a highly detailed method with a
proprietary estimating system which applies both contingency cost and
margin to achieve the appropriate profit margin for the risk assumed.
Diversification - To mitigate the risks inherent in construction and
general economic factors, Granite pursues projects (i) in both the public
and private sectors; (ii) for a wide range of customers within each sector
(from the federal government to small municipalities and from large
corporations to individual homeowners); (iii) in diverse geographic
markets; (iv) of various sizes, durations and complexity; and (v) in the
heavy industrial market segment.
Decentralized Profit Centers - Granite addresses each selected market with
a highly customer responsive organization through its decentralized
structure. Each of Granite's branches and the Heavy Construction Division
are individual profit centers.
Management Incentives - The Company compensates its profit center managers
with lower-than-market fixed salaries coupled with a substantial variable
cash and restricted stock incentive element based on the annual profit
performance of their respective profit centers.
Ownership of Construction Equipment - By owning and carefully maintaining
a large fleet of heavy construction equipment Granite effectively operates
an internal leasing company, competing more effectively by ensuring
availability of these resources at favorable cost.
Controlled Expansion - The Company intends to continue its geographic
expansion by selectively adding branches in the western United States, by
pursuing major infrastructure projects throughout the nation and expanding
into other construction market segments through acquisitions.
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Accident Prevention - Granite believes that the prevention of accidents is
both a moral obligation and good business. By identifying and preventing
potential accidents the Company continues to significantly reduce the
costs associated with accidents.
Environmental Affairs - Granite believes it benefits all parties to
maintain environmentally responsible operations. The Company is committed
to effective air quality control measures and reclamation at its plant
sites and to waste reduction and recycling of the environmentally
sensitive products used in its operations.
Quality and High Ethical Standards - Granite emphasizes the importance of
performing high quality work and maintaining high ethical standards.
CUSTOMERS
The Company has customers in both the public and private sectors. The
Branch Division's principal customers are state departments of transportation in
California, Arizona, Nevada and Utah. In 1997, contracts with the California
Department of Transportation represented 13.5% of the Company's revenue. Other
Branch Division clients include county and city public works departments and
developers and owners of industrial, commercial and residential sites. The
principal clients of the Heavy Construction Division are in the public sector
and currently include the U.S. Bureau of Reclamation, the State Departments of
Highways and Public Transportation in Texas, Georgia, Utah, Florida and New
Jersey, and the Metropolitan Water District of Southern California (See Note 2
of Notes to Consolidated Financial Statements).
A breakdown of the Company's revenues for the last three years by market
sector is as follows (in thousands):
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1997 1996 1995
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AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
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Contract revenues
Federal agencies ............ $ 38,789 3.8% $ 32,825 3.5% $ 53,018 5.9%
State agencies .............. 449,727 43.6 345,505 37.2 283,272 31.7
Local public agencies ....... 238,141 23.2 278,917 30.0 338,350 37.8
Private sector .............. 174,479 17.0 178,053 19.2 129,028 14.4
Construction materials sales ... 127,069 12.4 93,499 10.1 91,128 10.2
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Total .................... $1,028,205 100.0% $928,799 100.0% $894,796 100.0%
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BACKLOG
The Company's backlog (anticipated revenue from uncompleted portions of
existing contracts) was $909.8 million at December 31, 1997, up from $597.9
million at December 31, 1996. The Company's backlog was $590.1 million at the
end of 1995. Approximately $380 million of the December 31, 1997 backlog will
remain at December 31, 1998. The Company includes a construction project in its
backlog at such time as a contract is awarded or a firm letter of commitment is
obtained and funding is in place. (See "Management's Discussion and Analysis of
Financial Condition and Results of Operations".) The Company believes its
backlog figures are firm, subject only to the cancellation and modification
provisions contained in various contracts. Substantially all of the contracts in
the backlog may be canceled or modified at the election of the client. However,
the Company has not been materially adversely affected by contract cancellations
or modifications in the past. (See "Business-Contract Provisions and
Subcontracting.") A substantial percentage of the Company's anticipated revenue
in any year is not reflected in its backlog at the start of the year due to the
short duration of smaller Branch Division projects that are initiated and
completed during such year ("Turn Business"). The following is a breakdown of
backlog as of December 31, 1997(in millions):
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1997 1996 1995
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AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
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By Geographic Area:
California............................. $214.4 23.6% $247.5 41.4% $227.9 38.6%
West (excluding California)............ 379.5 41.7 72.6 12.1 79.2 13.4
South/East............................. 315.9 34.7 277.8 46.5 283.0 48.0
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$909.8 100.0% $597.9 100.0% $590.1 100.0%
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By Market Sector:
Federal agencies....................... $29.7 3.3% $ 28.7 4.8% $ 17.5 3.0%
State agencies......................... 674.9 74.2 374.8 62.7 354.3 60.0
Local public agencies.................. 144.9 15.9 123.0 20.6 152.6 25.9
Private sector......................... 60.3 6.6 71.4 11.9 65.7 11.1
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$909.8 100.0% $597.9 100.0% $590.1 100.0%
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EQUIPMENT
The Company purchases and maintains many pieces of equipment, including
cranes, bulldozers, scrapers, graders, loaders, trucks, pavers, rollers, and
construction materials processing plants. In 1997 and 1996, the Company spent
approximately $45.4 million and $43.0 million, respectively, for construction
equipment, plants and vehicles. The breakdown of the Company's construction
equipment, plants and vehicles at December 31, 1997 is as follows:
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Heavy construction equipment..................................... 2,207 units
Trucks, truck-tractors and trailers and vehicles................. 2,876 units
Aggregate crushing plants........................................ 38 plants
Asphalt concrete plants.......................................... 43 plants
Portland cement concrete batch plants............................ 25 plants
Thermal Soil Remediation Plants.................................. 2 plants
</TABLE>
The Company believes that ownership of equipment is preferable to leasing
because ownership ensures the equipment is available as needed and normally
results in lower equipment costs. The Company attempts to keep its equipment as
fully utilized as possible by pooling equipment for use by both the Branch
Division and the Heavy Construction Division. From time to time, the Company
leases or rents equipment on a short-term basis.
EMPLOYEES
On December 31, 1997, Granite employed 1,054 salaried employees, who work
in management, estimating and clerical capacities, and 2,446 hourly employees.
The total number of hourly personnel employed by the Company is subject to the
volume of construction in progress. During 1997, the number of hourly employees
ranged from 1,803 to 4,052 and averaged approximately 3,309. The Company is a
party to craft collective bargaining agreements in many areas in which it is
working.
The Company believes its employees are its most valuable resource and that
its workforce possesses a strong feeling of dedication to and pride in the
Company. Among salaried and non-union hourly employees, this dedication is
reinforced by 30% equity ownership through the Employee Stock Ownership Plan
("ESOP") and performance-based incentive compensation arrangements. The
Company's 367 managerial and supervisory personnel have an average of 11 years
of service with Granite.
COMPETITION
Factors influencing the Company's competitiveness are price, reputation
for quality, the availability of aggregate materials, machinery and equipment,
financial strength, knowledge of local markets and conditions and estimating
abilities. The Company believes that it competes favorably on the basis of the
foregoing factors. Branch Division competitors range from small local
construction companies to large regional construction companies. While the
market areas of these competitors overlap with several of the markets served by
the Company's branches, few, if any, compete in all of the Company's market
areas. The Heavy Construction Division normally competes with large regional and
national construction companies. Although the construction business is highly
competitive, particularly for competitively bid projects in the public sector,
the Company believes it is well positioned to compete effectively.
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CONTRACT PROVISIONS AND SUBCONTRACTING
The Company's revenue is substantially derived from contracts that are
"fixed unit price" contracts under which the Company is committed to provide
materials or services required by a project at fixed unit prices (for example,
dollars per cubic yard of concrete or cubic yards of earth excavated). While the
fixed unit price contract shifts the risk of estimating the quantity of units
required for a particular project to the customer, any increase in the Company's
unit cost over the unit price bid, whether due to inflation, inefficiency,
faulty estimates or other factors, is borne by the Company unless otherwise
provided in the contract. The Company's contracts are obtained primarily through
competitive bidding in response to advertisements by federal, state and local
government agencies and private parties.
All federal government contracts and many of the Company's other contracts
provide for termination of the contract for the convenience of the party
contracting with the Company. In addition, many of the Company's contracts are
subject to certain completion schedule requirements with liquidated damages in
the event schedules are not met. The Company has not been materially adversely
affected by these provisions in the past.
The Company acts as prime contractor on most of the construction projects
it undertakes. The Company accomplishes the majority of its projects with its
own resources and subcontracts specialized activities such as electrical and
mechanical work. As prime contractor, the Company is responsible for the
performance of the entire contract, including subcontract work. Thus, the
Company is subject to increased costs associated with the failure of one or more
subcontractors to perform as anticipated. The Company generally requires its
subcontractors to furnish bonds guaranteeing their performance. Affirmative
action regulations require the Company to use its best efforts to employ certain
types of subcontractors for a specified portion (historically ranging up to 25%)
of contract work done for governmental agencies. Some of these subcontractors
may not be able to obtain surety bonds. The Company has not incurred any
material loss or liability on work performed by subcontractors to date.
INSURANCE AND BONDING
The Company maintains general and excess liability, construction
equipment, and workers' compensation insurance, all in amounts consistent with
industry practices. Management believes its insurance programs are adequate.
In connection with its business, the Company generally is required to
provide various types of surety bonds guaranteeing its performance under certain
public and private sector contracts. The Company's ability to obtain surety
bonds depends upon its capitalization, working capital, past performance,
management expertise and other factors. Surety companies consider such factors
in light of the amount of surety bonds then outstanding for the Company and
their current underwriting standards, which may change from time to time. The
Company has been bonded by the same surety for more than 60 years and has never
been refused a bond.
GOVERNMENT REGULATIONS
The Company's operations are subject to compliance with regulatory
requirements of federal, state and municipal agencies and authorities, including
regulations concerning labor relations, affirmative action and the protection of
the environment. While compliance with applicable regulatory requirements has
not adversely affected the Company's operations in the past relative to its
competitive position within its industry sector, there can be no assurance that
these requirements will not change and that compliance will not adversely affect
the Company's operations. In addition, the aggregate materials operations of the
Company require operating permits granted by governmental agencies. The Company
believes that tighter regulations for the protection of the environment and
other factors will make it increasingly difficult to obtain new permits and
renewal of existing permits may be subject to more restrictive conditions than
currently exist.
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ITEM 2. PROPERTIES
The Company owns and leases real property for use in its construction and
aggregate mining and processing activities. The Company owns approximately
355,600 square feet of office and shop space and leases, pursuant to leases
expiring in the year 2000, an additional 55,600 square feet of office and shop
space. The Company owns approximately 10,200 acres of land of which 1,300 acres
are un-permitted reserves available for future use and leases approximately
4,500 additional acres of land at sites in California, Nevada, Arizona and Utah.
A majority of the land owned or leased by the Company is intended to serve as
aggregate reserves. There are no encumbrances against owned property. The
Company's leases for aggregate reserves generally limit the Company's interest
in the reserves to the right to mine the reserves. These leases range from
month-to-month leases to leases with expiration dates ranging from January 1998
to January 2038. The Company considers its available and future aggregate
reserves adequate to meet operating needs. The Company pursues a plan of
acquiring new sources of aggregate reserves to replenish those depleted and to
assure future growth.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to a number of legal proceedings. The Company
believes that the nature and number of these proceedings are typical for a
construction firm of its size and scope and that none of these proceedings is
material to the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company has not submitted any matters to a vote of security holders
during the fourth quarter of the year ended December 31, 1997.
EXECUTIVE OFFICERS OF THE REGISTRANT.
The executive officers of the Company are as follows:
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Age Position
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David H. Watts 59 President, Chief Executive Officer and Director
William E. Barton 53 Vice President, Chief Financial Officer
Patrick M. Costanzo 59 Senior Vice President and Manager, Heavy Construction Division
William G. Dorey 53 Senior Vice President and Manager, Branch Division
</TABLE>
Granite Construction Incorporated was incorporated in Delaware in January
1990 as the holding company for Granite Construction Company, which was
incorporated in California in 1922. All dates of service for the executive
officers of the registrant include the periods in which they served for Granite
Construction Company.
Mr. Watts joined the Company in 1987 as President and Chief Executive
Officer and has served as a director since 1988. In 1997, Mr. Watts became a
director of TIC Holdings, Inc., in which Granite Construction Incorporated owns
a 30% interest. From 1984 until 1987, Mr. Watts served as President, Chief
Executive Officer and a director of Ford, Bacon & Davis, Inc., an industrial
engineering and construction firm. From 1965 until 1984, Mr. Watts was employed
by an underwater services and construction firm in various capacities, including
as President and Chief Operating Officer. He received a B.A. degree in economics
from Cornell University in 1960.
Mr. Barton has been an employee of the Company since 1980 and has served
in various capacities, including Vice President and Chief Financial Officer
since 1990, Controller in 1989, Treasurer in 1988 and Cash Manager from 1980
until 1988. In 1997, Mr. Barton became a director of TIC Holdings, Inc., in
which Granite Construction Incorporated owns a 30% interest. He received a B.S.
degree in accounting and finance from San Jose State University in 1967 and an
M.B.A. degree from the University of Santa Clara in 1973.
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Mr. Costanzo has been an employee of the Company since 1970 and has served
in various capacities, including Senior Vice President and Manager, Heavy
Construction Division, since 1990, Vice President and Assistant Manager, Heavy
Construction Division, from 1988 to 1989, and an Area or Project Manager with
the Heavy Construction Division from 1972 to 1987. In 1997, Mr. Costanzo became
a director of TIC Holdings, Inc., in which Granite Construction Incorporated
owns a 30% interest. He received a B.S. degree in civil engineering from the
University of Connecticut in 1960 and a M.S. degree in civil engineering from
Stanford University in 1961.
Mr. Dorey has been an employee of the Company since 1968 and has served in
various capacities, including Senior Vice President and Manager, Branch Division
since 1987, and as Vice President and Assistant Manager, Branch Division from
1983 to 1987. In 1997, Mr. Dorey became a director of TIC Holdings, Inc., in
which Granite Construction Incorporated owns a 30% interest. He received a B.S.
degree in construction engineering from Arizona State University in 1967.
10
<PAGE> 11
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
On April 25, 1997, the Company commenced trading its common stock on the
New York Stock Exchange under the ticker symbol GVA. The Company's move from
NASDAQ Stock Market to the New York Stock Exchange is intended to improve
trading efficiencies and liquidity, in an effort to promote enhanced shareholder
value. See Quarterly Results in Item 7 for a two-year summary of quarterly
dividends and high and low sales prices of the Company's stock.
The Company expects to pay a quarterly cash dividend of $0.075 plus a
special dividend of $0.12 per share of Common Stock to stockholders of record as
of March 31, 1998 payable on April 17, 1998 (See Note 13 of Notes to
Consolidated Financial Statements). Declaration and payment of dividends is
within the sole discretion of the Company's Board of Directors, subject to
limitations imposed by Delaware law, and will depend on the Company's earnings,
capital requirements and financial conditions and such other factors as the
Board of Directors deems relevant. As of March 20, 1998 there were 18,255,266
shares of Common Stock outstanding held by approximately 313 stockholders of
record of the Company.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The selected Operations and Balance Sheet data set forth below have been
derived from Consolidated Financial Statements of the Company, which have been
audited by Coopers & Lybrand L.L.P., independent accountants.
11
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
==================================================================================================================================
YEARS ENDED DECEMBER 31, 1997 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING SUMMARY
Revenue $1,028,205 $928,799 $894,796 $693,388 $570,379 $518,312
Gross profit 111,730 110,655 111,963 89,988 50,743 50,578
As a percent of revenue 10.9% 11.9% 12.5% 13.0% 8.9% 9.8%
General and administrative expenses 73,593 71,587 69,610 62,795 47,107 46,906
As a percent of revenue 7.2% 7.7% 7.8% 9.1% 8.3% 9.0%
Income before cumulative effect of change
in accounting principle * 27,832 27,348 28,542 19,488 3,492 3,924
Net income 27,832 27,348 28,542 19,488 4,492 3,924
As a percent of revenue 2.7% 2.9% 3.2% 2.8% 0.8% 0.8%
Income per share before cumulative effect
of change in accounting principle: *
Basic $ 1.58 $ 1.57 $ 1.65 $ 1.13 $ 0.20 $ 0.23
Diluted 1.55 1.53 1.62 1.11 0.20 0.23
Net income per share:**
Basic 1.58 1.57 1.65 1.13 0.26 0.23
Diluted 1.55 1.53 1.62 1.11 0.26 0.23
Weighted average shares of common and
common stock equivalents outstanding:
Basic 17,598 17,471 17,277 17,256 17,250 17,250
Diluted 17,961 17,832 17,649 17,526 17,422 17,409
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION SUMMARY
Total assets $ 551,809 $473,045 $454,744 $349,098 $319,416 $316,978
Cash, cash equivalents and short-term
investments 72,769 72,230 66,992 48,638 48,810 54,139
Working capital 103,910 92,542 77,179 65,537 64,619 66,329
Current maturities of long-term debt 12,921 10,186 13,948 10,070 10,060 15,469
Long-term debt 58,396 43,602 39,494 17,237 28,585 38,618
Stockholders' equity 257,434 233,605 209,905 182,692 164,338 158,594
Book value per share 14.09 12.89 11.74 10.37 9.37 9.07
Dividends per share $ 0.36 $ 0.37 $ 0.29 $ 0.13 $ 0.13 $ 0.13
Common shares outstanding 18,266 18,126 17,885 17,622 17,534 17,477
- ----------------------------------------------------------------------------------------------------------------------------------
BACKLOG $ 909,793 $597,876 $590,075 $550,166 $659,738 $245,234
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
==============================================================================================================
YEARS ENDED DECEMBER 31, 1991 1990 1989 1988 1987
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING SUMMARY
Revenue $564,060 $557,996 $504,084 $437,230 $380,519
Gross profit 69,502 70,646 60,837 55,614 46,621
As a percent of revenue 12.3% 12.7% 12.1% 12.7% 12.3%
General and administrative expenses 46,541 44,466 41,915 33,702 32,381
As a percent of revenue 8.3% 8.0% 8.3% 7.7% 8.5%
Income before cumulative effect of change
in accounting principle * 17,622 18,811 14,211 15,009 8,594
Net income 17,622 18,811 14,211 15,009 8,594
As a percent of revenue 3.1% 3.4% 2.8% 3.4% 2.3%
Income per share before cumulative effect
of change in accounting principle: *
Basic $ 1.02 $ 1.13 $ 0.95 $ 1.00 $ 0.57
Diluted 1.01 1.13 0.95 1.00 0.57
Net income per share:**
Basic 1.02 1.13 0.95 1.00 0.57
Diluted 1.01 1.13 0.95 1.00 0.57
Weighted average shares of common and
common stock equivalents outstanding:
Basic 17,250 16,575 15,000 15,000 15,000
Diluted 17,415 16,622 15,000 15,000 15,000
- --------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION SUMMARY
Total assets $277,426 $260,426 $245,880 $205,847 $178,846
Cash, cash equivalents and short-term
investments 54,973 50,451 46,306 44,911 41,959
Working capital 55,186 52,352 34,902 39,656 31,036
Current maturities of long-term debt 7,669 7,887 14,228 12,497 10,806
Long-term debt 14,816 19,084 39,707 44,328 49,542
Stockholders' equity 153,159 131,026 86,552 69,033 50,756
Book value per share 8.81 7.60 5.77 4.60 3.38
Dividends per share $ 0.13 $ 0.10 $ -- $ -- $ --
Common shares outstanding 17,385 17,250 15,000 15,000 15,000
- --------------------------------------------------------------------------------------------------------------
BACKLOG $292,017 $368,384 $377,529 $231,338 $255,858
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes".
** Effective December 31, 1997, the Company adopted Financial Accounting
Standard No. 128 "Earnings Per Share." All prior period earnings per share
amounts have been restated to reflect this adoption.
12
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following "Management's Discussion and Analysis of Financial
Condition and Results of Operations" section contains forward-looking statements
which are made in reliance on the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements involve risks and uncertainties, including, without
limitation, changes in the composition of applicable federal and state
legislation appropriation committees; federal and state appropriation changes
for infrastructure spending; the general state of the economy; competition and
pricing pressures; state referendums and initiatives; and other risks detailed
from time to time in the Company's filings with the Securities and Exchange
Commission.
GENERAL
Granite is one of the largest heavy civil contractors in the United
States and is engaged in the construction of highways, dams, airports, mass
transit facilities and other infrastructure-related projects. The Company has
offices in California, Texas, Georgia, Nevada, Arizona, Florida, Oregon,
Maryland and Utah.
The Company's contracts are obtained primarily through competitive
bidding in response to advertisements by federal, state and local agencies and
private parties. The Company's bidding activity is affected by such factors as
backlog, current utilization of equipment and other resources, ability to obtain
necessary surety bonds and competitive considerations. Bidding activity, backlog
and revenue resulting from the award of new contracts to the Company may vary
significantly from period to period.
Revenue from construction contracts including construction joint
ventures is recognized using the percentage-of-completion method of accounting,
based upon costs incurred and projected costs. Revenue in an amount equal to
cost incurred is recognized prior to contracts reaching 25% completion. The
related earnings are not recognized until the period in which such percentage
completion is attained. Cost of revenue consists of direct costs on contracts,
including labor and materials, amounts payable to subcontractors, direct
overhead costs, equipment expense (primarily depreciation, maintenance and
repairs) and insurance costs. Depreciation is provided using accelerated methods
for construction equipment. Contracts frequently extend over a period of more
than one year and revisions in cost and profit estimates during construction are
reflected in the accounting period in which the facts that require the revision
become known. Losses on contracts, if any, are provided in total when
determined, regardless of the degree of project completion. Claims for
additional contract revenue are recognized in the period when it is probable
that the claim will result in additional revenue and the amount can be reliably
estimated. The foregoing as well as weather, stage of completion, and mix of
contracts at different margins may cause fluctuations in gross profit between
periods.
The Company's compensation strategy for selected management personnel
is to rely heavily on a variable cash and restricted stock performance-based
incentive element. Thus, the Company may experience an increase in general and
administrative expenses in a very profitable year and a decrease in less
profitable years. The Company's pension contribution in excess of the 401K
matching contributions is at the discretion of the Board of Directors based on
the Company reaching certain levels of profitability each year.
CURRENT YEAR
REVENUE AND BACKLOG. During the year ended December 31, 1997, revenue
increased $99.4 million (10.7%) to $1.028 billion. The increase in revenue is
associated with higher levels of bidding opportunities and awards in our Branch
Division. The Branch Division revenue increased $116.3 million to $831.9 million
in 1997, from $715.6 million in 1996. Heavy Construction Division (HCD) revenue
decreased $16.9 million to $196.3 million in 1997, from $213.2 million in 1996.
The Company's revenue from public sector contracts increased to $726.6 million,
or 70.6% of the Company's revenue in 1997, from $657.2 million, or 70.7% in
1996. Revenue from private sector contracts decreased $3.6 million to $174.5
million in 1997, and decreased from 19.2% of total revenue in 1996 to 17.0% of
total revenue in 1997.
The Company's backlog at December 31, 1997 was $909.8 million, up
$311.9 million, or 52.2% over the same period in 1996. Backlog at December 31,
1997 includes the Company's 23% share of the I-15 Corridor Reconstruction
project in Salt Lake City, Utah which was awarded in the first quarter of 1997.
Work on our $320
13
<PAGE> 14
million portion of the contract began during the second quarter of 1997 with 25%
completion for profit recognition not expected until mid 1998. Management
expects that approximately 58% of the work in the backlog at December 31, 1997
will be recognized as revenue during 1998. The Company believes its bidding
opportunities in its major marketplaces remain strong (see "Outlook").
GROSS PROFIT. For the year ended December 31, 1997, gross profit
reached $111.7 million, a $1.0 million increase from 1996. As a percentage of
revenue, gross profit decreased in 1997 to 10.9% from 11.9% in 1996, due in part
to an increase in revenue recognized for contracts that had not reached the 25%
completion threshold. Additionally, gross profit in 1997 reflects the absence of
the San Joaquin Hills Toll Road Project completed in late 1996 which carried a
higher than average gross profit margin.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses include salaries, incentive compensation, retirement plans, costs
associated with the Company's estimating and bidding activities, and other
administrative costs. General and administrative expenses increased from $71.6
million, or 7.7% of revenue in 1996, to $73.6 million, or 7.2% of revenue in
1997. The increase reflects a higher level of costs to support the Company's
increased revenue and bidding activities and increased personnel to support the
Company's expansion into the South/East marketplace.
OTHER INCOME (EXPENSES). Other income increased $1.7 million to $6.0
million in 1997. The increase was due an increase in the Company's equity in the
earnings of its affiliates partially offset by higher interest expense
associated with higher debt levels and a decrease in gains on sales of property
and equipment.
NEW ACCOUNTING PRONOUNCEMENTS. In June 1997 the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards No.
130 ("SFAS 130"), "Reporting Comprehensive Income." SFAS 130 establishes
standards for the reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. Comprehensive
income is defined as the change in equity of a business enterprise during a
period from transactions and other events and circumstances from nonowner
sources. SFAS 130 is effective for the Company in 1998 and its impact on
adoption is not expected to be significant.
In June 1997 the FASB issued Statement of Financial Accounting
Standards No. 131 ("SFAS 131"), "Disclosures about Segments of an Enterprise and
Related Information." SFAS 131 requires publicly-held companies to report
financial and other information about key revenue-producing segments of the
entity for which such information is available and is utilized by the chief
operations decision maker. Specific information to be reported for individual
segments includes profit or loss, certain revenue and expense items and total
assets. A reconciliation of segment financial information to amounts reported in
the financial statements would be provided. SFAS 131 is effective for the
Company in 1998 and the impact of adoption has not been determined.
OUTLOOK. This "Outlook" section contains forward-looking statements
which are made in reliance on the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements involve risks and uncertainties, including, without
limitation, changes in the composition of applicable federal and state
legislation appropriation committees; federal and state appropriation changes
for infrastructure spending; the general state of the economy; competition and
pricing pressures; state referendums and initiatives; and other risks detailed
from time to time in the Company's filings with the Securities and Exchange
Commission.
Looking ahead, re-authorization of the federal transportation bill,
often referred to as the "ISTEA" bill, is one of the most important issues
facing Granite and its industry in 1998. Federal funding for needed repair and
improvement of the nation's highway system expires May 1, 1998. If Congress
fails to take action by then, new federal funding for roads, bridges and transit
programs will cease. Some states, such as California, are currently enjoying the
fruits of a healthy state economy, and have surplus highway building funds that
could potentially be used to bridge any gap created by the lack of a federal
program, at least for the next fiscal year. In most states, however, that is not
the case, and the absence of federal highway funding could jeopardize many state
highway projects in the short-term.
We are very encouraged, however, by the action taken most
recently by the U.S. Senate. In previous communications with our shareholders,
we had indicated that it appeared unlikely that any action on the highway bill
would occur before the federal budget had been approved. Surprisingly, the
Senate passed a six-year, $214 billion ISTEA re-authorization bill in March
1998, a 38% increase over the previous authorization. The leadership in the
House has indicated that a companion bill will reach the floor by April 1. The
House version calls for increases in funding to $217 billion and taking the
Highway Trust Funds off-budget. A vote on the increase is expected to take place
during the week of March 30,
14
<PAGE> 15
1998. Taking the trust funds off-budget provides a mechanism to ensure that the
authorized funding is actually spent. In previous years Congress didn't always
appropriate funds to the same level as authorized under the earlier ISTEA. If
the House could pass its bill by April 1, it would greatly increase the chances
of a final bill being passed and signed by President Clinton near the May 1
deadline.
At the state level, our attention remains focused on the June
primary election and Proposition 224, the so-called contracting-out initiative.
The measure seeks to codify and expand a legal decision that precludes the
California Department of Transportation from contracting out to private
companies for design services at times when the agency does not have the
capacity internally to design highway projects. If this initiative passes, it
would decrease the throughput in the design process and offer contractors like
Granite fewer projects on which to bid.
We are pleased by the recent upswing in the private sector,
especially in California. According to the Construction Industry Research Board
(CIRB) private nonresidential building was the strongest construction sector in
1997. Moreover, residential building, as measured by new units in building
permits, was up 27.2% at year-end compared to the totals at December, 1996.
Another indicator of economic strength is job growth, and according to the CIRB,
non-farm job growth increased an estimated 3.3% in 1997, up from a 2.2% increase
in 1996.
Despite a still growing economy and the limited number of
construction workers, the labor market has been stable and labor costs have not
accelerated. We continue to expand our training and development efforts across
the country to attract and retain talented employees at both engineer and craft
levels.
We were very pleased with the 1997 return on our investment in
TIC Holdings, Inc.. The company had a very good year, and it enters 1998 with a
strong backlog and some excellent bidding opportunities. We were successful in
teaming with TIC and its subsidiary, Western Summit, on a large sewage treatment
plant in Atlanta and we continue to look for ways in which our two companies can
pursue joint venture opportunities.
The size and the quality of the backlog that we take into 1998
provide Granite with the opportunity to achieve continued success in the coming
year. We have some excellent bidding prospects this year to add to that backlog,
including the $1.8 billion Alameda Corridor Project in Southern California,
several large highway projects in the Southeastern U.S., and the San Francisco
Bay Area bridge retrofit projects. We are pleased with the progress of the
Interstate 15 project that we are building in joint venture in Salt Lake City,
Utah. The project is somewhat ahead of schedule, and we now expect it will reach
the 25% completion threshold, at which Granite recognizes earnings on a job, in
the third, perhaps even the second quarter of 1998, instead of the fourth
quarter, as previously estimated.
Based on strong economics in most of the regions in which it
operates, our Branch Division, coming off the best year in its history, is
expecting more of the same in 1998. The division is off to a good start, due
largely to the boost it is getting from El Nino-related emergency storm repair
projects.
In summary, we enter 1998 with a record backlog and have a
number of exciting bidding opportunities in front of us. We still have to
execute the work, but based on the strength of our backlog, increased public
works expenditures, and the emergence of the private sector, we feel very
confident that we can continue to grow our revenue and our earnings at the pace
we expect of ourselves and which our investors and other stakeholders have come
to expect.
PRIOR YEARS
REVENUE AND BACKLOG. During the year ended December 31, 1996,
revenue increased $34.0 million (3.8%) to $928.8 million due to higher levels of
bidding opportunities and awards in our Branch Division and a full year of Utah
Branch activity in 1996. The Branch Division revenue increased $39.6 million to
$715.6 million in 1996, from $676.0 million in 1995. Heavy Construction Division
revenue decreased $5.6 million to $213.2 million in 1996, from $218.8 million in
1995. The Company's revenue from private sector contracts increased $49.1
million to $178.1 million, and went from 14.4% of total revenue in 1995 to 19.2%
of total revenue in 1996. Revenue from public sector contracts decreased to
$657.2 million, or 70.7% of the Company's revenue in 1996, from $674.7 million,
or 75.4% in 1995.
During the year ended December 31, 1995, revenue increased
$201.4 million (29.0%) to $894.8 million. The increase in revenue reflected a
strong quality backlog, healthy Turn Business and the addition of the Company's
new branch in Utah.
The Company's backlog at December 31, 1996 was $597.9 million,
up $7.8 million, or 1.3% over the same period in 1995.
15
<PAGE> 16
GROSS PROFIT. For the year ended December 31, 1996, gross profit
reached $110.7 million, a $1.3 million decrease from 1995. As a percentage of
revenue, gross profit decreased in 1996 to 11.9% from 12.5% in 1995. Gross
profit as a percentage of revenue in 1995 decreased to 12.5% from 13.0% in 1994.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased from $69.6 million, or 7.8% of revenue in 1995, to $71.6
million, or 7.7% of revenue in 1996. The increase reflects a full year of Utah
Branch activity as well as an approximately $3.0 million increase to bad debt
expense relating to one project. General and administrative expenses increased
$8.8 million from 1994 primarily due to the addition of the Utah Branch and
higher incentive compensation and retirement plan contributions.
OTHER INCOME (EXPENSES). Other income increased $1.4 million to $4.3
million in 1996. The increase was influenced by $2.0 million of gain on sales of
joint venture owned equipment which cannot be expected to be repeated in future
years. Other income decreased $0.3 million to $3.0 million in 1995.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
-------------------------------------------------------------------
Dollars in thousands 1997 1996 1995
-------------------------------------------------------------------
<S> <C> <C> <C>
Cash and cash equivalents $ 54,359 $ 38,663 $ 22,410
Net cash provided (used) by:
Operating activities 63,798 61,424 69,622
Investing activities (49,207) (37,548) (48,977)
Financing activities 1,105 (7,623) (15,884)
Capital expenditures 48,448 46,139 36,006
Working Capital 103,910 92,542 77,179
-------------------------------------------------------------------
</TABLE>
During 1997, cash provided from operations of $63.8 million was
primarily used to purchase $48.4 million of property and equipment, to repay
$16.5 million of long-term debt, to pay dividends of $6.6 million and repurchase
$3.1 million of common stock. Changes in cash provided by operating activities
primarily reflect normal variations in the cash flow on contracts and payables.
The Company's practice has been to replace and replenish its equipment
fleet with cash generated from operations. Cash purchases of property, plants
and equipment increased $2.3 million from 1996 to 1997 and $10.1 million from
1995 to 1996. The increase in 1996 primarily reflected the Company's purchase of
the Utah Branch in 1995.
During 1997, the Company increased its investment in T.I.C. Holdings,
Inc. by $12.2 million to approximately 30% from the 10% investment in 1996. The
investment was financed by borrowings under the Company's revolving line of
credit.
In March of 1997, the Board of Directors authorized the Company to
repurchase at management's discretion up to 500,000 shares of its own common
stock on the open market. Future purchases are expected to be made using the
Company's own cash resources. Shares repurchased will be held in the corporate
treasury and will be used to cover contributions to the current Employee Stock
Ownership Plan or for other corporate purposes.
The Company has budgeted $66.0 million for capital expenditures in
1998, which includes amounts for construction equipment, aggregate and asphalt
plants, buildings, leasehold improvements and the purchase of land and aggregate
reserves. The Company anticipates that cash generated internally and amounts
available under its existing credit facilities will be sufficient to meet its
capital and other requirements, including contributions to employee benefit
plans, for the foreseeable future. The Company currently has access to funds
under its revolving credit agreement which allow it to borrow up to $75.0
million, of which $32.4 million was available at December 31, 1997.
IMPACT OF THE YEAR 2000 ISSUE. The Year 2000 Issue is the result of
computer programs being written using two digits rather than four to define the
applicable year. The issue arises if date-sensitive software recognizes a date
16
<PAGE> 17
using "00" as the year 1900 rather than the year 2000. This could result in a
system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send
invoices, or engage in similar normal business activities.
Based on a recent assessment, the Company determined that it will not
be required to materially modify or replace its software in response to the Year
2000 Issue. The Company has begun communications with its significant suppliers
and large public and private sector customers to determine the extent to which
the Company is vulnerable to those third parties' failure to solve their own
Year 2000 Issue. However, there can be no guarantee that the systems of other
companies or public agencies with which the Company does business will be timely
converted, or that failure to convert by another company or public agency would
not have a material adverse effect on the Company.
The Company does not believe that the cost of addressing the impact on
its computer systems of the Year 2000 Issue will be material to its business,
results of operations, financial condition, liquidity or capital resources.
SUBSEQUENT EVENTS. On January 23, 1998, the Board of Directors declared
a special dividend of $0.12 per share of common stock in addition to a $0.075
per share quarterly dividend, payable on April 17, 1998 to stockholders of
record as of March 31, 1998. The quarterly dividend represents a $0.015 per
share increase over the quarterly dividends paid in 1997 of $0.06 per share.
On March 19, 1998 the Company issued long-term debt in the amount of
$60 million to a group of institutional holders. The notes are due in nine equal
annual installments beginning in 2002 and bear interest at 6.54% per annum.
Proceeds of the notes will be used to retire a portion of existing debt and for
general corporate purposes.
17
<PAGE> 18
QUARTERLY RESULTS
The following table sets forth selected unaudited financial information
for the Company for the eight quarters in the period ended December 31, 1997.
This information has been prepared on the same basis as the audited financial
statements and, in the opinion of management, contains all adjustments necessary
for a fair presentation thereof.
QUARTERLY FINANCIAL DATA
(Unaudited - In Thousands, Except for Per Share Data)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
1997 QUARTERS ENDED DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 309,820 $ 328,988 $ 242,576 $ 146,821
Gross profit 26,008 38,882 30,990 15,850
As a percent of revenue 8.4% 11.8% 12.8% 10.8%
Net income 5,631 13,651 8,307 243
As a percent of revenue 1.8% 4.1% 3.4% 0.2%
Net income per share:
Basic $ 0.32 $ 0.77 $ 0.47 $ 0.01
Diluted $ 0.31 $ 0.76 $ 0.46 $ 0.01
- -----------------------------------------------------------------------------------------
Dividends per share $ 0.06 $ 0.06 $ 0.06 $ 0.18
Market price
High $ 24.00 $ 24.06 $ 21.25 $ 24.75
Low $ 20.31 $ 19.25 $ 17.75 $ 17.25
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
1996 QUARTERS ENDED DEC. 31 SEPT. 30 JUNE 30 MARCH 31
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 223,905 $ 302,646 $ 248,499 $ 153,749
Gross profit 25,979 40,816 29,218 14,642
As a percent of revenue 11.6% 13.5% 11.8% 9.5%
Net income 2,798 15,053 9,131 366
As a percent of revenue 1.2% 5.0% 3.7% 0.2%
Net income per share:
Basic $ 0.16 $ 0.86 $ 0.52 $ 0.02
Diluted $ 0.16 $ 0.84 $ 0.51 $ 0.02
- -----------------------------------------------------------------------------------------
Dividends per share $ 0.06 $ 0.06 $ 0.06 $ 0.19
Market price
High $ 21.25 $ 23.50 $ 27.25 $ 21.83
Low $ 18.00 $ 18.25 $ 19.00 $ 18.00
- -----------------------------------------------------------------------------------------
</TABLE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Registrant and
auditor's report are included in Item 8 and appear following Item 14:
Report of Independent Accountants
Consolidated Balance Sheets - At December 31, 1997 and 1996
Consolidated Statements of Income - Years Ended December 31,
1997, 1996 and 1995
Consolidated Statements of Stockholders' Equity - Years Ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows - Years Ended December
31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
Additionally, a two-year Summary of Quarterly Results is included in
Item 7 under "Quarterly Results".
18
<PAGE> 19
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
Not applicable.
19
<PAGE> 20
PART III
Certain information required by Part III is omitted from this Report in
that the Company will file its definitive proxy statement (the "Proxy
Statement") pursuant to Regulation 14A not later than 120 days after the end of
the fiscal year covered by this report, and certain information included therein
is incorporated herein by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the directors of the Company is set forth under
the caption "Information about Granite - Management, Directors" in the Company's
definitive Proxy Statement in connection with the Annual Meeting of Stockholders
to be held May 18, 1998. Such information is incorporated herein by reference.
Information relating to the executive officers of the Company is set forth in
Part I of this report under the caption "Executive Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation is set forth under the
caption "Information about Granite - Compensation of Directors and Executive
Officers" in the Company's definitive Proxy Statement in connection with the
Annual Meeting of Stockholders to be held May 18, 1998. Such information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to ownership of equity securities of the Company
by certain beneficial owners and Management is set forth under the caption
"Information about Granite - Stock Ownership of Certain Beneficial Owners and
Management" in the Company's definitive Proxy Statement in connection with the
Annual Meeting of Stockholders to be held May 18, 1998. Such information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relating to certain relationships and related transactions
is set forth under the caption "Information about Granite - Management, Certain
Transactions with Management" in the Company's definitive Proxy Statement in
connection with the Annual Meeting of Stockholders to be held May 18, 1998. Such
information is incorporated herein by reference.
20
<PAGE> 21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following documents are filed as part of this Report:
(a) 1. FINANCIAL STATEMENTS. The following consolidated financial
statements are filed as part of this Report:
<TABLE>
<CAPTION>
Form 10-K
Pages
---------
<S> <C>
Report of Independent Accountants................................................ F-1
Consolidated Balance Sheets at December 31, 1997 and 1996........................ F-2
Consolidated Statements of Income for the Years Ended
December 31, 1997, 1996 and 1995.............................................. F-3
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1997, 1996 and 1995.................................. F-4
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995.............................................. F-5
Notes to the Consolidated Financial Statements................................... F-6 to F-15
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES. The following financial
statement schedule of Granite Construction Incorporated for
the years ended December 31, 1997, 1996 and 1995 is filed as
part of this Report and should be read in conjunction with the
consolidated financial statements of Granite Construction
Incorporated.
<TABLE>
<CAPTION>
Form 10-K
Pages
---------
<S> <C>
Report of Independent Accountants on Financial Statement Schedules.................... S-1
Schedule
--------
Schedule II - Schedule of Valuation and Qualifying Accounts.................. S-2
</TABLE>
Schedules not listed above have been omitted because the
required information is not applicable or is shown in the
financial statements or notes.
3. EXHIBITS. The Exhibits listed in the accompanying Exhibit
Index are filed or incorporated by reference as part of this
Report.
(b) REPORTS ON FORM 8-K. The registrant was not required to file
any reports on Form 8-K during the fourth quarter of fiscal
1997.
21
<PAGE> 22
INDEPENDENT ACCOUNTANTS' REPORT
To the Stockholders and Board of Directors
Granite Construction Incorporated
Watsonville, California
We have audited the accompanying consolidated balance sheets
of Granite Construction Incorporated and Subsidiaries as of December
31, 1997 and 1996, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the
period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Granite Construction Incorporated and Subsidiaries as of
December 31, 1997 and 1996, and the consolidated results of their
operations and their cash flows for each of the three years in the
period ended December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------------
Coopers & Lybrand L.L.P.
San Jose, California
February 13, 1998, except
Note 13, as to which the
date is March 19, 1998
F-1
<PAGE> 23
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
================================================================================================
DECEMBER 31, 1997 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 54,359 $ 38,663
Short-term investments 18,410 33,567
Accounts receivable 168,968 124,124
Costs and estimated earnings in excess of billings 22,585 29,494
Inventories 12,251 13,493
Deferred income taxes 13,365 13,060
Equity in construction joint ventures 12,951 5,371
Other current assets 11,394 6,033
-----------------------
Total current assets 314,283 263,805
- ------------------------------------------------------------------------------------------------
Property and equipment 194,339 178,515
- ------------------------------------------------------------------------------------------------
Other assets 43,187 30,725
- ------------------------------------------------------------------------------------------------
$ 551,809 $ 473,045
================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 12,921 $ 10,186
Accounts payable 80,809 64,058
Billings in excess of costs and estimated earnings 51,573 45,352
Accrued expenses and other current liabilities 65,070 51,667
-----------------------
Total current liabilities 210,373 171,263
- ------------------------------------------------------------------------------------------------
Long-term debt 58,396 43,602
- ------------------------------------------------------------------------------------------------
Deferred income taxes 25,606 24,575
- ------------------------------------------------------------------------------------------------
Commitments and contingencies -- --
- ------------------------------------------------------------------------------------------------
Stockholders' equity
Preferred stock, $0.01 par value, authorized 3,000,000 shares,
none outstanding -- --
Common stock, $0.01 par value, authorized 27,000,000 shares;
1997- issued and outstanding 18,266,375 shares;
1996- issued 18,166,011 shares, outstanding
18,125,653 shares 183 182
Additional paid-in capital 39,836 36,901
Retained earnings 223,498 201,663
-----------------------
263,517 238,746
Unearned compensation (6,083) (5,141)
-----------------------
257,434 233,605
- ------------------------------------------------------------------------------------------------
$ 551,809 $ 473,045
================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
<PAGE> 24
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
=================================================================================================
YEARS ENDED DECEMBER 31, 1997 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $ 1,028,205 $ 928,799 $ 894,796
Cost of revenue 916,475 818,144 782,833
---------------------------------------
GROSS PROFIT 111,730 110,655 111,963
General and administrative expenses 73,593 71,587 69,610
---------------------------------------
OPERATING INCOME 38,137 39,068 42,353
- -------------------------------------------------------------------------------------------------
Other income (expense)
Interest income 7,941 6,330 6,395
Interest expense (7,515) (4,367) (3,443)
Gain on sales of property and equipment 2,463 3,458 31
Other, net 3,152 (1,080) (32)
---------------------------------------
6,041 4,341 2,951
- -------------------------------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR INCOME TAXES 44,178 43,409 45,304
Provision for income taxes 16,346 16,061 16,762
- -------------------------------------------------------------------------------------------------
NET INCOME $ 27,832 $ 27,348 $ 28,542
=================================================================================================
- -------------------------------------------------------------------------------------------------
Net income per share
Basic $ 1.58 $ 1.57 $ 1.65
Diluted $ 1.55 $ 1.53 $ 1.62
Weighted average shares of common and
common stock equivalents outstanding
Basic 17,598 17,471 17,277
Diluted 17,961 17,832 17,649
Dividends per share $ 0.36 $ 0.37 $ 0.29
=================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 25
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
==================================================================================================================================
ADDITIONAL
COMMON PAID-IN RETAINED UNEARNED
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 STOCK CAPITAL EARNINGS COMPENSATION TOTAL
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCES, DECEMBER 31, 1994 $178 $ 29,021 $ 156,022 $(2,529) $ 182,692
Net income -- -- 28,542 -- 28,542
Restricted stock issued - 163,611 shares 1 2,134 -- (2,135) --
Amortized restricted stock -- -- -- 1,549 1,549
Employee stock options exercised and
related tax benefit - 98,517 shares -- 1,345 -- -- 1,345
Repurchase of common stock - 40,000 shares -- (762) -- -- (762)
Common stock contributed to ESOP - 40,000 shares -- 762 -- -- 762
Cash dividends on common stock -- -- (5,049) -- (5,049)
Tax benefit from ESOP dividends -- -- 826 -- 826
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1995 179 32,500 180,341 (3,115) 209,905
Net income -- -- 27,348 -- 27,348
Restricted stock issued - 182,089 shares, net 1 3,993 -- (3,994) --
Amortized restricted stock -- -- -- 1,968 1,968
Employee stock options exercised and
related tax benefit- 59,350 shares 2 934 -- -- 936
Repurchase of common stock - 107,608 shares -- (2,076) -- -- (2,076)
Common stock contributed to ESOP - 80,000 shares -- 1,550 -- -- 1,550
Cash dividends on common stock -- -- (6,760) -- (6,760)
Tax benefit from ESOP dividends -- -- 734 -- 734
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1996 182 36,901 201,663 (5,141) 233,605
Net income -- -- 27,832 -- 27,832
Restricted stock issued - 156,264 shares, net 1 3,240 -- (3,241) --
Amortized restricted stock -- -- -- 2,299 2,299
Employee stock options exercised and
related tax benefit- 21,900 shares -- 350 -- -- 350
Repurchase of common stock - 167,442 shares -- (3,011) (126) -- (3,137)
Common stock contributed to ESOP - 130,000 shares -- 2,356 -- -- 2,356
Cash dividends on common stock -- -- (6,578) -- (6,578)
Tax benefit from ESOP dividends -- -- 707 -- 707
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1997 $183 $ 39,836 $ 223,498 $(6,083) $ 257,434
==================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 26
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
============================================================================================================
YEARS ENDED DECEMBER 31, 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income $ 27,832 $ 27,348 $ 28,542
Add (deduct) noncash items included in net income:
Depreciation, depletion and amortization 38,219 37,775 32,481
Gain on sales of property and equipment (2,463) (3,458) (31)
Deferred income taxes 726 3,962 (5,825)
Decrease in unearned compensation 2,299 1,968 1,549
Common stock contributed to ESOP 2,356 1,550 762
Equity in (earnings) loss of affiliates (733) 1,648 --
Cash provided by (used in):
Accounts and notes receivable (43,072) 15,990 (24,092)
Inventories 1,242 (3,313) 1,541
Equity in construction joint ventures (7,580) (5,161) 3,225
Other assets 864 (277) (1,239)
Accounts payable 16,751 (3,998) 17,483
Billings in excess of costs and estimated earnings, net 13,130 (9,739) 11,684
Accrued expenses 14,227 (2,871) 3,542
----------------------------------
Net cash provided by operating activities 63,798 61,424 69,622
- ------------------------------------------------------------------------------------------------------------
Investing Activities
Additions to property and equipment (48,448) (46,139) (36,006)
Proceeds from sales of property and equipment 4,688 8,027 3,364
Acquisition, net of cash acquired -- -- (1,280)
Investment in affiliates (13,689) (8,566) --
Additions to notes receivable (203) (874) (1,083)
Repayments of notes receivable 720 618 1,588
Additions to investments and other assets (7,432) (1,629) (1,967)
Purchases of short-term investments (27,351) (45,639) (56,324)
Maturities of short-term investments 42,508 56,654 42,731
----------------------------------
Net cash used by investing activities (49,207) (37,548) (48,977)
- ------------------------------------------------------------------------------------------------------------
Financing Activities
Additions to long-term debt 27,046 15,000 --
Repayments of long-term debt (16,480) (14,654) (11,497)
Employee stock options exercised 246 673 1,117
Repurchase of common stock (3,137) (2,076) (762)
Dividends paid (6,570) (6,566) (4,742)
----------------------------------
Net cash provided (used) by financing activities 1,105 (7,623) (15,884)
- ------------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 15,696 16,253 4,761
Cash and cash equivalents at beginning of year 38,663 22,410 17,649
----------------------------------
Cash and cash equivalents at end of year $ 54,359 $ 38,663 $ 22,410
============================================================================================================
Supplementary Information
Cash paid during the year for:
Interest $ 7,516 $ 4,367 $ 3,445
Income taxes 10,172 10,258 20,040
Noncash investing and financing activity:
Restricted stock issued for services $ 3,241 $ 3,994 $ 2,135
Financed acquisition of property and equipment 6,963 -- --
Financed acquisition of Gibbons Company -- -- 31,750
============================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 27
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS: The Company is a heavy civil
contractor engaged in the construction of highways, dams, airports,
mass transit facilities, real estate site developments and other
infrastructure related projects. The Company has offices in California,
Texas, Georgia, Nevada, Arizona, Utah, Maryland and Florida.
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany transactions and accounts
have been eliminated. The Company uses the equity method of accounting
for companies where its ownership is between 20% and 50% and for other
ventures and partnerships in which less than a controlling interest is
held. The Company's proportionate share of construction joint venture
revenue, cost of revenue and other income is included in the
consolidated statements of income.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
CONSTRUCTION CONTRACTS: Earnings on construction contracts
including construction joint ventures are recognized on the percentage
of completion method in the ratio of costs incurred to estimated final
costs. Revenue in an amount equal to cost incurred is recognized prior
to contracts reaching 25% completion. The related earnings are not
recognized until the period in which such percentage completion is
attained. Revisions in contract revenue and cost estimates are
reflected in the accounting period when known. Provision for the entire
amount of estimated losses on uncompleted contracts is made in the
period such losses are determined. Claims for additional contract
revenue are recognized if it is probable that the claim will result in
additional revenue and the amount can be reliably estimated.
BALANCE SHEET CLASSIFICATIONS: The Company includes in current
assets and liabilities amounts receivable and payable under
construction contracts which may extend beyond one year. A one-year
time period is used as the basis for classifying all other current
assets and liabilities.
CASH AND CASH EQUIVALENTS: Cash equivalents are securities
held for cash management purposes having maturities of three months or
less from the date of purchase.
SHORT-TERM INVESTMENTS: Short-term investments that are deemed
by management to be held-to-maturity are reported at amortized cost.
Short-term investments that are considered available-for-sale are
carried at market value. Unrealized gains and losses, if material, are
reported net of tax as a separate component of stockholders' equity
until realized. Realized gains and losses, if any, are determined using
the specific identification method.
FINANCIAL INSTRUMENTS: The carrying value of short-term
investments approximates their fair value as determined by market
quotes. All significant debt obligations carry variable interest rates
or market interest rates and their carrying value is considered to
approximate fair value. The carrying value of receivables and other
amounts arising out of normal contract activities, including retentions
which may be settled beyond one year, is estimated to approximate fair
value.
INVENTORIES: Inventories consist primarily of quarry products
valued at the lower of average cost or market.
F-6
<PAGE> 28
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
PROPERTY AND EQUIPMENT: Property and equipment are stated at
cost. Depreciation is provided using accelerated methods over lives
ranging from four to ten years for construction equipment and the
straight-line method over lives from three to twenty years for the
remaining depreciable assets. Depletion of quarry property is based on
the usage of depletable reserves. The cost and accumulated depreciation
and depletion of property sold or retired are removed from the accounts
and gains or losses, if any, are reflected in earnings for the period.
INTANGIBLE ASSETS: Intangible assets consist primarily of
covenants not to compete amortized on a straight-line basis over five
years.
INCOME TAXES: Deferred taxes are provided on a liability
method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carryforwards and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of
enactment.
COMPUTATION OF EARNINGS PER SHARE: The Company has adopted the
provisions of Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS 128"), effective December 31, 1997. SFAS
128 requires the presentation of basic and diluted earnings per share.
Basic earnings per share is computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding, excluding restricted common stock. Diluted earnings per
share is computed giving effect to all dilutive potential common shares
that were outstanding during the period. Dilutive potential common
shares consist of the incremental common shares issuable upon the
exercise of stock options and upon the vesting of restricted common
stock. All prior period earnings per share amounts have been restated
to reflect the adoption of SFAS 128.
RECLASSIFICATIONS: Certain financial statement items have been
reclassified to conform to the current year's format.
NEW ACCOUNTING PRONOUNCEMENTS: In June 1997 the Financial
Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income". SFAS 130 establishes standards for the reporting and display
of comprehensive income and its components in a full set of general
purpose financial statements. Comprehensive income is defined as the
change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources.
SFAS 130 is effective for the Company in 1998 and the impact of its
adoption is not expected to be significant.
In June 1997 the FASB issued Statement of Financial Accounting
Standards No. 131 ("SFAS 131"), "Disclosures about Segments of an
Enterprise and Related Information". SFAS 131 requires publicly-held
companies to report financial and other information about key
revenue-producing segments of the entity for which such information is
available and is utilized by the chief operations decision maker.
Specific information to be reported for individual segments includes
profit or loss, certain revenue and expense items and total assets. A
reconciliation of segment financial information to amounts reported in
the financial statements would be provided. SFAS 131 is effective for
the Company in 1998 and the impact of adoption has not been determined.
2. DISCLOSURE OF SIGNIFICANT RISKS AND UNCERTAINTIES
DISCLOSURE OF SIGNIFICANT ESTIMATES - REVENUE RECOGNITION: As
outlined in the Summary of Significant Accounting Policies, the
Company's construction revenue is recognized on the percentage of
completion basis. Consequently, construction revenue and gross margin
for each reporting period is determined on a contract by contract basis
by reference to estimates by the Company's engineers of expected costs
to be incurred to complete each project. These estimates include
provisions for known and anticipated cost overruns, if any exist or are
expected to occur. These estimates may be subject to revision in the
normal course of business.
F-7
<PAGE> 29
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2. DISCLOSURE OF SIGNIFICANT RISKS AND UNCERTAINTIES, CONTINUED
DISCLOSURE OF SIGNIFICANT ESTIMATES - LITIGATION: The Company
has been named as a defendant in legal proceedings wherein substantial
damages are claimed. Such proceedings are not uncommon in the Company's
business and usually involve claims against multiple defendants who
were involved in the project which is the subject of the proceeding.
Historically, the Company has been successful in defending such actions
or has settled them within insured limits.
CONCENTRATIONS: The Company maintains the majority of cash
balances and all of its short-term investments with twelve financial
institutions. The Company invests with high credit quality financial
institutions, and, by policy, limits the amount of credit exposure to
any financial institution. Substantially all of the Company's labor
force is subject to collective bargaining agreements. Collective
bargaining agreements covering 27.5% of the Company's unionized labor
force at December 31, 1997 will expire during 1998.
The Company operates in a single industry segment encompassing
the construction of infrastructure assets and has no foreign
operations. Revenue received from federal, state and local government
agencies amounted to $726,657 (70.6%) in 1997, $657,247 (70.7%) in
1996, and $674,640 (75.4%) in 1995. One customer, California Department
of Transportation, represented $139,300 (13.5%) in 1997, $104,171
(11.2%) in 1996, and $88,970 (9.9%) in 1995 of total revenue. At
December 31, 1997, 1996 and 1995 the Company had significant amounts
receivable from these agencies and customer. The Company performs
ongoing credit evaluations of its customers and generally does not
require collateral, although the law provides the Company the ability
to file mechanics liens on real property improved for private customers
in the event of non-payment by such customers. The Company maintains
reserves for potential credit losses and such losses have been within
management's expectations.
3. SHORT-TERM INVESTMENTS
The carrying and market values of short-term
investments are as follows at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
Held-To-Maturity Held-To-Maturity
December 31, 1997 December 31, 1996
Carrying Unrealized Unrealized Fair Carrying Unrealized Unrealized Fair
Value Gains Losses Value Value Gains Losses Value
----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and Agency
Obligations $ 1,998 $ -- $ -- $ 1,998 $ 2,993 $ -- $ -- $ 2,993
Commercial Paper -- -- -- -- 3,977 -- -- 3,977
Municipal Bonds 5,019 -- -- 5,019 6,011 6 -- 6,017
Foreign Banker's Acceptances -- -- -- -- 7,420 1 -- 7,421
Domestic Banker's Acceptances 3,450 -- -- 3,450 -- -- -- --
----------------------------------------------- ----------------------------------------------
10,467 -- -- 10,467 20,401 7 -- 20,408
----------------------------------------------- ----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Available-For-Sale Available-For-Sale
December 31, 1997 December 31, 1996
Carrying Unrealized Unrealized Fair Carrying Unrealized Unrealized Fair
Value Gains Losses Value Value Gains Losses Value
----------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and Agency
Obligations 2,984 -- -- 2,984 9,146 3 (14) 9,135
Municipal Bonds 4,959 44 -- 5,003 4,020 23 -- 4,043
----------------------------------------------- ----------------------------------------------
7,943 44 -- 7,987 13,166 26 (14) 13,178
----------------------------------------------- ----------------------------------------------
Total Short-Term Investments $18,410 $ 44 $ -- $18,454 $33,567 $ 33 $ (14) $33,586
=============================================== ==============================================
</TABLE>
F-8
<PAGE> 30
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
3. SHORT-TERM INVESTMENTS, CONTINUED
There were no sales of investments classified as
available-for-sale for the years ended December 31, 1997 and 1996. At
December 31, 1997, scheduled maturities of investments are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Held-To- Available-
Maturity For-Sale Total
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Within one year $10,467 $5,959 $16,426
After one year through five years -- 1,984 1,984
- ------------------------------------------------------------------------------------------
$10,467 $7,943 $18,410
==========================================================================================
</TABLE>
For the years ended December 31, 1997 and 1996, purchases and
maturities were as follows:
<TABLE>
<CAPTION>
------------------------------------- ---------------------------------------
December 31, 1997 December 31, 1996
Held-To- Available Total Held-To- Available Total
Maturity For Sale Maturity For Sale
------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Purchases $ 15,566 $11,785 $ 27,351 $ 35,315 $ 10,324 $ 45,639
Maturities 31,536 10,972 42,508 43,300 13,354 56,654
------------------------------------- ---------------------------------------
Net change $(15,970) $ 813 $(15,157) $ (7,985) $ (3,030) $(11,015)
===================================== =======================================
</TABLE>
4. ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
DECEMBER 31, 1997 1996
-------------------------------------------------------------------------
<S> <C> <C>
Construction Contracts
Completed and in progress $ 94,482 $ 59,764
Retentions 55,041 47,956
-------------------------------------------------------------------------
149,523 107,720
Construction material sales 17,383 12,651
Other 2,753 4,446
-------------------------------------------------------------------------
169,659 124,817
Less allowance for doubtful accounts 691 693
-------------------------------------------------------------------------
$168,968 $124,124
=========================================================================
</TABLE>
The balances billed but not paid by customers pursuant to
retainage provisions in construction contracts generally
become due upon completion of the contracts and acceptance by
the owners. Retainage amounts at December 31, 1997 are
expected to be collected as follows: $49,801 in 1998; $1,511
in 1999 and $3,729 in 2000.
5. EQUITY METHOD INVESTMENTS
The Company participates in various construction joint venture
partnerships. Generally, each construction joint venture is formed to
accomplish a specific project and is dissolved upon completion of the
project. The combined assets, liabilities and net assets of these
ventures are as follows:
F-9
<PAGE> 31
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
5. EQUITY METHOD INVESTMENTS, CONTINUED
<TABLE>
<CAPTION>
------------------------------------------------------------
DECEMBER 31, 1997 1996
------------------------------------------------------------
<S> <C> <C>
Assets
Total $276,038 $96,760
Less other venturers' interest 208,830 69,175
------------------------------------------------------------
Company's interest 67,208 27,585
------------------------------------------------------------
Liabilities
Total 223,711 75,408
Less other venturers' interest 169,454 53,194
------------------------------------------------------------
Company's interest 54,257 22,214
------------------------------------------------------------
Company's interest in net assets $ 12,951 $ 5,371
============================================================
</TABLE>
The revenue and costs of revenue of construction joint
ventures are as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31, 1997 1996 1995
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Total $326,895 $234,824 $321,388
Less other venturers' interest 248,028 164,676 224,972
-----------------------------------------------------------------------------------------
Company's interest 78,867 70,148 96,416
-----------------------------------------------------------------------------------------
Cost of Revenue
Total 287,705 160,056 267,650
Less other venturers' interest 220,497 112,313 187,355
-----------------------------------------------------------------------------------------
Company's interest 67,208 47,743 80,295
-----------------------------------------------------------------------------------------
$ 11,659 $ 22,405 $ 16,121
=========================================================================================
</TABLE>
Additionally, the Company has investments in affiliates that
are accounted for on the equity method. The most significant of these
investments is a 30% interest in T.I.C. Holdings, Inc. and a 22.2%
limited partnership interest in a partnership which constructed and
operates a private toll road. At December 31, 1997 the Company had a
commitment supported by a letter of credit of $2,400 related to its
limited partnership interest. The summarized unaudited financial
information below represents an aggregation of the Company's
nonsubsidiary affiliates:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
YEARS ENDED DECEMBER 31, 1997 1996
-----------------------------------------------------------------------
<S> <C> <C>
Balance sheet data
Assets $275,685 $130,897
Liabilities 216,512 119,363
Net assets 59,173 11,534
-----------------------------------------------------------------------
Company's equity in net assets 25,008 2,564
-----------------------------------------------------------------------
Earnings data
Revenue 434,389 6,719
Gross profit (loss) 41,137 (3,104)
Earnings (loss) before taxes 1,891 (7,446)
-----------------------------------------------------------------------
Company's equity in earnings (loss) $ 733 $ (1,648)
=======================================================================
</TABLE>
F-10
<PAGE> 32
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
6. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
-------------------------------------------------------------------
DECEMBER 31, 1997 1996
-------------------------------------------------------------------
<S> <C> <C>
Land $ 20,654 $ 15,328
Quarry property 35,862 34,408
Buildings and leasehold improvements 17,175 12,973
Equipment and vehicles 416,073 388,697
Office furniture and equipment 5,467 5,485
-------------------------------------------------------------------
495,231 456,891
Less accumulated depreciation,
depletion and amortization 300,892 278,376
-------------------------------------------------------------------
$194,339 $178,515
===================================================================
</TABLE>
7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
-------------------------------------------------------------------
DECEMBER 31, 1997 1996
-------------------------------------------------------------------
<S> <C> <C>
Payroll and related employee benefits $24,374 $21,627
Accrued insurance 25,882 19,997
Income taxes 3,129 53
Other 11,685 9,990
-------------------------------------------------------------------
$65,070 $51,667
===================================================================
</TABLE>
8. LONG-TERM DEBT AND CREDIT ARRANGEMENTS
<TABLE>
<CAPTION>
---------------------------------------------------------------------
DECEMBER 31, 1997 1996
---------------------------------------------------------------------
<S> <C> <C>
Bank revolving credit notes $39,000 $18,000
Notes payable to bank 25,000 35,000
Other notes payable 7,317 788
---------------------------------------------------------------------
71,317 53,788
Less current maturities 12,921 10,186
---------------------------------------------------------------------
$58,396 $43,602
=====================================================================
</TABLE>
The aggregate minimum principal maturities of long-term debt
for each of the five years following December 31, 1997 are as
follows: 1998 - $12,921; 1999 - $14,843; 2000 - $13,997; 2001
- $8,748; 2002 - $7,984 and beyond 2002 - $12,824.
The Company has a bank revolving line of credit of $75,000
which allows for unsecured borrowings for up to five years through June
30, 1999, with interest rate options. Outstanding borrowings under the
revolving line of credit at December 31, 1997 are at the IBOR interest
rate plus margin (6.44% at December 31, 1997) with principal payable
semiannually beginning December 1999 through June 2004 and interest
payable quarterly.
The Company has standby letters of credit totaling
approximately $6,100 outstanding at December 31, 1997 of which $3,600
reduces the amount available under the line of credit and $2,400
supports the commitment by the Company related to its investment in a
limited partnership. The unused and available portion of the line of
credit at December 31, 1997 was $32,400.
Notes payable to bank are unsecured with principal payable
semiannually and interest payable quarterly at primarily the IBOR rate
plus margin (6.54% at December 31, 1997) through June 2000.
F-11
<PAGE> 33
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
8. LONG-TERM DEBT AND CREDIT ARRANGEMENTS, CONTINUED
Restrictive covenants under the terms of the debt agreements
include the maintenance of certain levels of working capital and cash
flow. Other covenants prohibit capital expenditures in excess of
specified limits and require the maintenance of tangible net worth (as
defined) of approximately $188,000.
Other notes payable are comprised primarily of notes incurred
in connection with the purchase of property and equipment and other
assets. The notes are collateralized by the assets purchased, bear
interest at 6.5% per annum and are payable in installments through
2007.
9. EMPLOYEE BENEFIT AND COMPENSATION PLANS
EMPLOYEE STOCK OWNERSHIP PLAN: The Company's Employee Stock
Ownership Plan ("ESOP") covers all employees not included in collective
bargaining agreements. As of December 31, 1997, the ESOP owned
5,530,686 shares of the Company's common stock. Dividends on shares
held by the ESOP are charged to retained earnings and all shares held
by the ESOP are treated as outstanding in computing the Company's
earnings per share.
Contributions to the ESOP are at the discretion of the Board
of Directors. Contributions for the years ended December 31, 1997, 1996
and 1995 were approximately $1,812, $2,094 and $762, respectively.
PROFIT SHARING AND 401K PLAN: The Profit Sharing Plan is a
defined contribution plan covering all employees not included in
collective bargaining agreements. The plan receives annual
contributions at the discretion of the Board of Directors. On January
1, 1995, the Company amended the Profit Sharing Plan to create the
Granite Construction Profit Sharing and 401K Plan, beginning for the
year ended December 31, 1995. The amended plan is also a defined
contribution plan covering all employees not included in collective
bargaining agreements. Each employee can elect to have up to 3% of
gross pay contributed to the plan on a before-tax basis. The plan
allows for Company matching and additional contributions at the
discretion of the Board of Directors.
Contributions to the Profit Sharing and 401K Plan for the
years ended December 31, 1997, 1996 and 1995 were $4,706, $4,064 and
$5,681, respectively. Included in the contributions were 401K matching
contributions of $1,807, $1,647 and none in 1997, 1996 and 1995,
respectively.
1990 OMNIBUS STOCK AND INCENTIVE PLAN: Under the Company's
1990 Omnibus Stock and Incentive Plan (the "Stock Plan") a total of
1,000,000 shares of the Company's common stock are reserved to grant
key employees of the Company restricted common stock, incentive and
nonqualified stock options, performance units and performance shares.
Restricted common stock is issued for services to be rendered and may
not be sold, transferred or pledged for such period as determined by
the compensation committee.
Restricted shares outstanding under the Plan at December 31,
1997 were 651,546 shares. Unearned compensation is amortized over the
restriction periods of generally five years. Compensation expense
related to restricted shares for the years ended December 31, 1997,
1996 and 1995 was $2,299, $1,968 and $1,549, respectively.
F-12
<PAGE> 34
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
9. EMPLOYEE BENEFIT AND COMPENSATION PLANS, CONTINUED
The exercise price for incentive and nonqualified stock
options granted under the Stock Plan may not be less than 100% and 85%,
respectively, of the fair market value at the date of the grant.
Options granted will be exercisable at such times and be subject to
such restrictions and conditions as determined by the compensation
committee, but no option shall be exercisable later than ten years from
the date of grant. Options generally vest one third after 3 years of
service from the date of grant and one third during each of the
following two years. Stock option transactions during 1997, 1996 and
1995 are summarized as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
December 31, 1997 1996 1995
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding, beginning of year 126,650 186,000 284,517
Options exercised (21,900) (59,350) (98,517)
-------------------------------------------------------------------------------
Options outstanding, end of year 104,750 126,650 186,000
-------------------------------------------------------------------------------
</TABLE>
At December 31, 1997, all options are 100% vested. All shares
have been granted, exercised and canceled at $11.00 per share.
OTHER: The Company also contributes to various multi-employer
pension plans on behalf of union employees. Contributions to these
plans for the years ended December 31, 1997, 1996 and 1995 were
approximately $11,972, $10,406 and $10,705, respectively.
10. EARNINGS PER SHARE
In accordance with the disclosure requirements of SFAS 128, a
reconciliation of the numerator and denominator of basic and diluted
earnings per share is provided as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31, 1997 1996 1995
---------------------------------------------------------------------------------
<S> <C> <C> <C>
NUMERATOR - BASIC AND DILUTED EARNINGS PER SHARE
Net income $27,832 $27,348 $28,542
=================================================================================
DENOMINATOR - BASIC EARNINGS PER SHARE
Common stock outstanding 18,250 18,066 17,802
Less restricted stock outstanding 652 595 525
-----------------------------
TOTAL 17,598 17,471 17,277
-----------------------------
Basic earnings per share $ 1.58 $ 1.57 $ 1.65
=================================================================================
DENOMINATOR - DILUTED EARNINGS PER SHARE
Denominator - Basic Earnings per Share 17,598 17,471 17,277
Effect of Dilutive Securities:
Common stock options 49 66 50
Restricted stock 314 295 322
-----------------------------
TOTAL 17,961 17,832 17,649
-----------------------------
Diluted earnings per share $ 1.55 $ 1.53 $ 1.62
=================================================================================
</TABLE>
F-13
<PAGE> 35
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
11. INCOME TAXES
Provision for income taxes:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Years Ended December 31, 1997 1996 1995
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Federal
Current $12,964 $ 9,727 $18,785
Deferred 646 3,470 (5,108)
-----------------------------------------------------------------------------
13,610 13,197 13,677
-----------------------------------------------------------------------------
State
Current 2,656 2,372 3,802
Deferred 80 492 (717)
-----------------------------------------------------------------------------
2,736 2,864 3,085
-----------------------------------------------------------------------------
$16,346 $16,061 $16,762
=============================================================================
</TABLE>
Reconciliation of statutory to effective tax rate:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Years Ended December 31, 1997 1996 1995
----------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% 35.0%
State taxes, net of federal tax benefit 4.0 4.3 4.4
Percentage depletion deduction (2.0) (1.3) (1.3)
Other -- (1.0) (1.1)
----------------------------------------------------------------------------
37.0% 37.0% 37.0%
============================================================================
</TABLE>
Deferred tax assets and liabilities:
<TABLE>
<CAPTION>
-------------------------------------------------------------
DECEMBER 31, 1997 1996
-------------------------------------------------------------
<S> <C> <C>
DEFERRED TAX ASSETS:
Accounts receivable $ 2,280 $ 2,041
Inventory 1,520 1,050
Property and equipment 2,508 2,319
Insurance accruals 8,301 7,529
Deferred compensation 2,144 1,879
Other accrued liabilities 3,113 3,012
Other 621 613
Valuation allowance -- --
-------------------------------------------------------------
20,487 18,443
-------------------------------------------------------------
DEFERRED TAX LIABILITIES:
Property and equipment 28,837 28,553
Contract recognition 1,207 199
TIC basis difference 1,355 --
Other 1,329 1,206
-------------------------------------------------------------
32,728 29,958
-------------------------------------------------------------
$ (12,241) $ (11,515)
=============================================================
</TABLE>
F-14
<PAGE> 36
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
12. LEASES
Minimum rental commitments under all noncancellable operating
leases, primarily quarry property and construction equipment, in effect
at December 31, 1997 were:
<TABLE>
<CAPTION>
Years Ending December 31,
<S> <C>
1998 $ 4,923
1999 3,767
2000 3,047
2001 1,321
2002 1,165
Later years (through 2038) 7,190
---------------------------------------------------
Total minimum rental commitment $21,413
===================================================
</TABLE>
Operating lease rental expense was $4,414 in 1997, $3,593 in
1996, and $4,261 in 1995.
13. SUBSEQUENT EVENTS
On January 23, 1998 the Board of Directors declared a cash dividend of
$0.075 per common share plus a special cash dividend of $0.12 per share of
common stock to stockholders of record as of March 31, 1998, payable on April
17, 1998.
On March 19, 1998 the Company issued long-term debt in the amount of
$60 million to a group of institutional holders. The notes are due in nine equal
annual installments beginning in 2002 and bear interest at 6.54% per annum.
Proceeds of the notes will be used to retire a portion of existing debt and for
general corporate purposes.
F-15
<PAGE> 37
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
Granite Construction Incorporated
Watsonville, California
Our report on the consolidated financial statements of Granite Construction
Incorporated is included on page F-1 of this 10-K. In connection with our audits
of such financial statements, we have also audited the related financial
statement schedule listed in the index on page 22 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------
Coopers & Lybrand L.L.P.
San Jose, California
February 13, 1998, except
Note 13, as to which the
date is March 19, 1998
S-1
<PAGE> 38
SCHEDULE II
GRANITE CONSTRUCTION INCORPORATED
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ADDITIONS
-------------------------
BALANCE AT ADJUSTMENTS BALANCE AT
BEGINNING BAD DEBT AND END OF
DESCRIPTION OF YEAR EXPENSE COLLECTIONS DEDUCTIONS(1) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Allowance for doubtful accounts ....... $693 $ 759 $ 1,162 $(1,923) $691
=======================================================================
Allowance for notes receivable ........ $ 68 $ -- $ -- $ -- $ 68
=======================================================================
YEAR ENDED DECEMBER 31, 1996
Allowance for doubtful accounts ....... $898 $3,614 $ 1,576 $(5,395) $693
=======================================================================
Allowance for notes receivable ........ $ 68 $ -- $ -- $ -- $ 68
=======================================================================
YEAR ENDED DECEMBER 31, 1995
Allowance for doubtful accounts (2) ... $655 $ 743 $ 531 $(1,031) $898
=======================================================================
Allowance for notes receivable ......... $309 $ 68 $ (309) $ -- $ 68
=======================================================================
</TABLE>
(1) Accounts deemed to be uncollectible and (2) $542 of adjustments related to
the acquisition of Gibbons and Reed.
S-2
<PAGE> 39
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Granite Construction Incorporated on Form S-8 (File No. 33-36482 and
33-36485) of our report dated February 13, 1998 (except Note 13, as to which the
date is March 19, 1998) on our audits of the consolidated financial statements
and the financial statement schedule of Granite Construction Incorporated, as of
December 31, 1997 and 1996, and the years ended December 31, 1997, 1996 and
1995, which report is included in the Annual Report on Form 10-K on Page F-1.
San Jose, California
March 27, 1998
22
<PAGE> 40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 20, 1998 GRANITE CONSTRUCTION INCORPORATED
By: /s/ William E. Barton
-----------------------------------------
[William E. Barton, Vice President and
Chief Financial Officer]
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below on March 20, 1998, by the following persons in the
capacities indicated.
<TABLE>
<S> <C>
/s/ Richard C. Solari Chairman of the Board
- ------------------------ and Director
[Richard C. Solari]
/s/ David H. Watts President, Chief Executive Officer,
- ------------------------ and Director
[David H. Watts]
/s/ William E. Barton Vice President and Chief Financial Officer
- ------------------------ Principal Accounting and Financial Officer
[William E. Barton]
/s/ Joseph J. Barclay Director
- ------------------------
[Joseph J. Barclay]
/s/ Richard M. Brooks Director
- ------------------------
[Richard M. Brooks]
/s/ Brian C. Kelly Director
- ------------------------
[Brian C. Kelly]
/s/ Rebecca A. McDonald Director
- ------------------------
[Rebecca A. McDonald]
/s/ Denman K. McNear Director
- ------------------------
[Denman K. McNear]
/s/ Raymond E. Miles Director
- ------------------------
[Raymond E. Miles]
</TABLE>
23
<PAGE> 41
INDEX TO FORM 10-K EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
- --- ----------- ---
<S> <C> <C>
3.1 Certificate of Incorporation of Granite Construction Incorporated [a]
3.2 Bylaws of Granite Construction Incorporated (as amended and restated effective
February 27, 1991) [b]
10.1 Granite Construction Incorporated Employee Stock Ownership Plan, through
amendments and Trust Agreement (**as to Trust Agreements only) [b]
10.1.a Amendment 3 to the Granite Construction Incorporated Employee Stock Ownership
Plan, through amendments and Trust Agreement (**as to Trust Agreements only) [c]
10.1.b Amendment 4 to the Granite Construction Incorporated Employee Stock Ownership
Plan as of May 21, 1993 [d]
10.1.c Amendment 5 to the Granite Construction Incorporated Employee Stock Ownership
Plan adopted December 16, 1993 and effective January 1, 1994 [d]
10.1.d Amendment 6 to the Granite Construction Incorporated Employee Stock Ownership
Plan adopted December 15, 1994 and effective January 1, 1995 [e]
10.1.e Amendment 7 to Granite Construction Incorporated Employee Stock Ownership
Plan and Amendment 1 to the Trust Agreement adopted December 19, 1995, effective
January 1, 1996 [g]
10.2 Amendment to and Restatement of the Granite Construction Company Profit Sharing
and 401K Plan adopted December 15, 1994 and effective January 1, 1995 [e]
10.2.a Amendment to and Restatement of Granite Construction Incorporated Profit Sharing
and 401K Plan and Trust Agreement adopted and effective as of December 15, 1994 [e]
10.2.b Amendment 2 to the Granite Construction Incorporated Profit Sharing and 401K Plan
and Amendment 2 to the Trust Agreement adopted March 20, 1995 and effective
January 1, 1996 [g]
10.2.c Amendment 3 to the Granite Construction Incorporated Profit Sharing and 401K Plan
adopted August 23, 1996 and effective January 1, 1997 [h]
10.2.d Amendment 4 to the Granite Construction Incorporated Profit Sharing and 401(k) Plan
adopted July 24, 1997 and effective January 1, 1995, January 1, 1997,
February 3, 1997 and January 1, 1998 28
10.2.e Amendment 5 to the Granite Construction Incorporated Profit Sharing and 401(k) Plan
adopted December 29, 1997 and effective January 1, 1997 and January 1, 1998 34
10.5 Credit Agreement dated and effective June 30, 1997 40
10.5.a First Amendment to the Credit Agreement entered into January 16, 1998 297
10.6 Form of Director and Officer Indemnification Agreement [a]
10.7 Form of Executive Officer Employment Agreement [a]
</TABLE>
24
<PAGE> 42
<TABLE>
<S> <C> <C>
10.8 Stock Purchase Agreement among Granite Construction Incorporated, Gibbons
Company and all of the Shareholders of Gibbons Company, dated March 17, 1995 [f]
10.9 Restated Gibbons Company Profit Sharing and Retirement Plan adopted December 30,
1994 and effective January 1, 1989 [h]
10.9.a First Amendment to the Restated Gibbons Company Profit Sharing and Retirement
Plan adopted March 29, 1995 and effective January 1, 1989 [h]
10.9.b Second Amendment to the Restated Gibbons Company Profit Sharing and Retirement
Plan adopted April 27, 1995 and effective May 8, 1995 and May 31, 1995 [h]
10.9.c Third Amendment to the Restated Gibbons Company Profit Sharing and Retirement
Plan adopted June 23, 1995 and effective July 1, 1995 [h]
10.9.d Fourth Amendment to the Restated Gibbons Company Profit Sharing and Retirement
Plan adopted December 1, 1995 [h]
10.9.e Fifth Amendment to the Restated Gibbons Company Profit Sharing and Retirement
Plan adopted July 16, 1996 and effective January 1, 1995 [h]
10.9.f Sixth Amendment to the Restated Gibbons Company Profit Sharing and Retirement
Plan adopted May 30, 1997 and effective January 1, 1989 and July 1, 1993 306
10.10 Granite Construction Incorporated Key Management Deferred Compensation Plan
adopted and effective January 1, 1996 [h]
10.11 Granite Construction Incorporated Key Management Deferred Incentive Compensation
Plan adopted and effective January 1, 1996 [h]
10.12 Stock Purchase Agreement between Granite Construction Incorporated and TIC Holdings,
Inc. dated December 23, 1996 314
21.1 List of Subsidiaries of Granite Construction Incorporated [h]
24.1 Consent of Coopers & Lybrand L.L.P. is contained on page 23 of this Report
27.1 Financial Data Schedule - Year Ended December 31, 1997 433
27.2 Financial Data Schedule - Nine Months Ended September 30, 1997 434
27.3 Financial Data Schedule - Six Months Ended June 30, 1997 435
27.4 Financial Data Schedule - Three Months Ended March 31, 1997 436
27.5 Financial Data Schedule - Year Ended December 31, 1996 437
27.6 Financial Data Schedule - Nine Months Ended September 30, 1996 438
27.7 Financial Data Schedule - Six Months Ended June 30, 1996 439
27.8 Financial Data Schedule - Three Months Ended March 31, 1996 440
27.9 Financial Data Schedule - Year Ended December 31, 1995 441
</TABLE>
[a] Incorporated by reference to the exhibits filed with the Company's
Registration Statement on Form S-1 (No. 33-33795).
[b] Incorporated by reference to the exhibits filed with the Company's Form 10-K
for the year ended December 31, 1991.
[c] Incorporated by reference to the exhibits filed with the Company's Form 10-K
for the year ended December 31, 1992.
[d] Incorporated by reference to the exhibits filed with the Company's 10-K for
the year ended December 31, 1993.
[e] Incorporated by reference to the exhibits filed with the Company's 10-K for
the year ended December 31, 1994.
[f] Incorporated by reference to the exhibits filed with the Company's 8-K dated
May 8, 1995.
[g] Incorporated by reference to the exhibits filed with the Company's 10-K for
the year ended December 31, 1995.
[h] Incorporated by reference to the exhibits filed with the Company's 10-K for
the year ended December 31, 1996.
25
<PAGE> 1
EXHIBIT 10.2.d
GRANITE CONSTRUCTION
PROFIT SHARING AND 401(k) PLAN
Amendment No. 4 to Amended and Restated Plan
WHEREAS, Granite Construction, Incorporated ("Granite") maintains the
Granite Construction Profit Sharing and 401(k) Plan (the "Plan") for the benefit
of the eligible employees of Granite and its subsidiaries;
WHEREAS, the Internal Revenue Service has requested that certain
technical amendments be made to the Plan as a condition for the issuance of a
favorable determination letter relating to the qualified status of the Plan
under the Internal Revenue Code of 1986, as amended, and the regulations
thereunder;
WHEREAS, it is desirable to amend the Plan to conform to certain
provisions of the Internal Revenue Code of 1986, as amended by the Small
Business Job Protection Act of 1996; and
WHEREAS, it is desirable to amend the Plan to clarify certain other
Plan provisions.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 2 is amended by adding the following definition of "Break
in Service" after the definition of "Beneficiary," effective as of January 1,
1995:
Break in Service............. A Plan Year (or the 12-consecutive
month period beginning on an
Employee's initial date of Service
or his date of reemployment with an
Employer) in which an Employee is
credited with 500 or less Hours of
Service. See Sections 3(c) and
10(b).
1
<PAGE> 2
2. Section 2 is further amended by deleting the last sentence of the
definition of "Compensation," effective as of January 1, 1997.
3. Section 2 is further amended by restating the definition of
"Highly Compensated Employee" to read as follows, effective as of January 1,
1997:
Highly Compensated
Employee..................... A Highly Compensated Employee
includes any Employee who (1) was a
5% owner at any time during the Plan
Year or preceding Plan Year, or (2)
received Statutory Compensation in
excess of $80,000 in the preceding
Plan Year and, if so elected by the
Company, was in the top-paid 20%
group of Employees for such
preceding Plan Year. The $80,000
amount shall be adjusted after 1997
for increases in the cost of living
pursuant to Section 414(q)(1) of the
Code. The determination of who is a
"Highly Compensated Employee,"
including the determinations of the
number and identity of Employees in
the top-paid group and the Statutory
Compensation that is considered,
will be made in accordance with
Section 414(q) of the Code and the
regulations thereunder.
4. Section 2 is further amended by restating the definition of
"Statutory Compensation" to read as follows, effective as of January 1, 1998:
Statutory
Compensation................. The total remuneration paid to an
Employee by the Company or an
Affiliate during the Plan Year for
personal services rendered, plus the
amount of his 401(k) Contributions
and any elective contributions that
are made by the Employer on his
behalf that are not included in
gross income under Section 125
2
<PAGE> 3
of the Code, but excluding employer
contributions to a plan of deferred
compensation, amounts realized in
connection with stock options and
amounts which receive special tax
benefits.
5. Section 3(a) is amended by adding the following sentence at the
end of the first paragraph thereof, effective as of January 1, 1995:
For this purpose, the eligibility computation period for determining
the 1,000 Hours of Service requirement in the preceding sentence
shall initially be the period of 12 consecutive months beginning on
the Employee's initial date of Service and thereafter shall be each
Plan Year beginning after his initial date of Service.
6. Section 3(c) is amended by adding the following sentence at the
end thereof:
Notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with Section 414(u)
of the Code.
7. Section 4(b)(2) is amended by restating the last sentence thereof
to read as follows, effective as of February 3, 1997:
401(k) Contributions shall be paid by a Participant's Employer to the
Trustee as soon as practicable but in no event later than the 15th
business day of the month following the month in which such amounts
are withheld from the Participant's Compensation.
8. Section 4(b)(3) is amended by deleting the second sentence in the
first paragraph thereof effective as of January 1, 1997.
3
<PAGE> 4
9. Section 4(b)(3)(iii) is restated to read as follows, effective as
of January 1, 1997:
(iii) Distribute all or a portion of the 401(k)
Contributions made on behalf of a Highly Compensated Employee
(together with any income attributable thereto) to him which are
determined to be "excess contributions" within the meaning of Section
1.40l(k)-1(g)(7) of the regulations. Such "excess contributions" are
determined by reducing 401(k) Contributions made on behalf of Highly
Compensated Employees in order of the actual deferral percentages
beginning with the highest of such percentages. The actual deferral
percentage of the Highly Compensated Employee with the highest such
percentage shall be reduced until it equals that of the Highly
Compensated Employee with the next highest percentage. This process
shall be repeated until one of the tests described in Section
401(k)(3) of the Code and Section 1.401(k)-1(b) is passed. The amount
of excess contributions to be distributed to Highly Compensated
Employees under this Section 4(b)(3)(iii) shall be deemed
attributable first to those Highly Compensated Employees who have the
greatest dollar amount of 401(k) Contributions. Such excess
contributions shall be reduced by any excess deferrals previously
distributed under Section 4(b)(4) for the calendar year ending with
the Plan Year.
10. Section 4(c)(2) is amended by deleting the second sentence in the
first paragraph thereof, effective as of January 1, 1997.
11. Section 8(b) is restated to read as follows, effective as of
January 1, 1995:
(b) Summary Annual Report - Within two months after the due
date for filing the annual report (Form 5500) for the Plan with the
Internal Revenue Service, each Participant shall be furnished with
the summary annual report of the Plan required by Section l04(b)(3)
of ER1SA, in the form prescribed in regulations of the Department of
Labor.
4
<PAGE> 5
12. Section 10(b) is amended by adding the following sentence after
the first sentence in the second paragraph thereof, effective as of January 1,
1995:
For purposes of this Section 10(b), a "maternity/paternity absence"
means a Participant's absence (A) by reason of (i) the pregnancy of
the individual, (ii) birth of a child of the individual or (iii)
placement of a child with the individual in connection with the
adoption of such child by such individual, or (B) for purposes of
caring for a child described in clause (A) for a period beginning
immediately following such birth or placement.
13. Section 12(c) is restated to read as follows, effective as of
January 1, 1997:
(c) Distribution of a Participant's Capital Accumulation
shall occur not later than 60 days after the Allocation Date
coinciding with or next following his 65th birthday (or his
termination of Service, if later). The distribution of the Capital
Accumulation of any Participant who attains age 70 1/2 in a calendar
year and either has (1) terminated Service or (2) is a 5% owner (as
defined in Section 416(i)(1)(B)(i) of the Code) must occur not later
than April 1st of the next calendar year and must be made in
accordance with the regulations under Section 401(a)(9) of the Code,
including Section 1.401(a)(9)-2. Any Participant who commenced
receiving distributions from the Plan (prior to 1997) in accordance
with the regulations under Section 401(a)(9) of the Code shall
continue to receive such distributions unless he elects otherwise. If
the amount of a Participant's Capital Accumulation cannot be
determined (by the Committee) by the date on which a distribution is
to occur, or if the Participant cannot be located, distribution of
his Capital Accumulation shall occur within 60 days after the date on
which his Capital Accumulation can be determined or after the date on
which the Committee locates the Participant.
14. Section 15 is amended by adding the following sentence at the end
of the second paragraph thereof effective as of January 1, 1995:
5
<PAGE> 6
All decisions and interpretations of the Committee under this Section
15 shall be conclusive and binding upon all persons with an interest
in the Plan and shall be given the greatest deference permitted by
law.
15. Section 18(c)(2) is restated to read as follows, effective as of
January 1, 1995:
(2) the same percentage of his Statutory
Compensation as the allocation to
the "key employee" for whom the
percentage is the highest for that
Plan Year. 401(k) Contributions made
by key employees during a Plan Year
shall be included in determining the
"key employee" with the highest
percentage for such Plan Year.
To record the adoption of this Amendment No. 4 to the amended and
restated Plan, Granite has caused it to be executed this 24 day of July , 1997.
GRANITE CONSTRUCTION,
INCORPORATED
By________________________________
David H. Watts., President & CEO
6
<PAGE> 1
EXHIBIT 10.2.E
GRANITE CONSTRUCTION
PROFIT SHARING AND 401(k) PLAN
Amendment No.5 to Amended and Restated Plan
WHEREAS, Granite Construction, Incorporated ("Granite") maintains the
Granite Construction Profit Sharing and 401(k) Plan (the "Plan") for the benefit
of the eligible employees of Granite and its subsidiaries;
WHEREAS, it is desirable to amend the Plan to permit participants to
defer an additional amount of their Compensation as a 401(k) Contribution to the
Plan equal to the amount of the cash dividends that are paid each calendar
quarter on the shares of Company Stock in their Company Stock Accounts in the
Granite Construction Employee Stock Ownership Plan;
WHEREAS, it is desirable to amend the conditions for obtaining
hardship withdrawals; and
WHEREAS, it is necessary to amend the Plan to conform to certain
provisions of the Internal Revenue Code of 1986, as amended by the Small
Business lob Protection Act of 1996 and the Taxpayer Relief Act of 1997.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 2 is amended by adding the following definition of
"Additional 401(k) Contributions" after the definition of "Account," effective
as of January 1,1998:
Additional
401(k) Contributions.................... Employer Contributions made
pursuant to
1
<PAGE> 2
Participant elections under Section
4(b)(2).
2. Section 2 is further amended by restating the definition
of "401(k) Contributions," effective as of January 1, 1998:
401(k) Contributions......... Employer Contributions made
pursuant to Participant elections
under Section 4(b). Any reference
made to "401(k) Contributions" in
the Plan shall generally include a
Participant's "Additional 401(k)
Contributions," except for purposes
of Sections 3(b) and 4(c) with
respect to Matching Contributions.
3. Section 2 is further amended by restating the definition
of "Highly Compensated Employee" to read as follows, effective as of January 1,
1997:
Highly Compensated
Employee..................... A Highly Compensated Employee
includes any Employee who (1) was a
5% owner at any time during the Plan
Year or preceding Plan Year, or (2)
received Statutory Compensation in
excess of $80,000 in the preceding
Plan Year and was in the top-paid
20% group of Employees for such
preceding Plan Year. The $80,000
amount shall be adjusted after 1997
for increases in the cost of living
pursuant to Section 414(q)(1) of the
Code. The determination of who is a
"Highly Compensated
Employee,"including the
determinations of the number and
identity of Employees in the
top-paid group and the Statutory
Compensation that is considered,
will be made in accordance with
Section 414(q) of the Code and the
regulations thereunder.
2
<PAGE> 3
4. The first sentence of Section 3(b) is amended to read as
follows, effective as of January 1, 1998:
A Participant shall be entitled to share in the allocation of
Matching Contributions and related Forfeitures for each Plan Year in
which he elects to make 401(k) Contributions; provided, however, that
a Participant shall not be entitled to share in the allocation of
Matching Contributions with respect to any Additional 401(k)
Contributions that are made to the Trust on his behalf.
5. Section 4(b) is amended by adding the following subsection
(2) after Section 4(b)(l), effective as of January 1, 1998. Hereafter,
subsections (2), (3), (4) and (5) of Section 4(b) shall be identified as (3),
(4), (5) and (6) accordingly:
(2) Effective as of January 1, 1998, under rules
established by the Committee, an eligible Participant may elect to
have an additional portion of his Compensation withheld by his
Employer and contributed to the Trust as Additional 401(k)
Contributions equal to the fell amount of the quarterly cash
dividends that are paid to him under Section 13(a) of the ESOP. An
Additional 401(k) Contribution may be made for a Participant with
respect to a calendar quarter only if he is an Employee on the last
day of such calendar quarter and if he is not a participant in a
non-qualified deferred compensation plan maintained by an Employer
for such calendar quarter.
6. Section 4(b)(4)(I) is amended to read as follows,
effective as of January 1, 1998:
(i) Prospectively limit the amount of 401(k)
Contributions for some or all Highly Compensated Employees for such Plan Year,
provided, however, that the Committee shall first limit the amount of Additional
401(k) Contributions for some or all Highly Compensated Employees for such Plan
Year before limiting the amount of such Highly Compensated Employees' 401(k)
Contributions;
3
<PAGE> 4
7. Section 4(b)(4)(iii) is amended by adding the following
sentence after the fifth sentence thereof effective as of January 1, 1998:
The amount of excess contributions to be distributed to an affected
Highly Compensated Employee shall be taken first from the affected
Highly Compensated Employee's Additional 401(k) Contributions, if
any.
8. Section 4(c)(l) is amended to add the following sentence
after the first sentence thereof effective as of January 1, 1998:
A Participant shall not be entitled to share in the allocation of
Matching Contributions with respect to any Additional 401(k)
Contributions that are made to the Trust on his behalf.
9. The final sentence of the second paragraph of Section 6 is
amended to read as follows, effective as of January 1, 1998:
Subaccounts of the 401(k) Account may be maintained to reflect
Additional 401(k) Contributions and the portion of the 401(k) Account
invested in each investment fund.
10. Section 11(a) is amended by adding the following
subsection (3) after subsection (2) thereof effective as of January 1, 1998:
(3) payments necessary to prevent the eviction of
the Participant from his principal residence or
foreclosure on the mortgage on that residence.
11. Section 12(a) is amended by restating the second sentence
thereof to read as follows, effective as of January 1, 1998:
4
<PAGE> 5
If the value of a Participant's Capital Accumulation at the time
distribution would otherwise commence under this Section 12 exceeds
$5,000, no portion of his Capital Accumulation may be distributed to
him before he attains age 65 without his written consent.
12. Section 12(b)(l) is amended by restating the first
sentence thereof, effective as of January 1, 1998:
If the value of a Participant's Capital Accumulation is $5,000 or
less, his Capital Accumulation shall be distributed as soon as
practicable after the date his Service terminates, upon the
completion and processing of the applicable distribution forms.
13. Section 12(b)(2) is restated to read as follows, effective
as of January 1, 1998:
(2) If the value of a Participant's Capital Accumulation
exceeds $5,000 and the Participant terminates Service (whether or not
on account of Retirement or Disability), the Participant may elect to
receive a distribution of his Capital Accumulation as soon as
practicable after the date his Service terminates, upon the
completion and processing of the applicable distribution forms.
14. Section 12(c) is restated to read as follows, effective as
of January 1, 1997:
(c) Distribution of a Participant's Capital Accumulation
shall occur not later than 60 days after the Allocation Date
coinciding with or next following his 65th birthday (or his
termination of Service, if later). The distribution of the Capital
Accumulation of any Participant who attains age 70 1/2 in a calendar
year and either has (1) terminated Service or (2) is a 5% owner (as
defined in Section 416(I)(l)(B)(I) of the Code) must occur not later
than April lst of the next calendar year and must be made in
accordance with the regulations under Section 40l(a)(9) of the Code,
including Section 1.40l(a)(9)-2.
5
<PAGE> 6
Distributions must be made to any other Participant who attains age
70 1/2 before January 1, 1999, only to the extent required under
Sections 401(a)(9) and 41l(d)(6) of the Code and the regulations
issued thereunder. If the amount of a Participant's Capital
Accumulation cannot be determined (by the Committee) by the date on
which a distribution is to occur, or if the Participant cannot be
located, distribution of his Capital Accumulation shall occur within
60 days after the date on which his Capital Accumulation can be
determined or after the date on which the Committee locates the
Participant.
To record the adoption of this Amendment No. 5 to the amended and
restated Plan, Granite has caused it to be executed this 29th day of December ,
l99 7 .
GRANITE CONSTRUCTION,
INCORPORATED
By_______________________________________
William G. Dorey, Senior Vice President
6
<PAGE> 1
CLOSING DOCUMENTS
CREDIT AGREEMENT
DATED AS OF
JUNE 30, 1997
AMONG
GRANITE CONSTRUCTION INCORPORATED,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS AGENT
AND
THE OTHER FINANCIAL INSTITUTIONS
PARTY HERETO
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
TAB
---
<S> <C>
BASIC DOCUMENTS
CREDIT AGREEMENT .............................................................................1
SCHEDULES
Schedule 2.01(a) Term Commitment
Schedule 2.01(b) Revolving Commitment
Schedule 3.03 Existing Letters of Credit
Schedule 5.01(d) Good Standing
Schedule 6.07 ERISA Compliance
Schedule 6.11(c) Leases, Dividends and Letters of Credit
Schedule 6.12 Environmental Matters
Schedule 6.17 Intellectual Property Disputes
Schedule 6.18 Subsidiaries and Equity Investments
Schedule 8.01(a) Liens Existing on Closing Date
Schedule 8.04 Investment Policy
Schedule 8.06 Contingent Obligations.
Schedule 8.18 Indebtedness
Schedule 11.02 Addresses for Notices; Payment and Lending Offices
EXHIBITS
Exhibit A Notice of Borrowing
Exhibit B Notice of Conversion/Continuation
Exhibit C Letter of Credit Application
Exhibit D Form of Legal Opinion of Michael Futch
Exhibit E Form of Job Status Report
Exhibit F Form of List of Anticipated Construction Bids
Exhibit G Assignment and Assumption Agreement
Exhibit H Form of Guaranty
Exhibit I Form of Letter Requesting Extension of
Revolving Termination Date
GUARANTY .....................................................................................2
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
TAB
---
ADDITIONAL DOCUMENTS
Resolutions of the boards of directors of the Company and each Guarantor
certified as of the Closing Date by the Secretary or Assistant Secretary of each
such entity ..............................................................................3
Responsible Officer's Certificate as to representations and warranties,
no defaults, etc. ........................................................................4
Opinion of Michael Futch .................................................................5
</TABLE>
<PAGE> 4
================================================================================
CREDIT AGREEMENT
DATED AS OF JUNE 30, 1997
AMONG
GRANITE CONSTRUCTION INCORPORATED,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
AS AGENT
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
================================================================================
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS......................................................... 1
1.01 Defined Terms................................................ 1
1.02 Other Interpretive Provisions................................ 18
1.03 Accounting Terms and Definitions............................. 19
ARTICLE II THE CREDITS......................................................... 20
2.01 Amounts and Terms of Commitments............................. 20
(a) The Term Credit.......................................... 20
(b) The Revolving Credit..................................... 20
(c) Funding of Term Loans.................................... 20
(d) Continuation of Interest Periods......................... 21
2.02 Loan Accounts................................................ 21
2.03 Procedure for Borrowing...................................... 21
2.04 Conversion and Continuation Elections........................ 22
2.05 Voluntary Termination or Reduction of Commitments............ 23
2.06 Optional Prepayments......................................... 24
2.07 Repayment.................................................... 24
(a) The Term Credit.......................................... 24
(b) The Revolving Credit..................................... 24
2.08 Interest..................................................... 24
2.09 Fees......................................................... 25
2.10 Computation of Fees and Interest............................. 25
2.11 Payments by the Company...................................... 26
2.12 Payments by the Banks to the Agent........................... 26
2.13 Sharing of Payments, Etc..................................... 27
2.14 Guaranty of Obligations...................................... 27
2.15 Extension of Revolving Termination Date...................... 28
ARTICLE III THE LETTERS OF CREDIT............................................... 28
3.01 The Letter of Credit Facility................................ 28
3.02 Issuance and Amendment of Letters of Credit.................. 30
3.03 Participations, Drawings and Reimbursements.................. 32
3.04 Repayment of Participations.................................. 33
3.05 Role of the Issuing Bank..................................... 34
3.06 Obligations Absolute......................................... 34
3.07 Cash Collateral Pledge....................................... 35
3.08 Letter of Credit Fees........................................ 36
3.09 Additional Issuing Bank...................................... 36
</TABLE>
i
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY.............................. 36
4.01 Taxes........................................................ 36
4.02 Illegality................................................... 39
4.03 Increased Costs and Reduction of Return...................... 40
4.04 Funding Losses............................................... 40
4.05 Inability to Determine Rates................................. 41
4.06 Certificates of Banks........................................ 42
4.07 Survival..................................................... 42
ARTICLE V CONDITIONS PRECEDENT................................................ 42
5.01 Conditions of Effectiveness of Agreement..................... 42
(a) Credit Agreement, Exhibits, Schedules and Guaranty....... 42
(b) Resolutions; Incumbency.................................. 42
(c) Legal Opinion............................................ 43
(d) Certificate.............................................. 43
(e) Other Documents.......................................... 43
5.02 Conditions to all Credit Extension........................... 43
(a) Notice................................................... 43
(b) Continuation of Representations and Warranties........... 44
(c) No Existing Default...................................... 44
ARTICLE VI REPRESENTATIONS AND WARRANTIES...................................... 44
6.01 Corporate Existence and Power................................ 44
6.02 Corporate Authorization; No Contravention.................... 44
6.03 Governmental Authorization................................... 45
6.04 Binding Effect............................................... 45
6.05 Litigation................................................... 45
6.06 No Default................................................... 45
6.07 ERISA Compliance............................................. 46
6.08 Use of Proceeds; Margin Regulations.......................... 47
6.09 Title to Properties.......................................... 47
6.10 Taxes........................................................ 47
6.11 Financial Condition.......................................... 48
6.12 Environmental Matters........................................ 48
6.13 Regulated Entities........................................... 49
6.14 No Burdensome Restrictions................................... 49
6.15 Solvency..................................................... 49
6.16 Labor Relations.............................................. 49
6.17 Copyrights, Patents, Trademarks and Licenses, etc............ 49
6.18 Subsidiaries................................................. 50
6.19 Insurance.................................................... 50
6.20 Swap Obligations............................................. 50
6.21 Full Disclosure.............................................. 50
</TABLE>
ii
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VII AFFIRMATIVE COVENANTS............................................... 50
7.01 Financial Statements......................................... 51
7.02 Certificates; Other Information.............................. 51
7.03 Notices...................................................... 52
7.04 Preservation of Corporate Existence, Etc..................... 54
7.05 Maintenance of Property...................................... 54
7.06 Insurance.................................................... 54
7.07 Payment of Obligations....................................... 54
7.08 Compliance with Laws......................................... 55
7.09 Inspection of Property and Books and Records................. 55
7.10 Environmental Laws........................................... 55
7.11 Use of Proceeds.............................................. 56
7.12 Solvency..................................................... 56
ARTICLE VIII NEGATIVE COVENANTS.................................................. 56
8.01 Limitation on Liens.......................................... 56
8.02 Disposition of Assets........................................ 58
8.03 Consolidations and Mergers................................... 58
8.04 Loans and Investments........................................ 59
8.05 Transactions with Affiliates................................. 59
8.06 Contingent Obligations....................................... 60
8.07 Compliance with ERISA........................................ 60
8.08 Lease Obligations............................................ 61
8.09 Restricted Payments.......................................... 61
8.10 Current Ratio................................................ 62
8.11 Consolidated Tangible Net Worth.............................. 62
8.12 Leverage Ratio............................................... 62
8.13 Cash How Ratio............................................... 62
8.14 Change in Business........................................... 62
8.15 Change in Structure.......................................... 62
8.16 Accounting Changes........................................... 62
8.17 Other Contracts.............................................. 63
8.18 Limitation on Indebtedness................................... 63
8.19 Use of Proceeds.............................................. 63
ARTICLE IX EVENTS OF DEFAULT................................................... 64
9.01 Event of Default............................................. 64
(a) Non-Payment............................................. 64
(b) Representation or Warranty.............................. 64
(c) Other Defaults.......................................... 64
(d) Cross-Default........................................... 65
(e) Bankruptcy or Insolvency................................ 65
(f) Involuntary Proceedings................................. 65
(g) ERISA................................................... 66
</TABLE>
iii
<PAGE> 8
<TABLE>
<CAPTION>
Page
----
<S> <C>
(h) Monetary Judgments...................................... 66
(i) Non-Monetary Judgments.................................. 66
(j) Adverse Change.......................................... 66
(k) Guarantor Defaults...................................... 66
9.02 Remedies..................................................... 67
9.03 Rights Not Exclusive......................................... 67
ARTICLE X THE AGENT........................................................... 67
10.01 Appointment and Authorization; "Agent"....................... 67
10.02 Delegation of Duties......................................... 68
10.03 Liability of Agent........................................... 68
10.04 Reliance by Agent............................................ 69
10.05 Notice of Default............................................ 69
10.06 Credit Decision.............................................. 69
10.07 Indemnification.............................................. 70
10.08 Agent in Individual Capacity................................. 70
10.09 Successor Agent.............................................. 71
ARTICLE XI MISCELLANEOUS....................................................... 71
11.01 Amendments and Waivers....................................... 71
11.02 Notices...................................................... 72
11.03 No Waiver; Cumulative Remedies............................... 72
11.04 Costs and Expenses........................................... 73
11.05 Indemnity.................................................... 73
11.06 Successors and Assigns....................................... 73
11.17 Assignments, Participations etc.............................. 74
11.08 Set-off; Payments Set Aside.................................. 75
11.09 Notification of Addresses, Lending Offices, Etc.............. 76
11.10 Confidentiality.............................................. 76
11.11 Severability................................................. 76
11.12 Governing Law and Jurisdiction............................... 76
11.13 No Third Parties Benefitted.................................. 77
11.14 Entire Agreement............................................. 77
11.15 Effect of Amendment and Restatement.......................... 77
11.16 Counterparts................................................. 77
</TABLE>
iv
<PAGE> 9
SCHEDULES
Schedule 2.01 (a) Term Commitment
Schedule 2.01 (b) Revolving Commitment
Schedule 3.03 Existing Letters of Credit
Schedule 5.01 (d) Good Standing
Schedule 6.07 ERISA Compliance
Schedule 6.11 (c) Leases, Dividends and Letters of Credit
Schedule 6.12 Environmental Matters
Schedule 6.17 Intellectual Property Disputes
Schedule 6.18 Subsidiaries and Equity Investments
Schedule 8.01 (a) Liens Existing on Closing Date
Schedule 8.04 Investment Policy
Schedule 8.06 Contingent Obligations
Schedule 8.18 Indebtedness
Schedule 11.02 Addresses for Notices; Payment and Lending Offices
EXHIBITS
Exhibit A Notice of Borrowing
Exhibit B Notice of Conversion/Continuation
Exhibit C Letter of Credit Application
Exhibit D Form of Legal Opinion of Michael Futch
Exhibit E Form of Job Status Report
Exhibit F Form of List of Anticipated Construction Bids
Exhibit G Assignment and Assumption Agreement
Exhibit H Form of Guaranty
Exhibit I Form of Letter Requesting Extension of Revolving
Termination Date
v
<PAGE> 10
CREDIT AGREEMENT
This CREDIT AGREEMENT, is entered into as of June 30,1997, among Granite
Construction Incorporated, a Delaware corporation (the "Company"), the several
financial institutions parties to this Agreement (collectively, the "Banks";
individually, a "Bank"), and Bank of America National Trust and Savings
Association, as agent for the Banks (the "Agent"), and as letter of credit
issuing bank.
WHEREAS, the Company, the Agent and the Banks are parties to a Second
Amended and Restated Credit Agreement dated as of June 15, 1995, as amended by
the First Amendment to Second Amended and Restated Credit Agreement dated as of
May 31, 1996 and the Second Amendment to Second Amended and Restated Credit
Agreement dated as of December 20, 1996 (the "Prior Credit Agreement"), which
provided for the making of loans and the issuance of letters of credit in the
maximum principal amount of $100,000,000;
WHEREAS, in order to provide for an increase in the maximum principal
amount of loans under the Prior Credit Agreement, as well as the modification of
certain other terms and provisions of the Prior Credit Agreement, the Agent and
the Banks have agreed to amend and restate the representations, warranties,
covenants, agreements and obligations of the Company in this Agreement, which
completely amends, restates and replaces the Prior Credit Agreement, all upon
the terms and provisions and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereby amend and restate the Prior
Credit Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms. In addition to the terms defined elsewhere in this
Agreement, the following terms have the following meanings:
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of the other Person, whether through the ownership of voting
securities, by contract or otherwise. Without limitation, any director,
executive officer or beneficial owner of 5% or more of the equity of a
Person shall, for the purposes of this Agreement, be deemed to control the
other Person.
"Agent" means Bank of America National Trust and Savings Association
in its capacity as agent for the Banks hereunder, and any successor agent.
1
<PAGE> 11
"Agent-Related Persons" has the meaning specified in Section 10.03.
"Aggregate Commitment" means the combined Commitments of the Banks
in the amount of $105,000,000, as such amount may be reduced from time to
time pursuant to this Agreement.
"Aggregate L/C Commitment" means the combined L/C Commitments of the
Banks, in the initial amount of $20,000,000 as such amount may be reduced
from time to time pursuant to this Agreement, provided that the Aggregate
L/C Commitment is a part of the Aggregate Revolving Commitment.
"Aggregate Revolving Commitment" means the combined Revolving
Commitments of the Banks, in the initial amount of $75,000,000 as such
amount may be reduced from time to time pursuant to this Agreement.
"Aggregate Term Commitment" means the combined Term Commitments of
the Banks in the initial aggregate amount of $30,000,000 as such amount
may be reduced from time to time pursuant to this Agreement.
"Agreement" means this Agreement, as amended, supplemented or
modified from time to time.
"Applicable Margin" means the per annum rates of interest specified
in the chart below:
<TABLE>
<CAPTION>
Revolving Commitment
--------------------------------
Term Revolving
Commitment Period Term Period
---------- --------- -----------
<S> <C> <C> <C>
Reference Rate Loans +0% +0% +0%
Eurodollar Rate Loans +0.600% +0.500% +0.750%
CD Rate Loans +0.725% +0.625% +0.875%
</TABLE>
Where:
"Revolving Period" means the period from the Closing Date to the
Revolving Termination Date; and
"Term Period" means the period from the Revolving Termination Date
to the date of the final semi-annual payment under Section 2.07(b)
"Arranger" means BancAmerica Securities, Inc., a Delaware
corporation.
2
<PAGE> 12
"Assignee" has the meaning specified in Section 11.07.
"Assignment and Acceptance" has the meaning specified in subsection
11.07(a).
"Bank" means the institutions specified in the introductory clause
hereto. References to the "Banks" shall include BofA, including in its
capacity as Issuing Bank, and any other Bank which may be an Issuing Bank
from time to time hereunder; for purposes of clarification only, to the
extent that BofA or any other such Issuing Bank may have any rights or
obligations in addition to those of the Banks due to its status as Issuing
Bank, its status as such will be specifically referenced.
"BofA" means Bank of America National Trust and Savings Association,
a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of the
same type made to the Company on the same day by the Banks pursuant to
Article II, and, other than in the case of Reference Rate Loans, having
the same Interest Period.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or San Francisco are
authorized (a required by law to close and, if the applicable Business Day
relates to any Eurodollar Rate Loan, means such a day on which dealings
are carried on in the applicable offshore dollar interbank market.
"Capital Expenditures" means for any period and with respect to any
Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing of fixed or capital assets or
additions to equipment (including replacements, capitalized repairs and
improvements during such period) which should be capitalized under GAAP on
a consolidated balance sheet of such Person and its Subsidiaries, less net
proceeds from sales of fixed or capital assets received by such Person or
any of its Subsidiaries during such period. For the purpose of this
definition, the purchase price of equipment which is purchased
simultaneously with the trade-in of existing equipment owned by such
Person or any of its Subsidiaries or with insurance proceeds shall be
included in Capital Expenditures only to the extent of the gross amount of
such purchase price less the credit granted by the seller of such
equipment for such equipment being traded in at such time, or the amount
of such proceeds, as the case may be.
"Capital Lease Obligations" means all monetary obligations of the
Company or any of its Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, is classified as a capital
lease.
"Cash Flow" means, for any period, Net Cash Provided by Operating
Activities as determined on a consolidated basis in accordance with FASB
95 plus interest expense (net of capitalized interest).
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<PAGE> 13
"CD Rate" means, for any Interest Period with respect to CD Rate
Loans comprising part of the same Borrowing, the rate of interest (rounded
upward to the next 1/00th of 1%) determined as follows:
CD Rate= Certificate of Deposit Rate + Assessment Rate
1.00 - Reserve Percentage
Where:
"Assessment Rate" means, for any day of such Interest Period,
the rate determined by the Agent as equal to the annual assessment
rate in effect on such day payable to the Federal Deposit Insurance
Corporation, or any successor ("FDIC") by a member of the Bank
Insurance Fund that is classified as adequately capitalized and
within supervisory subgroup "A" (or a comparable successor
assessment risk classification within the meaning of 12 C.F.R.
Section 327.3) for insuring time deposits at offices of such member
in the United States; or, in the event that the FDIC shall at any
time hereafter cease to assess time deposits based upon such
classifications or successor classifications, equal to the maximum
annual assessment rate in effect on such day that is payable to the
FDIC by commercial banks (whether or not applicable to any
particular Bank) for insuring time deposits at offices of such banks
in the United States.
"Certificate of Deposit Rate" means the rate of interest per
annum determined by the Agent to be the arithmetic mean (rounded
upward to the next 1/100th of 1%) of the rates notified to the Agent
as the rates of interest bid by two or more certificate of deposit
dealers of recognized standing selected by the Agent for the
purchase at face value of dollar certificates of deposit issued by
major United States banks, for a maturity comparable to such
Interest Period and in the approximate amount of the CD Rate Loans
to be made, at the time selected by the Agent on the first day of
such Interest Period.
"Reserve Percentage" means, for any day of such Interest
Period, the maximum reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%), as determined by the
Agent, in effect on such day (including any ordinary, marginal,
emergency, supplemental, special and other reserve percentages),
prescribed by the FRB for determining the maximum reserves to be
maintained by member banks of the Federal Reserve System with
deposits exceeding $1,000,000,000 for new non-personal time deposits
for a period comparable to such Interest Period and in an amount of
$100,000 or more.
The CD Rate shall be adjusted, as to all CD Rate Loans then
outstanding, automatically as of the effective date of any change in the
Assessment Rate or the Reserve Percentage.
"CD Rate Loan" means a Loan that bears interest based on the CD
Rate.
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<PAGE> 14
"CERCLA" has the meaning specified in the definition of
"Environmental Laws."
"Closing Date" means the date on which all conditions precedent set
forth in Section 5.01 are satisfied or waived.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means, for each Bank, the sum of its Revolving
Commitment and Term Commitment
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of such Bank's Revolving Commitment, Term Commitment or L/C
Commitment divided by the Aggregate Revolving Commitment, Aggregate Term
Commitment or Aggregate L/C Commitment, as applicable.
"Consolidated Current Assets" means, as of any date of
determination, all amounts which would, in accordance with GAAP, be
included under current assets on a consolidated balance sheet of the
Company and its Subsidiaries.
"Consolidated Current Liabilities" means, as of any date of
determination, all amounts which would, in accordance with GAAP, be
included under current liabilities on a consolidated balance sheet of the
Company and its Subsidiaries.
"Contingent Obligation" means, as applied to any Person, any direct
or indirect liability of that Person, (a) with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"),
including any obligation of that Person, whether or not contingent, (i) to
purchase, repurchase or otherwise acquire such primary obligations or any
property constituting direct or indirect security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation,
or (iv) otherwise to assure or hold harmless the holder of any such
primary obligation against loss in respect thereof (each, a "Guaranty
Obligation"); or (b) in respect of any Swap Contract. The amount of any
Contingent Obligation other than in respect of Swap Contracts shall be
deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made
or, if not stated or if indeterminable, the maximum reasonably anticipated
liability in respect thereof, and, in the case of any Contingent
Obligation in respect of any Swap Contract shall be equal to the amount
that would be determined if such Swap Contract were terminated on such
date of determination, taking into account any legally enforceable netting
arrangement relating to such Swap Contract.
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<PAGE> 15
"Contractual Obligations" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document
or agreement to which such Person is a party or by which it or any of its
property is bound.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with
the Company or any of its Subsidiaries pursuant to Section 414(b), (c),
(m) or (o) of the Code.
"Conversion Date" means any date on which the Company elects to
convert a Reference Rate Loan to a Eurodollar Rate Loan or a CD Rate Loan;
a CD Rate Loan to a Eurodollar Rate Loan or a Reference Rate Loan; or a
Eurodollar Rate Loan to a CD Rate Loan or a Reference Rate Loan.
"Default" means any event which, with the giving of notice, the
lapse of time, or both, would constitute an Event of Default.
"documents" includes any and all instruments, documents, agreements,
certificates and other writings, however evidenced.
"DOL" means the United States Department of Labor.
"dollars" and "$" means lawful money of the United States.
"Domestic Lending Office" means, with respect to each Bank, the
office of that Bank designated as such in the signature pages hereto or
such other office of the Bank as it may from time to time specify to the
Company and the Agent.
"Effective Amount" means (i) with respect to any Revolving Loans or
Term Loans on any date, the aggregate outstanding principal amount thereof
after giving effect to any Borrowings and prepayments or repayments
thereof occurring on such date; and (ii) with respect to any outstanding
L/C Obligations on any date, the amount of such L/C Obligations on such
date after giving effect to any Issuances of Letters of Credit occurring
on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements
of outstanding unpaid drawings under any Letters of Credit or any
reductions in the maximum amount available for drawing under Letters of
Credit taking effect on such date.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (ii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the United States; or (iii) a Person
engaged in the business of commercial
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<PAGE> 16
banking that is (A) a Subsidiary of a Bank, (B) a Subsidiary of a Person
of which a Bank is a Subsidiary, or (C) or of a Person of which a Bank is
a Subsidiary.
"Environmental Claim" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or
injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural resources
damage, or otherwise alleging liability or responsibility for damages
(punitive or otherwise), cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive relief, or other type
of relief, resulting from or based upon (a) the presence, placement,
discharge, emission or release (including intentional and unintentional,
negligent and non-negligent, sudden or non-sudden, accidental or
non-accidental placement, spills, leaks, discharges, emissions or
releases) of any Hazardous Material at, in or from property, whether or
not owned by the Company, or (b) any other circumstances forming the basis
of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means, as of the date of any determination, all
then existing federal, state or local laws, statutes, common law duties,
rules, regulations, ordinances and codes, together with all administrative
orders, directed duties, requests, judgments, decrees, guidelines,
licenses, authorizations and permits of, agreements with or any similar
form of decision of, or any interpretation or administration of any of the
foregoing by, any Governmental Person relating to the regulation or
protection of human or animal health or safety or of the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or toxic or hazardous substances or wastes
(including Hazardous Materials) into the indoor or outdoor environment,
including ambient air, soil, surface water, ground water, wetlands, land
or subsurface strata, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or toxic or hazardous
substances or wastes. The term "Environmental Law" shall include
administrative orders, directed duties and the terms and conditions of any
Governmental Approval issued under any Environmental Law or with respect
to any Hazardous Material.
"ERISA" means the Employee Retirement Income Security Act of 1974
and any regulation promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary of
the Company within the meaning of Section 414(b), 414(c) or 414(m) of the
Code.
"ERISA Event" means (a) a Reportable Event with respect to a
Qualified Plan or a Multiemployer Plan; (b) a withdrawal by any member of
the Controlled Group from a Qualified Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer (as
defined in Section 4001(a)(2) of ERISA) or cessation of operations which
is treated as such a withdrawal under Section 4062(c) of ERISA; (c) a
complete or
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<PAGE> 17
partial withdrawal by any member of the Controlled Group from a
Multiemployer Plan; (d) the filing of a notice of intent to terminate, the
treatment of a plan amendment as a termination under Section 4041 or 4041
A of ERISA or the commencement of proceedings by the PBGC to terminate a
Qualified Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a
failure to make required contributions to a Qualified Plan or
Multiemployer Plan; (f) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Qualified Plan or Multiemployer Plan; (g) the imposition of any liability
under Title IV of ERISA, other than PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon any member of the Controlled Group; (h)
an application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code with respect to any Qualified
Plan; (i) any member of the Controlled Group engages in or otherwise
becomes liable for a non-exempt prohibited transaction; or (j) a violation
of the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rule under Section 401(a) of the Code by any fiduciary
with respect to any Qualified Plan for which the Company or any of its
Subsidiaries may be directly or indirectly liable.
"Eurodollar Lending Office" means with respect to each Bank, the
office of such Bank designated as such in the signature pages hereto or
such other office of such Bank as such Bank may from time to time specify
to the Company and the Agent.
"Eurodollar Rate" means, for any Interest Period, with respect to
Eurodollar Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by
the Agent as follows:
Eurodollar Rate = IBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1 /100th of 1 %) in effect on
such day (whether or not applicable to any Bank) under regulations
issued from time to time by the FRB for determining the maximum
reserve requirement (including any emergency supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"); and
"IBOR" means the rate of interest per annum determined by the
Agent as the rate at which dollar deposits in the approximate amount
of BofA's Commitment Percentage of such Borrowing for such Interest
Period would be offered by BofA's Grand Cayman Branch, Grand Cayman
B.W.I. (or such other office as may be designated for such purpose
by BofA), to major banks in the offshore dollar interbank market at
their request at approximately 11:00 a.m. (New York City time) two
Business Days prior to the commencement of such Interest Period.
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<PAGE> 18
The Eurodollar Rate shall be adjusted automatically as to all
Eurodollar Rate Loans then outstanding as of be effective date of
any change in the Eurodollar Reserve Percentage.
"Eurodollar Rate Loan" means a Loan that bears interest based on the
Eurodollar Rate.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Existing Letters of Credit" means those certain irrevocable standby
letters of credit issued under the Prior Credit Agreement and outstanding
on the date hereof, as described on Schedule 3.03.
"Existing Term Loan" has the meaning specified in Section 2.01(c).
"Event of Default" means any of the events specified in Section
9.01.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York with
respect to the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant date such rate is not so published
with respect to any such preceding Business Day, the rate for such day
will be the arithmetic mean as determined by the Agent of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00
a.m. (New York City time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in Section 2.09(a).
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal
functions.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies
with similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such other entity
as may be in general use by significant segments of the U.S. accounting
profession, which are applicable to the circumstances as of the date of
determination.
"GCC" means Granite Construction Company, a California corporation.
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<PAGE> 19
"Governmental Approvals" means any authorization, consent, approval,
license, lease, ruling, permit, waiver, exemption, filing, registration or
notice by or with any Governmental Authority.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Guarantor" means each of GCC, Granite SR91 Corporation, Wilcott
Corporation, Desert Aggregates, Inc., GG&R, Inc., Intermountain Slurry
Seal, Inc., Bear River Contractors, Pozzolan Products Company (P.P.C.),
GILC Incorporated, GILC, L.P., Granite SR91, L.P., GTC, Inc. and any other
Subsidiary executing and delivering a Guaranty from time to time under
Section 2.14 hereof.
"Guaranty" means a guaranty, in substantially the form attached
hereto as Exhibit H, executed by a Guarantor in favor of the Agent and the
Banks guarantying the obligations of the Company under this Agreement and
the other Loan Documents.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Hazardous Materials" means, collectively, as of any date, (a) any
petroleum or petroleum products, flammable explosives, radioactive
materials, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, and transformers or other equipment that
contain dielectric fluid containing polychlorinated biphenyls (PCB's), (b)
any chemicals or other materials or substances which as of such date are
defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants," "infectious wastes," "pollutants" or words of similar
import under any Environmental Law, and (c) any other chemical or other
material or substance, exposure to which or use of which as of such date
is prohibited, limited or regulated under any Environmental Law.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services; (c) all
reimbursement obligations with respect to surety bonds, letters of credit,
bankers' acceptances and similar instruments (in each case, whether or not
such obligations are contingent or absolute, except that for purposes of
calculations made under Sections 8.12 and 8.13, only surety bonds under
which a breach or default has occurred and letters of credit which have
been drawn and for which reimbursement must be made one to be included as
Indebtedness); (d) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses;
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<PAGE> 20
(e) all indebtedness created or arising under any conditional sale or
other title retention agreement, or incurred as financing, in either case
with respect to property acquired by the Person (even though the rights
and remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property); (f) all
Capital Lease Obligations; (g) all indebtedness referred to in paragraphs
(a) through (f) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property (including accounts and contracts rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; and (h) all direct or
indirect guaranties in respect of and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others
of the kinds referred to in paragraphs (a) through (f) above.
"Indebtedness" does not include the acquisition of goods, services,
supplies or merchandise on normal trade credit.
"Indemnified Liabilities" has the meaning specified in subsection
11.05(a).
"Indemnified Person" has the meaning specified in subsection
11.05(a).
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors or
other, similar arrangement; in each case (a) and (b) under U.S. federal,
state or foreign law.
"Interest Payment Date" means, with respect to any CD Rate Loan or
Eurodollar Rate Loan, the last Business Day of each Interest Period
applicable to such Loan and, with respect to Reference Rate Loans, the last
Business Day of each calendar quarter and each date a Reference Rate Loan
is converted into a Eurodollar Rate Loan or a CD Rate Loan, provided,
however, that if any Interest Period for a CD Rate Loan or Eurodollar Rate
Loan exceeds 90 days or three months, respectively, "Interest Payment Date"
with respect to such Loans shall include the date which falls 90 days or
three months after the beginning of such Interest Period, respectively.
"Interest Period" means, (a) with respect to any Eurodollar Rate
Loan, the period commencing on the Business Day the Loan is disbursed or
continued or on the Conversion Date on which the Loan is converted to the
Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the Company in its Notice of Borrowing or
Notice of Conversion/Continuation; and (b) with respect to any CD Rate
Loan, the period commencing on the Business Day the CD Rate Loan is
disbursed or continued or on the Conversion Date on which a Loan is
converted to the CD Rate Loan and ending 30, 60, 90 or 180 days
thereafter, as selected by the Company in its Notice of Borrowing or
Notice of Conversion/Continuation;
provided that:
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<PAGE> 21
(i) if any Interest Period pertaining to a Eurodollar Rate
Loan or CD Rate Loan would otherwise end on a day which is not a
Business Day, that Interest Period shall be extended to the next
succeeding Business Day unless, in the case of Eurodollar Rate Loan,
the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period
shall end the immediately preceding Business Day;
(ii) any Interest Period pertaining to a Eurodollar Rate Loan
that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month at the end of such Interest
Period;
(iii) no Interest Period for any Term Loan shall extend beyond
the Term Credit Maturity Date and no Interest Period for any
Revolving Loan shall extend beyond June 30, 2002 (as such date may
be extended pursuant to the terms of and subject to the conditions
of subsection 2.15(b)); and
(iv) no Interest Period applicable to a Term Loan or portion
thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of the Term Loans unless the aggregate
principal amount of Term Loans represented by Reference Rate Loans
or by CD Rate Loans or Eurodollar Rate Loans having Interest Periods
that will expire on or before such date is equal to or in excess of
the amount of such principal payment.
"Issuing Bank" means BofA, and any other Bank which has agreed to
Issue one or more Letters of Credit, subject to Section 3.09 hereof.
"Issue" means, with respect to any Letter of Credit, to incorporate
the Existing Letters of Credit into this Agreement, or to issue or to
extend the expiry of, or to renew or increase the amount of such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have
corresponding meanings.
"Joint Venture" means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal
arrangement (whether created by contract or conducted through a separate
legal entity) now or hereafter formed by the Company or any of its
Subsidiaries with another Person in order to conduct a common venture or
enterprise with such Person.
"L/C Advance" means each Bank's participation in any L/C Borrowing
in accordance with its Commitment Percentage.
"L/C Borrowing" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been reimbursed on
the date when made nor converted into a Borrowing of Revolving Loans under
subsection 2.01(b).
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<PAGE> 22
"L/C Commitment" means the commitment of the Issuing Bank to Issue,
and the commitment of each of the Banks severally to participate in,
Letters of Credit (including the Existing Letters of Credit) from time to
time Issued or outstanding pursuant to Article III, and to make L/C
Advances, in an aggregate amount not to exceed its Commitment Percentage
of the Aggregate L/C Commitment, provided that each Bank's L/C Commitment
is a part of its Revolving Commitment rather than a separate, independent
commitment.
"L/C Obligations" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under all Letters of Credit, including
all outstanding L/C Borrowings.
"L/C-Related Document" means any document or agreement relating to
any Letter of Credit.
"Letter of Credit" means any letter of credit Issued by the Issuing
Bank pursuant to Article III, which shall include the Existing Letters of
Credit and any Retention Letter of Credit.
"Lending Office" means, with respect to any Bank, the office or
offices of the Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Eurodollar Lending Office," as the case may be, opposite its
name on the signature pages hereto, or such other once or offices of the
Bank as it may from time to time specify to the Company and the Agent
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including those created by,
arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a Capital Lease
Obligation, any financing lease having substantially the same economic
effect as any of the foregoing, or the filing of any financing statement
naming the owner of the asset to which such lien relates as debtor, under
the UCC or any comparable law) and any contingent or other agreement to
provide any of the foregoing.
"Loan" means an extension of credit by a Bank to the Company
pursuant to Article II or (with respect to L/C Borrowings) Article III,
and may be a Reference Rate Loan, CD Rate Loan or Eurodollar Rate loan as
permitted hereunder.
"Loan Documents" means this Agreement, the Guaranty(ies) and all
documents delivered to the Agent in connection herewith or therewith,
including the letter agreements referred to in Sections 2.09 and 3.08
hereof and any letter from the Company requesting an extension of the
Revolving Termination Date pursuant to Section 2.15 hereof.
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<PAGE> 23
"Majority Banks" means at any time Banks holding at least 66-2/3% of
the then aggregate unpaid principal amount of the Loans, or, if no such
principal amount is then outstanding, Banks having at least 66-2/3% of the
Aggregate Commitment.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, any of (a) the operations, business,
properties, condition (financial or otherwise) or prospects of the Company
and its Subsidiaries taken as a whole; (b) the ability of the Company or
any Subsidiary to perform under any Loan Document; or (c) the legality,
validity, binding effect or enforceability of any Loan Document.
"Multiemployer Plan" means a "multiple employer plan" or
"multiemployer plan" (within the meaning of Section 4064(a) and Section
4001(a)(3) of ERISA) and to which any member of the Controlled Group
makes, is making, or is obligated to make contributions or has made, or
been obligated to make, contributions.
"Net Worth" means shareholders' equity as determined in accordance
with GAAP.
"Notice of Borrowing" means a notice given by the Company to the
Agent pursuant to Section 2.03, in substantially the form of Exhibit A.
"Notice of Conversion/Continuation" means a notice given by the
Company to the Agent pursuant to Section 2.04, in substantially the form
of Exhibit B.
"Notice of Lien" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's
office, central filing office or Governmental Authority for the purpose of
evidencing, creating, perfecting or preserving the priority of a Lien
securing obligations owing to a Governmental Authority.
"Obligations" means all Loans, and other Indebtedness, advances,
debts, liabilities, obligations, covenants and duties owing by the Company
to any Bank (including the Issuing Bank), the Agent, or any other Person
required to be indemnified under any Loan Document, of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other
instrument, arising under this Agreement, under any other Loan Document,
whether or not for the payment of money, whether arising by reason of an
extension of credit, loan, guaranty, indemnification or in any other
manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired.
"Ordinary Course of Business" means, in respect of any transaction
involving the Company or any Subsidiary of the Company, (i) the ordinary
course of such Person's business, substantially as conducted by any such
Person prior to or as of the Closing Date,
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and undertaken by such Person in good faith and not for purposes of
evading any covenant or restriction in any Loan Document, or (ii)
transactions outside the ordinary course of such Person's then-existing
business, as long as the Company provides written notice to the Agent and
the Banks prior to such Person undertaking such business, provided that
the Majority Banks shall not have delivered written objections to the
Agent within five (5) Business Days after their receipt of such written
notice.
"Other Taxes" has the meaning specified in subsection 4.01(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Participant" has the meaning specified in subsection 11.07(d).
"Permitted Liens" has the meaning specified in Section 8.01.
"Permitted Swap Obligations" means all obligations (contingent or
otherwise) of the Company or any Subsidiary existing or arising under Swap
Contracts, provided that each of the following criteria is satisfied: (a)
such obligations are (or were) entered into by such Person in the ordinary
course of business for the purpose of directly mitigating risks associated
with liabilities, commitments or assets held by such Person, or changes in
the value of securities issued by such Person in conjunction with a
securities repurchase program not otherwise prohibited hereunder, and not
for purposes of speculation or taking a "market view;" and (b) such Swap
Contracts do not contain (i) any provision ("walk-away" provision)
exonerating the non-defaulting party from its obligation to make payments
on outstanding transactions to the defaulting party, or (ii) any provision
creating or permitting the declaration of an event of default, termination
event or similar event upon the occurrence of an Event of Default
hereunder (other than an Event of Default under subsection 9.01(a)).
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, Joint Venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company or any member of the Controlled Group sponsors or
maintains or to which the Company or member of the Controlled Group makes
or is obligated to make contributions, and includes any Multiemployer Plan
or Qualified Plan.
"Qualified Plan" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and
which any member of the Controlled Group sponsors, maintains, or to which
it makes or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding period covering
at least five (5) plan years, but excluding any Multiemployer Plan.
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"Reference Rate" means the higher of:
(a) the rate of interest publicly announced from time to
time by BofA in San Francisco, California, as its reference rate. It is a
rate set by BofA based upon various factors including BofA's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate; or
(b) one-half percent per annum above the Federal Funds
Rate.
Any change in the reference rate announced by BofA shall take effect
at the opening of business on the day specified in the public announcement
of such change.
"Reference Rate Loan" means a Loan that bears interest based on the
Reference Rate.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the indoor or outdoor environment, including the movement of
Hazardous Materials through ambient air, soil, surface water, ground
water, wetlands, land or subsurface strata.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, a withdrawal from a Plan
described in Section 4063 of ERISA, or a cessation of operations described
in Section 4062(e) of ERISA.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon
the Person or any of its property or to which the Person or any of its
property is subject.
"Responsible Officer" means the Chief Executive Officer or the
President of the Company or, with respect to financial matters, the Chief
Financial Officer or the Treasurer of the Company.
"Retention Letter of Credit" means any letter of credit Issued
pursuant to Article III hereof for the purpose of providing security in
lieu of retention under any construction contract entered into by the
Company or is Subsidiaries.
"Revolving Commitment," with respect to each Bank, has the meaning
specified in subsection 2.01(b).
"Revolving Loan" has the meaning specified in subsection 2.01(b).
"Revolving Termination Date" means the earlier to occur of:
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(a) June 30, 1999; and
(b) the date on which the Commitments shall terminate in
accordance with the provisions of this Agreement.
Subject to clause (b) of this definition, the term "Revolving
Termination Date" shall be deemed to refer to any such Revolving
Termination Date as extended from time to time pursuant to, and subject to
the conditions of, Section 2.15.
"SEC" means the Securities and Exchange Commission or any successor
or similar Governmental Authority.
"Solvent" means, as to any Person at any time, that (i) the fair
value of the property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes of Section 101(32) of the United States Bankruptcy Code (11
U.S.C. Section 101 et seq.); (ii) the present fair saleable value of the
property of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become
absolute and matured; (iii) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed,
contingent and unliquidated liabilities) as they mature in the normal
course of business; (iv) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's
ability to pay its such debts and liabilities mature; and (v) such Person
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would
constitute unreasonably small capital.
"Subsidiary" of a Person means any corporation, limited liability
company, association, partnership or other business entity of which more
than 50% of the voting stock or other equity interests is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
"Surely Instruments" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Swap Contract" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or bill option, interest rate option, forward
foreign exchange transaction, cap, collar or floor transaction, currency
swap, cross-currency rate swap, swaption, currency option or any other,
similar transaction (including any option to enter into any of the
foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to or governing
any or all of the foregoing.
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"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or
after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s),
and (b) for any date prior to the date referenced in clause (a) the
amount(s) determined as the mark-to-market value(s) for such Swap
Contracts, as determined based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in such
Swap Contracts (which may include any Bank).
"Tangible Net Worth" means Net Worth excluding goodwill, patents,
trademarks, trade names, organization expense, treasury shares,
unamortized debt discount and premium, deferred charges and other like
intangibles.
"Taxes" has the meaning specified in subsection 4.01 (a).
"Term Commitment" with respect to each Bank, has the meaning
specified in subsection 2.01 (a).
"Term Loan" has the meaning specified in subsection 2.01 (a).
"Term Credit Maturity Date" has the meaning specified in subsection
2.07(a).
"Transferee" has the meaning specified in subsection 11.07(e).
"Unfunded Pension Liabilities" means the excess of a Plan's accrued
benefits, as defined in Section 3(23) of ERISA, over the current value of
that Plan's assets, as defined in Section 3(26) of ERISA.
"United States" and "U.S." each means the United States of America.
"Withdrawal Liabilities" means, as of any determination date, the
aggregate amount of the liabilities, if any, pursuant to Section 4201 of
ERISA if the Controlled Group made a complete withdrawal from all
Multiemployer Plans and any increase in contributions pursuant to Section
4243 of ERISA.
1.02 Other Interpretive Provisions.
(a) Unless otherwise specified herein or therein, all terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this
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Agreement unless otherwise specified. The meaning of defined terms shall be
equally applicable to the singular and plural forms of the defined terms. The
term "including" is not limiting and means "including without limitation."
(c) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding," and the word "through" means "to
and including."
(d) References to agreements and other contractual instruments
shall be deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document.
(e) References to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(f) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
(g) This Agreement and the other Loan Documents are the results of
negotiations among the Agent, the Company and the other parties, have been
reviewed by counsel to the Agent, the Company and such other parties, and are
the products of all parties. Accordingly, they shall not be construed against
the Banks or the Agent merely because of the Agent's or Banks' involvement in
their preparation.
1.03 Accounting Terms and Definitions.
(a) Except as otherwise expressly provided in this Agreement, all
accounting terms used in this Agreement shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Agent and the Banks under this Agreement shall (unless
otherwise disclosed to the Agent in writing at the time of delivery in the
manner described in subsection (b) below) be prepared, in accordance with GAAP
applied on a basis consistent with those used in the preparation of the latest
financial statements furnished to the Agent and the Banks under this Agreement.
All calculations made for the purposes of determining compliance with this
Agreement shall (except as otherwise expressly provided in this Agreement) be
made by application of GAAP applied on a basis consistent with those used in the
preparation of the latest annual or quarterly financial statements furnished to
the Agent and the Banks pursuant to Section 7.01 unless (i) the Company shall
have objected to determining such compliance on such basis at the time of
delivery of such financial statements or (ii) the Agent on behalf of the
Majority Banks shall so object in writing within 30 days after delivery of such
financial statements, in either of which events such calculations shall be made
on a basis consistent with those used in the preparation of the latest financial
statements as to which such objection shall not have been made.
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(b) The Company shall deliver to the Agent, with sufficient copies
for the Agent and each Bank, at the same time as the delivery of any annual or
quarterly financial statement under Section 7.01 (i) a description in reasonable
detail of any material variation between the application of accounting
principles employed in the preparation of such statement and the application of
accounting principles employed in the preparation of the next preceding annual
or quarterly financial statements as to which no objection has been made in
accordance with the last sentence of subsection (a) above and (ii) reasonable
estimates of the difference between such statements arising as a consequence of
any such difference.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments.
(a) The Term Credit. Each Bank severally agrees, on the terms and
conditions set forth herein, including subsection (c) hereof, to make a single
loan to the Company (each such loan, a "Term Loan") on the Closing Date in an
amount equal to the amount set forth opposite such Bank's name in Schedule
2.01(a) under the heading "Term Commitment" (such amount as the same may be
reduced pursuant to Section 2.05 or as a result of one or more assignments
pursuant to Section 11.07, the Bank's "Term Commitment"). Amounts borrowed as
Term Loans which are repaid or prepaid by the Company may not be reborrowed.
(b) The Revolving Credit. Each Bank severally agrees, on the terms
and conditions hereinafter set forth, to make Loans to the Company (each such
Loan, a "Revolving Loan") from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination Date, in an aggregate
amount not to exceed at any time outstanding the amount set forth opposite the
Bank's name in Schedule 2.01(b) under the heading "Revolving Commitment" (such
amount as the same may be reduced pursuant to Section 2.05 or as a result of one
or more assignments pursuant to Section 11.07, the Bank's "Revolving
Commitment"); provided, however, that, after giving effect to any Borrowing of
Revolving Loans, the Effective Amount of all Revolving Loans and L/C Obligations
together shall not at any time exceed the Aggregate Revolving Commitment; and
provided further, that the sum of (i) the Effective Amount of the Revolving
Loans of any Bank, plus (ii) the participation of such Bank in the Effective
Amount of all L/C Obligations, shall not at any time exceed such Bank's
Revolving Commitment. Within the limits of each Bank's Revolving Commitment, and
subject to the other terms and conditions hereof, the Company may borrow under
this subsection 2.01(b), prepay pursuant to Section 2.06 and reborrow pursuant
to this subsection 2.01(b).
(c) Funding of Term Loans. Each Bank's obligation to fund its Term
Loan on the Closing Date shall be satisfied by deeming that each Bank's term
loan outstanding as of the Closing Date under the Prior Credit Agreement, which
loans aggregate $30,000,000 in principal amount, (the "Existing Term Loans")
shall be deemed to be its Term Loan hereunder.
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(d) Continuation of Interest Periods. Each of the Existing Term
Loans and each "Revolving Loan" (as such term is defined in the Prior Credit
Agreement) that are outstanding under the Prior Credit Agreement as of the
Closing Date and that are "Eurodollar Rate Loans" (as such term is defined in
the Prior Credit Agreement) shall continue with the same Interest Period
hereunder as the interest period in effect under the Prior Credit Agreement with
respect to such loan, until the expiration of such interest period, and shall,
until the expiration of such interest period, bear interest at the "Eurodollar
Rate" in effect under and as defined in the Prior Credit Agreement with respect
to such loans (plus the Applicable Margin hereunder).
2.02 Loan Accounts. The Loans made by each Bank shall be evidenced by one
or more loan accounts maintained by such Bank in the ordinary course of
business. The loan accounts maintained by the Agent and each Bank shall be
rebuttable presumptive evidence of the amount of the Loans made by the Banks to
the Company and the interest and payments thereon. Any failure so to record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of the Company hereunder to pay any amount owing with respect to the
Loans.
2.03 Procedure for Borrowing.
(a) Each Borrowing shall be made upon the written notice of the
Company in the form of a Notice of Borrowing (which notice must be received by
the Agent prior to 9:00 a.m. (San Francisco time) (i) three Business Days prior
to the requested borrowing date, in the case of Eurodollar Rate Loans, (ii) two
Business Days prior to the requested borrowing date, in the case of CD Rate
Loans, and (iii) on the requested borrowing date, in the case of Reference Rate
Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum principal amount of (i) $3,000,000 or any multiple
of $ 1,000,000 in excess thereof, in the case of Eurodollar Rate
Loans or CD Rate Loans, and (ii) $ 1,000,000 or any multiple of $
1,000,000 in excess thereof, in the case of Reference Rate Loans;
(B) the requested borrowing date, which shall be a
Business Day;
(C) whether the Borrowing is to be comprised of
Eurodollar Rate Loans, CD Rate Loans or Reference Rate Loans; and
(D) with respect to Eurodollar Rate Loans and CD Rate
Loans, the duration of the Interest Period applicable to such Loans
included in such notice. If the Notice of Borrowing shall fail to
specify the duration of the Interest Period for any Borrowing
comprised of CD Rate Loans or Eurodollar Rate Loans, such Interest
Period shall be 90 days or three months, respectively.
(b) Upon receipt of the Notice of Borrowing, the Agent will
promptly notify each Bank thereof of the amount of such Bank's Commitment
Percentage of the Borrowing.
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(c) Each Bank will make the amount of its Commitment Percentage of
the Borrowing available to the Agent for the account of the Company at the
office specified by the Agent in Section 11.02 for payment by 10:00 a.m. (San
Francisco time), in the case of CD Rate Loans or Eurodollar Rate Loans, or 12:00
noon (San Francisco time), in the case of Reference Rate Loans, in each case on
the borrowing date requested by the Company in funds immediately available to
the Agent. Unless any applicable condition specified in Article V has not been
satisfied, the proceeds of all such Loans will then be made available to the
Company by the Agent at such office by crediting the account of the Company on
the books of BofA with the aggregate of the amounts made available to the Agent
by the Banks and in like funds as received by the Agent.
(d) After giving effect to any Borrowing, unless the Agent shall
otherwise consent, there may not be more than ten different Interest Periods in
effect.
2.04 Conversion and Continuation Elections.
(a) The Company may upon irrevocable written notice to the Agent:
(i) elect to convert on any Business Day, any Reference Rate
Loans (or any part thereof in an amount not less than $3,000,000 or an
integral multiple of $1,000,000 in excess thereof) into Eurodollar Rate
Loans or CD Rate Loans;
(ii) elect to convert on any Interest Payment Date, any CD
Rate Loans or Eurodollar Rate Loans maturing on such Interest Payment Date
(or any part thereof in an amount not less than (A) $3,000,000 or an
integral multiple of $1,000,000 in excess thereof, in the case of a
conversion into CD Rate Loans or Eurodollar Rate Loans, or (B) $1,000,000
or an integral multiple of $1,000,000 in excess thereof, in the case of a
conversion into Reference Rate Loans), in the case of CD Rate Loans, into
Eurodollar Rate Loans or Reference Rate Loans, and in the case of
Eurodollar Rate Loans, into CD Rate Loans or Reference Rate Loans; or
(iii) elect to continue, on any Interest Payment Date
therefor, any CD Rate Loans or Eurodollar Rate Loans (or any part thereof
in an amount not less than $3,000,000 or an integral multiple of
$l,000,000);
provided, that if the aggregate amount of CD Rate Loans or Eurodollar Rate Loans
shall have been reduced by payment, prepayment, or conversion of part thereof to
be less than $3,000,000, the CD Rate Loans or Eurodollar Rate Loans shall
automatically convert into Reference Rate Loans, and on and after such date the
right of the Company to continue such Loans as Eurodollar Rate Loans or CD Rate
Loans, as the case may be, shall terminate.
(b) The Company shall deliver by telex, cable or facsimile,
confirmed immediately in an original writing, a Notice of
Conversion/Continuation to be received by the Agent not later than 9:00 a.m.
(San Francisco time) at least (i) three Business Days in advance of the
Conversion Date or continuation date, if the Loans are to be converted into or
continued as
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Eurodollar Rate Loans; (ii) two Business Days in advance of the Conversion Date
or continuation date, if the Loans are to be converted into or continued as CD
Rate Loans; and (iii) on the Conversion Date or continuation date, if the Loans
are to be converted into Reference Rate Loans, specifying:
(A) the proposed Conversion Date or continuation date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the nature of the proposed conversion or
continuation; and
(D) the duration of the requested Interest Period, if
applicable.
(c) If upon the expiration of any Interest Period applicable to CD
Rate Loans or Eurodollar Rate Loans, the Company has failed to select a new
Interest Period to be applicable to such CD Rate Loans or Eurodollar Rate Loans,
as the case may be, or if any Event of Default shall then exist, the Company
shall be deemed to have elected to convert such CD Rate Loans or Eurodollar Rate
Loans into Reference Rate Loans effective as of the expiration date of such
current Interest Period.
(d) Upon receipt of a Notice of Conversion/ Continuation, the
Agent will promptly notify each Bank thereof, or, if no timely notice is
provided, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made pro rata
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Bank.
(e) After giving effect to any conversion or continuation of any
Loans, unless the Agent shall otherwise consent, there shall not be more than 10
different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than five Business Days' prior notice to the Agent, terminate the
Aggregate Revolving Commitment or permanently reduce the Aggregate Revolving
Commitment by an aggregate minimum amount of $5,000,000 or any multiple of $
1,000,000 in excess thereof, provided that no such reduction or termination
shall be permitted if the Effective Amount of all outstanding Revolving Loans
and L/C Obligations would exceed the Aggregate Revolving Commitment then in
effect, or (b) the Effective Amount of all L/C Obligations then outstanding
would exceed the Aggregate L/C Commitment then in effect; and, provided,
further, that once reduced in accordance with this Section 2.05, the Aggregate
Revolving Commitment and, if applicable the Aggregate L/C Commitment may not be
increased. Any reduction of the Aggregate Revolving Commitment shall be applied
to each Bank's Commitment in accordance with such Bank's Commitment Percentage.
If and to the extent specified by the Company in the notice to the Agent, some
or all of the reduction in the Aggregate Revolving Commitment shall be applied
to reduce the Aggregate L/C Commitment, subject to the first proviso of the
first sentence of this Section. If any of the Commitments are terminated in
their entirety, all accrued commitment fees
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to the effective date of such termination shall be payable on the effective date
of such termination without any premium or penalty.
2.06 Optional Prepayments. Subject to Section 4.04, the Company may, at
any time or from time to time, upon at least three Business Days' notice to the
Agent for CD Rate Loans or Eurodollar Rate Loans and one Business Days notice
for Reference Rate Loans, ratably prepay Loans in whole or in part, in amounts
of $2,000,000 or any multiple of $1,000,000 in excess thereof. Such notice of
prepayment shall specify the date and amount of such prepayment and whether such
prepayment is of Reference Rate Loans, CD Rate Loans or Eurodollar Rate Loans,
or any combination thereof. Such notice shall not thereafter be revocable by the
Company and the Agent will promptly notify each Bank thereof and of the amount
of such Bank's Commitment Percentage of such prepayment. If such notice is
given, the Company shall make such prepayment and the payment amount specified
in such notice shall be due and payable on the date specified therein, together
with accrued interest to each such date on the amount prepaid and the amounts
required pursuant to Section 4.04.
2.07 Repayment.
(a) The Term Credit. The Company agrees to repay the principal
amount of the Term Loans in six (6) equal semi-annual installments of $5,000,000
each, beginning on December 31, 1997, and thereafter on the last Business Day of
each June and December of each year thereafter, through and including June 30,
2000 (the "Term Credit Maturity Date"), on which date the final installment
shall be due and payable.
(b) The Revolving Credit. The Company agrees to repay the
principal amount outstanding as of the Revolving Termination Date of the
Revolving Loans in ten equal semiannual installments (i) beginning on the last
Business Day in December, 1999 (as such date may be extended pursuant to the
terms of and subject to the conditions of subsection 2.15(b)), and (ii)
thereafter on the last Business Day of June and December of each year
thereafter, through and including the last Business Day in June, 2004 (as such
date may be extended pursuant to the terms of and subject to the conditions of
subsection 2.15(b)).
2.08 Interest
(a) Subject to subsection 2.08(c), each Loan shall bear interest
on the outstanding principal amount thereof from the date when made until it
becomes due at a rate per annum equal to the CD Rate, the Eurodollar Rate or the
Reference Rate, as the case may be, plus the Applicable Margin.
(b) Interest on each Loan shall be payable in arrears on each
Interest Payment Date. Interest shall also be payable on the date of any
prepayment of Loans pursuant to Sections 2.05 and 2.06 for the portion of the
Loans so prepaid and upon payment (including prepayment) in full thereof and,
after the occurrence and during the continuance of any Event of Default,
interest shall be payable on demand.
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(c) If any amount of principal of or interest on any Loan, or any
other amount payable hereunder or under any of the other Loan Documents is not
paid in full when due (whether at stated maturity, by acceleration, demand or
otherwise), the Company agrees to pay interest on such unpaid principal or other
amount, from the date such amount becomes due until the date such amount is paid
in full, payable on demand, at a fluctuating rate per annum equal to the
Reference Rate plus two percent.
2.09 Fees.
(a) Agency Fee. The Company shall pay an agency fee to the Agent
for the Agent's own account, in the amounts and at the times as required by the
letter agreement dated as of May 30, 1997, between the Company and the Agent.
(b) Commitment Fees. The Company shall pay to the Agent for the
account of each Bank a commitment fee on the average daily unused portion of
such Bank's Revolving Commitment equal to 1.875% per annum. Such commitment fee
shall accrue from the Closing Date to the Revolving Termination Date and shall
be payable quarterly in arrears on the last Business Day of each calendar
quarter commencing on September 30, 1997, and on the Revolving Termination Date.
The Company shall also pay, on June 30, 1997, to the Agent for the account of
each Bank, any unpaid commitment fees due and owing under subsection 2.09(b) of
the Prior Credit Agreement through and including the Closing Date.
2.10 Computation of Fees and Interest.
(a) All computations of interest payable in respect of Reference
Rate Loans shall be made on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed. All other computations of fees and interest
under this Agreement shall be made on the basis of a 360 day year and actual
days elapsed, which results in more interest being paid than if computed on the
basis of a 365-day year. Interest and fees shall accrue during each period
during which interest or such fees are computed from the first day thereof to
the last day thereof.
(b) The Agent will, with reasonable promptness, notify the Company
and the Banks of each determination of a Eurodollar Rate or of a CD Rate,
provided that any failure to so shall not relieve the Company of any liability
hereunder. Any change in the interest rate on a Loan resulting from a change in
the Reserve Percentage, Eurocurrency Reserve Percentage, or the Assessment Rate
shall become effective as of the opening of business on the day on which such
change in the Reserve Percentage, Eurocurrency Reserve Percentage, or the
Assessment Rate becomes effective. The Agent will with reasonable promptness
notify the Company and the Banks of the effective date and the amount of each
such change, provided that any failure to do so shall not relieve the Company of
any liability hereunder.
(c) Each determination of an interest rate by the Agent pursuant
to any provision of this Agreement shall be conclusive and binding on the
Company and the Banks in the absence of manifest error.
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2.11 Payments by the Company.
(a) All payments (including prepayments) to be made by the Company
on account of principal, interest and fees shall be made without set-off or
counterclaim and shall be made to the Agent, for the account of the Banks
(except as otherwise provided in subsection 2.12(b) and Sections 4.01, 4.03,
4.04 and 4.06), at the Agent's office referenced in Section 11.02, in dollars
and in immediately available funds no later than 12:00 noon (San Francisco
time). The Agent will promptly distribute to each Bank the amount of its
Commitment Percentage of such principal, interest, fees or other amounts, in
like funds as received. Any payment which is received by the Agent later than
12:00 noon (San Francisco time) shall be deemed to have been received on the
immediately succeeding Business Day.
(b) Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be; subject to the provisions
set forth in the definition of "Interest Period" herein.
(c) Unless the Agent shall have received notice from the Company
prior to the date on which any payment is due to the Banks hereunder that the
Company will not make such payment in full, the Agent may assume that the
Company has made such payment in full to the Agent on such date and the Agent
may (but shall not be so required), in reliance upon such assumption, cause to
be distributed to each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent the Company shall not have made such payment
in full to the Agent, each Bank shall repay to the Agent on demand such amount
distributed to such Bank, together with interest thereon for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Agent, at the Federal Funds Rate as in effect on such date.
2.12 Payments by the Banks to the Agent.
(a) Each Bank shall make available to the Agent in immediately
available funds for the account of the Company an amount equal to the product of
(i) its Commitment Percentage times (ii) the amount of any Borrowing.
(b) Unless the Agent shall have received notice from a Bank on or
prior to the Closing Date or, with respect to each Borrowing after the Closing
Date, at least one Business Day prior to the date of any proposed Borrowing,
that such Bank will not make available to the Agent for the account of the
Company the amount of that Bank's Commitment Percentage of the Borrowing, the
Agent may assume that each Bank has made such amount available to the Agent on
the borrowing date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Agent and the Agent in such circumstances has made available to
the Company such amount, that Bank shall within two Business Days following the
date of such Borrowing make such amount available to the Agent, together with
interest at the Federal Funds Rate for each day during such period. A
certificate of
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the Agent submitted to any Bank with respect to amounts owing under this
subsection 2.12(b) shall be conclusive, absent manifest error. If such amount is
so made available, such payment to the Agent shall constitute such Bank's Loan
on the date of Borrowing for all purposes of this Agreement. If such amount is
not made available to the Agent within two Business Days following the date of
such Borrowing, the Agent shall notify the Company of such failure to fund and,
upon demand by the Agent, the Company shall pay such amount to the Agent for the
Agent's account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing; provided,
however, that the Company shall not be obligated to pay any amounts pursuant to
Section 4.04 as a result of such payment.
(c) The failure of any Bank to make any Loan on any date of
Borrowing shall not relieve any other Bank of any obligation hereunder to make a
Loan on the date of such Borrowing, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such other Bank on the
date of any Borrowing.
2.13 Sharing of Payments, Etc. If, other than as provided in Section
4.01, 4.03, 4.04 or 4.06, any Bank shall obtain on account of the Loans made by
it, any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its Commitment Percentage of
payments on account of the Loans obtained by all the Banks, such Bank shall
forthwith (a) notify the Agent of such fact, and (b) purchase from the other
Banks such participations in the Loans made by them as shall be necessary to
cause such purchasing Bank to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid thereto together with an amount equal to such paying Bank's
Commitment Percentage (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company agrees
that any Bank so purchasing a participation from another Bank pursuant to this
Section 2.13 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off, but subject to Section
11.08(a)) with respect to such participation as fully as if such Bank were the
direct creditor of the Company in the amount of such participation. The Agent
shall keep records (which shall be conclusive and binding in the absence of
manifest error), of participations purchased pursuant to this Section 2.13 and
shall in each case notify the Banks following any such purchases.
2.14 Guaranty of Obligations. The Obligations shall be jointly and
severally guaranteed by the Guarantors pursuant to one or more Guaranties.
Promptly after the date that any Person becomes a Subsidiary of the Company,
and, in any event, within ten Business Days following receipt by the Company
from the Agent of a request therefor, the Company will cause such Subsidiary to
execute and deliver to the Agent and the Banks a guaranty of the Obligations in
substantially the form of the Guaranty, along with such other items as
reasonably requested by the Agent, at the request of any Bank, in connection
with the foregoing, including resolutions, incumbency and officers certificates
and opinions of counsel.
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2.15 Extension of Revolving Termination Date. (a) Not earlier than April
30, 1998 and not later than April 30, 1999, and, if the Revolving Termination
Date has previously been extended pursuant to this Section 2.15, not earlier
than the April 30 of the year immediately prior to the year in which the
Revolving Termination Date then occurs, and not later than the April 30 of the
year in which the Revolving Termination Date then occurs, the Company may, at
its option, request that all the Banks extend the Revolving Termination Date by
one year by means of a letter, addressed to the Agent and each Bank,
substantially in the form of Exhibit I; provided, however, that notwithstanding
the foregoing, the Revolving Termination Date shall occur on the date that the
Commitments terminate pursuant to Section 9.02 or the Revolving Commitments are
terminated pursuant to Section 2.05. The Revolving Termination Date shall be
extended by one year if all of the Banks consent (in each Bank's sole and
absolute discretion) to such extension, such consent to be given by executing
and delivering to the Agent, no later than 15 Business Days after its receipt of
such letter, a counterpart of such letter; provided, that, if, one or more Banks
decline to consent to the extension of the Revolving Termination Date, any
Bank's consent to such extension shall be nullified, and the Revolving
Termination Date shall not be extended. If any Bank fails to execute and deliver
such letter on or before the expiration of the aforesaid 15 Business Day period,
such Bank shall be deemed to have declined to consent to extend the Revolving
Termination Date, and the Revolving Termination Date shall not be extended.
(b) In each instance that the Revolving Termination Date shall
have been extended pursuant to subsection (a) of this Section, the date on which
the first installment of principal is due under clause (i) of subsection 2.07(b)
shall be extended to the last Business Day of the year in which the Revolving
Termination Date (as so extended) occurs (such last Business Day, the "First
Principal Payment Date"), and the date on which the last installment of
principal is due under clause (ii) of subsection 2.07(b) shall be extended to
the last Business Day in June of the year which is five years after the year in
which the First Principal Payment Date occurs.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Facility.
(a) From time to time on the terms and conditions set forth herein
(i) the Issuing Bank agrees prior to the Revolving Termination Date (A) to issue
Letters of Credit for the account of the Company or its Subsidiaries (it being
understood that the Company shall be liable hereunder for all obligations with
respect to any Letters of Credit issued hereunder for the account of a
Subsidiary, which for purposes hereof shall be deemed to be issued "for the
account of the Company), (B) to amend Letters of Credit previously issued
hereunder by it, in accordance with subsection 3.02(c), and (C) to honor drafts
drawn under any Letter of Credit; and (ii) the Banks severally agree to
participate in Letters of Credit (including the Letters of Credit described in
subsection 3.03(a)) Issued for the account of the Company; provided, however,
that the Issuing Bank shall not be obligated to Issue, and no Bank shall be
obligated to
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participate in, any Letter of Credit if as of the date of and after giving
effect to the Issuance of such Letter of Credit (1) the Effective Amount of all
L/C Obligations plus the Effective Amount of all Revolving Loans exceeds (or
would exceed) the Aggregate Revolving Commitment, (2) the participation of any
Bank in the Effective Amount of all L/C Obligations plus the Effective Amount of
the Revolving Loans of such Bank exceeds (or would exceed) such Bank's
Commitment, or (3) the Effective Amount of L/C Obligations exceeds (or would
exceed) the Aggregate L/C Commitment. Within the foregoing limits, and subject
to the other terms and conditions hereof, the Company's ability to obtain
Letters of Credit shall be fully revolving, and, accordingly, the Company may,
during the foregoing period, obtain Letters of Credit to replace Letters of
Credit which have expired or which have been drawn upon and reimbursed.
(b) The Issuing Bank shall be under no obligation to Issue any
Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain
the Issuing Bank from issuing such Letter of Credit, or any Requirement of
Law applicable to the Issuing Bank or any request or directive (whether or
not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit, or request that the
Issuing Bank refrain from, the issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon the Issuing Bank
with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the Issuing Bank is not otherwise compensated) not
in effect on the Closing Date, or shall impose upon the Issuing Bank any
unreimbursed loss, cost or expense which was not applicable on the Closing
Date and which the Issuing Bank in good faith deems material to it;
(ii) the Issuing Bank has received written notice from any
Bank, the Agent or the Company, on or prior to the Business Day prior to
the requested date of issuance of such Letter of Credit, that one or more
of the applicable conditions contained in Article V is not then satisfied;
(iii) the expiry date of any requested Letter of Credit, other
than a Retention Letter of Credit, is (x) more than one year after the
date of issuance, unless the Issuing Bank and the Majority Banks have
approved such expiry date in writing, or (y) after the Revolving
Termination Date, unless all the Banks have approved such expiry date in
writing; or the expiry date of any requested Retention Letter of Credit is
more than two years after the date of issuance, unless all of the Banks
have approved such expiry date in writing;
(iv) any requested Letter of Credit does not provide for
drafts, or is not otherwise in form and substance acceptable to the
Issuing Bank;
(v) such Letter of Credit, other than a Retention Letter of
Credit, is to be used for any purpose other than to support the Company's
workers' compensation program, unless the Issuing Bank and the Majority
Banks have approved such other purpose in
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writing; or such Retention Letter of Credit is to be used for any purpose
other than to provide security in lieu of retention under any construction
contract entered into by the Company, unless the Issuing Bank and the
Majority Banks have approved such other purpose in writing; or
(vi) the face amount of any requested Retention Letter of
Credit is less than $ 1,000,000.
3.02 Issuance and Amendment of Letters of Credit.
(a) Each Letter of Credit shall be Issued upon the irrevocable
written request of the Company received by the Issuing Bank (with a copy sent by
the Company to the Agent) at least ten days (or such shorter time as the Issuing
Bank may agree in a particular instance in its sole discretion) prior to the
proposed date of issuance. Each such request for issuance of a Letter of Credit
shall be by telecopy, telex or cable, confirmed immediately in an original
writing, in substantially the form of Exhibit C, or an application form for
issuances of standby letters of credit as shall at any time be in use at the
applicable Issuing Bank, as such Issuing Bank shall request ("Letter of Credit
Application") and shall specify in form and detail satisfactory to the Issuing
Bank: (i) the proposed date of issuance of the Letter of Credit (which shall be
a Business Day); (ii) the face amount of the Letter of Credit (provided that
the face amount of any Retention Letter of Credit shall not be less than
$1,000,000); (iii) the expiry date of the Letter of Credit; (iv) the name and
address of the beneficiary thereof; (v) the documents to be presented by the
beneficiary of the Letter of Credit in case of any drawing thereunder; (vi) the
full text of any certificate to be presented by the beneficiary in case of any
drawing thereunder; and (vii) such other matters as the Issuing Bank may
require. This Agreement shall control in the event of any conflict with a Letter
of Credit Application.
(b) At least two Business Days prior to the Issuance of any Letter
of Credit or any amendment of any Letter of Credit, the Issuing Bank will
confirm with the Agent (by telephone or in writing) that the Agent has received
a copy of the Letter of Credit Application or Amendment Application from the
Company and, if not, the Issuing Bank will provide the Agent with a copy of
same. Unless the Issuing Bank has received notice on or before the Business Day
immediately preceding the date the Issuing Bank is to Issue a requested Letter
of Credit (A) from the Agent directing the Issuing Bank not to issue additional
Letters of Credit because (x) the available Revolving Commitments equal zero, or
the aggregate amount of all L/C Obligations equals or exceeds the Aggregate L/C
Commitment; or (y) the stated amount of the Letter of Credit the Issuing Bank is
being requested to issue exceeds the available Revolving Commitments or would
cause the Effective Amount of the L/C Obligations to exceed the Aggregate L/C
Commitment; or (B) from the Agent or any Bank that one or more conditions
specified in Article V are not then satisfied; then subject to the terms and
conditions hereof, the Issuing Bank will, on the requested date, Issue a Letter
of Credit for the account of the Company or amend or reinstate a Letter of
Credit, as the case may be, in accordance with the Issuing Bank's usual and
customary business practices.
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(c) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, the Issuing Bank will, upon the written
request of the Company in form and substance satisfactory to the Issuing Bank
(an "Amendment Application"), with a copy sent by the Company to the Agent,
amend any Letter of Credit Issued by it; provided that the Issuing Bank shall be
under no obligation to amend any Letter of Credit if:
(i) the Issuing Bank would have no obligation at such time
to Issue such Letter of Credit in its amended form at such time under the
terms of this Agreement; or
(ii) the beneficiary of any such Letter of Credit does not
accept the Letter of Credit as amended.
(d) From time to time while a Letter of Credit is outstanding
after the Revolving Termination Date (subject to clause (iii) of subsection
3.01(b)), the Issuing Bank will, upon submission to the Issuing Bank of an
Amendment Application in form and substance satisfactory to the Issuing Bank,
with a copy sent by the Company to the Agent, amend any Letter of Credit Issued
by it; provided that the Issuing Bank shall be under no obligation to amend any
Letter of Credit after the Revolving Termination Date if:
(i) such Letter of Credit in its amended form would have an
expiry date subsequent to that of the Letter of Credit as to which the
Amendment Application has been submitted;
(ii) such Letter of Credit in is amended form would have an
amount available for drawing in excess of that of the Letter of Credit as
to which the Amendment Application has been submitted;
(iii) a Default or Event of Default has occurred and is
continuing as of the date of the Amendment Application; or
(iv) the beneficiary of any such Letter of Credit does not
accept the Letter of Credit as amended.
(e) The Agent will promptly notify the Banks of the receipt by it
of any Letter of Credit Application or Amendment Application.
(f) The Issuing Bank may, at its election (or as required by the
Agent at the direction of the Majority Banks), deliver any notices of
termination or other communications to any Letter of Credit (other than a
Retention Letter of Credit) beneficiary or transferee, or take any other action
as necessary or appropriate, at any time and from time to time, in order to
cause the expiry date of such Letter of Credit (other than a Retention Letter of
Credit) to be a date not later than the Revolving Termination Date.
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3.03 Participations, Drawings and Reimbursements.
(a) As of the Closing Date, the Existing Letters of Credit will be
deemed for all purposes Letters of Credit Issued and outstanding under this
Article III, and will be governed by applications and agreements pertaining
thereto and by this Agreement (which shall control in the event of a conflict).
Each Bank (other than the Issuing Bank) shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the Issuing Bank on the
Closing Date a participation in such Letters of Credit and each drawing
thereunder in an amount equal to the product of (i) the Commitment Percentage of
the Bank, times (ii) the face amount of such Letters of Credit. For purposes of
subsection 3.01 (a), the Existing Letters of Credit shall be deemed to utilize
the Revolving Commitment of each Bank (other than the Issuing Bank) by an amount
equal to the amount of such participation and to utilize the Revolving
Commitment of the Issuing Bank by an amount equal to the face amount of such
Letters of Credit less the aggregate amount of such participations.
(b) Immediately upon the Issuance of each Letter of Credit in
addition to that described in subparagraph (a), each Bank (other than the
applicable Issuing Bank) shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Bank a participation in
such Letter of Credit and each drawing thereunder in an amount equal to the
product of (i) the Commitment Percentage of the Bank, times (ii) the face amount
of such Letter of Credit. For purposes of subsection 3.01(a), each Issuance of a
Letter of Credit shall be deemed to utilize the Revolving Commitment of each
Bank (other than the applicable Issuing Bank) by an amount equal to the amount
of such participation and to utilize the Revolving Commitment of the Issuing
Bank by an amount equal to the face amount of such Letter of Credit less the
aggregate amount of such participations.
(c) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the applicable Issuing Bank
will promptly notify the Company. The Company shall reimburse the Issuing Bank
prior to 11:00 a.m. (San Francisco time), on each date that any amount is paid
by the Issuing Bank under any Letter of Credit, in an amount equal to the amount
so paid by the Issuing Bank. In the event the Company shall fail to reimburse
the Issuing Bank the full amount of any drawing under any Letter of Credit by
11:00 a.m. (San Francisco time) on the same date such drawing is honored by the
Issuing Bank, the Issuing Bank will promptly notify the Agent and the Agent will
promptly notify each Bank thereof, and, if such drawing occurs before the
Revolving Termination Date, the Company shall be deemed to have requested that
Reference Rate Loans be made by the Banks to be disbursed on the date of payment
by the Issuing Bank under the Letter of Credit, subject to the amount of the
unutilized portion of the Revolving Commitment and subject to the conditions set
forth in Section 5.02. If such drawing on any Letter of Credit occurs on or
after the Revolving Termination Date, the Company shall be deemed to have
incurred from the Issuing Bank a L/C Borrowing in the amount of such drawing,
which shall be due and payable and shall bear interest in accordance with the
terms of subsection 3.03(e) hereof. Any notice given by the Issuing Bank or the
Agent pursuant hereto may be oral if immediately confirmed in writing (including
by facsimile); provided that the lack of such an immediate confirmation shall
not affect the conclusiveness or binding effect of such notice.
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(d) Each Bank will upon receipt of any notice pursuant to
subsection 3.03(c) make available to the Agent for the account of the Issuing
Bank an amount in immediately available funds equal to its Commitment Percentage
of the amount of the drawing, whereupon the participating Banks shall (subject
to subsection 3.03(e)) each be deemed to have made a Revolving Loan consisting
of a Reference Rate Loan to the Company in that amount. If any Bank so notified
shall fail to make available to the Agent for the account of the Issuing Bank
the amount of such Bank's Commitment Percentage of the amount of the drawing by
no later than 12:00 noon (San Francisco time) on the date such drawing was
honored by the Issuing Bank (the "Participation Date"), then interest shall
accrue on such Bank's obligation to make such payment, from the Participation
Date to the date such Bank makes such payment at a rate per annum equal to the
Federal Funds Rate in effect from time to time. The Agent will promptly give
notice of the occurrence of the Participation Date, but failure of the Agent to
give any such notice on the Participation Date or in sufficient time to enable
any Bank to effect such payment on such date shall not relieve such Bank from
its obligations under this Section 3.03.
(e) With respect to any unreimbursed drawing which is not
converted into Revolving Loans consisting of Reference Rate Loans to the Company
in whole or in part, because of the Company's failure to satisfied the
conditions set forth in Section 5.02, because the drawing on any Letter of
Credit occurred on or after the Revolving Termination Date, or for any other
reason, the Company shall be deemed to have incurred from the Issuing Bank a L/C
Borrowing in the amount of such drawing, which L/C Borrowing shall be due and
payable on demand (together with interest) and shall bear interest until such
demand at a rate per annum equal to the Reference Rate plus two percent, and
each Bank's payment to the Issuing Bank pursuant to subsection 3.03(d) shall be
deemed a L/C Advance in satisfaction of its participation obligation under this
Section 3.03.
3.04 Repayment of Participations.
(a) Upon (and only upon) receipt by the Agent for the account of
the Issuing Bank of funds from the Company (i) in reimbursement of any payment
made by the Issuing Bank under any Letter of Credit with respect to which any
Bank has theretofore paid the Agent for the account of the Issuing Bank for such
Bank's participation in such Letter of Credit pursuant to Section 3.03, or (ii)
in payment of interest thereon; the Agent will pay to each Bank, in the same
funds as those received by the Agent for the account of the Issuing Bank, the
amount of such Bank's Commitment Percentage of such funds, and the Issuing Bank
shall receive the amount of the Commitment Percentage of such funds of any Bank
that did not so pay the Agent for the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to
return to the Company or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Company to the Agent for the account of the Issuing Bank pursuant to subsection
3.04(a) in reimbursement of a payment made under any Letter of Credit or
interest thereon, each Bank shall, on demand of the Agent, forthwith return to
the Agent or the Issuing Bank the amount of its Commitment Percentage of any
amounts so returned by the Agent or the Issuing Bank plus interest thereon from
the date such demand is
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made to the date such amounts are returned by such Bank to the Agent or the
Issuing Bank, at a rate per annum equal to the Federal Funds Rate in effect from
time to time.
3.05 Role of the Issuing Bank.
(a) Each Bank agrees that, in paying any drawing under a Letter of
Credit, the Issuing Bank shall not have any responsibility to obtain any
document (other than any sight draft and certificates expressly required by the
Letter of Credit) or to ascertain or inquire as to the validity or accuracy of
any such document or the authority of the Person executing or delivering any
such document. Neither the Issuing Bank nor any of its Affiliates,
correspondents, participants or assignees, or any of their respective officers,
directors or employees, shall be liable to any Bank for:
(i) any action taken or omitted in connection herewith at
the request or with the approval of the Banks (including the Majority
Banks, as applicable);
(ii) any action taken or omitted in the absence of gross
negligence or wilful misconduct; or
(iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(b) The Company hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the Company's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement.
Neither the Issuing Bank, nor any of its Affiliates, correspondents,
participants or assignees, or any of their respective officers, directors or
employees, shall be liable or responsible for any of the matters described in
paragraphs (i) through (vii) of Section 3.06; provided, however, anything in
such clauses to the contrary notwithstanding, that the Company may have a claim
against the Issuing Bank, and the Issuing Bank may be liable to the Company, to
the extent, but only to the extent, of any direct, as opposed to consequential
or exemplary, damages suffered by the Company which the Company proves were
caused by (i) the Issuing Bank's willful misconduct or gross negligence or (ii)
the Issuing Bank's willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate both
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing, the Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
3.06 Obligations Absolute. The obligations of the Company under this
Agreement and any L/C-Related Document to reimburse the Issuing Bank, and to
repay L/C Borrowings and L/C Borrowings converted into Revolving Loans, shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement and such other L/C-Related Document under all
circumstances, including the following:
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(i) any lack of validity or enforceability of this
Agreement, any Letter of Credit or any other L/C-Related Document;
(ii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the obligations of the Company in
respect of any Letter of Credit or any other amendment or waiver of or any
consent to departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Company may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C-Related Documents or any unrelated
transaction;
(iv) any certificate or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(v) any payment by the Issuing Bank under any Letter of
Credit against presentation of a draft or certificate that does not
strictly comply with the terms of any Letter of Credit; or any payment is
made by the Issuing Bank under any Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee
for the benefit of creditors, liquidator, receiver or other representative
of or successor to any beneficiary or any transferee of any Letter of
Credit, including any arising in connection with any Insolvency
Proceeding;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any other guarantee, for all or any of the obligations of
the Company in respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge of,
the Company or a guarantor.
3.07 Cash Collateral Pledge. Upon the request of Agent, (i) if the
Issuing Bank has honored any full or partial drawing request on any Letter of
Credit or (ii) if, as of the Revolving Termination Date, any Letters of Credit
(other than any Retention Letters of Credit) may for any reason remain
outstanding and partially or wholly undrawn, or (iii) if, after the Revolving
Termination Date, any Retention Letters of Credit remain outstanding and
partially or wholly undrawn and there shall occur a Default or Event of Default,
the Company shall immediately pay over, pledge and deliver, pursuant to a
security agreement in form and substance acceptable to the Agent, cash in an
amount equal to the maximum amount available for drawing under any outstanding
Letters of Credit, to the Agent for the benefit of the Banks as collateral.
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3.08 Letter of Credit Fees. The Company shall pay to the Agent for the
benefit of the Banks letter of credit fees equal to (i) 0.500% per annum, in
each case of the face amount of outstanding Letters of Credit other than
Retention Letters of Credit, and (ii) 0.325% per annum, in each case of the face
amount of outstanding Retention Letters of Credit. Such fees shall be payable
quarterly in arrears on the last day of each calendar quarter. The Company shall
pay BofA, in its capacity as Issuing Bank, a letter of credit fronting fee in
the amount and at the times as set forth in a letter agreement between the
Company and BofA, as Issuing Bank, dated as of May 30, 1997, and shall pay any
other Issuing Bank a letter of credit fronting fee as agreed to from time to
time by the Company and such Issuing Bank.
3.09 Additional Issuing Bank. If BofA as Issuing Bank declines to Issue a
requested Letter of Credit due to the circumstances set forth in clause (i) of
subsection 3.01(b), then the Company shall have the right to designate an
additional Bank as an Issuing Bank hereunder, provided that such Issuing Bank
shall have notified the Agent in writing prior to the Issuance of any Letter of
Credit by it that it is an Issuing Bank hereunder with respect to Letters of
Credit and upon receipt by Agent of such notice, the definition of 'Issuing
Bank' hereunder shall be deemed to be amended thereby.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
(a) Subject to subsection 4.01(g), any and all payments by the
Company to each Bank or the Agent under this Agreement shall be made free and
clear of, and without deduction or withholding for, any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Agent, such taxes (including income taxes or franchise taxes) as are imposed on
or measured by each Bank's net income by the jurisdiction under the laws of
which such Bank or the Agent, as the case may be, is organized or maintains a
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes").
(b) In addition, the Company shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Documents (hereinafter referred to as "Other Taxes").
(c) Subject to subsection 4.01(g), the Company shall indemnify and
hold harmless each Bank and the Agent for the fall amount of Taxes or Other
Taxes (including without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 4.01) paid by the Bank or the
Agent in the amount that the respective Bank
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specifies as necessary to preserve the after-tax yield the Bank would have
received if such Taxes or Other Taxes had not been imposed, and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted and any liability (including penalties, interest, additions
to tax and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days from the date the Bank or the Agent
makes written demand therefor. Should the Agent or a Bank determine in its sole
discretion to seek a refund or rebate of some or all of the amount of Taxes,
Other Taxes or other liability paid by it and for which it was indemnified by
the Company and should it receive some or all of the refund or rebate which it
sought, it shall return to the Company the difference between the amount of such
refund or rebate and its reasonable costs and expenses of counsel (and the
allocated cost of internal counsel) incurred by it in procuring such refund or
rebate.
(d) If the Company shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or the Agent; then, subject to subsection 4.01(g):
(i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.01) such Bank or the Agent,
as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made;
(ii) the Company shall make such deductions; and
(iii) the Company shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(e) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(f) Each Bank which is a foreign person (i.e., a person other than
a United States person for United States Federal income tax purposes) agrees
that:
(i) it shall, no later than the Closing Date (or, in the
case of a Bank which becomes a part hereto pursuant to Section 11.07 after
the Closing Date, the date upon which the Bank becomes a part hereto)
deliver to the Company through the Agent:
(A) if any Lending Office is located in the United
States, two accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("Form 4224"),
and
(B) if any Lending Office is located outside the
United States, two accurate and complete signed originals of
Internal Revenue Service Form 1001
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or any successor thereto ("Form 1001"), in each case indicating that
the Bank is on the date of delivery thereof entitled to receive
payments of principal, interest and fees for the account of such
Lending Office or Offices under this Agreement free from withholding
of United States Federal income tax;
(ii) if at any time the Bank changes its Lending Office or
Offices or selects an additional Lending Office as herein provided, it
shall with reasonable promptness deliver to the Company through the Agent
in replacement for, or in addition to, the forms previously delivered by
it hereunder:
(A) if such changed or additional Lending Office is
located in the United States, two accurate and complete signed
originals of Form 4224; or
(B) otherwise, two accurate and complete signed
originals of Form 1001,
in each case indicating that the Bank is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the
account of such changed or additional Lending Office under this Agreement
free from withholding of United States federal income tax;
(iii) it shall, before or promptly after the occurrence of
any event (including the passing of time but excluding any event
mentioned in (ii) above) requiring a change in the most recent Form 4224
or Form 1001 previously delivered by such Bank and if the delivery of
the same be lawful, deliver to the Company through the Agent two
accurate and complete original signed copies of Form 4224 or Form 1001
in replacement for the forms previously delivered by the Bank; and
(iv) it shall, promptly upon the Company's reasonable request
to that effect, deliver to the Company such other forms or similar
documentation as may be required from time to time by any applicable law,
treaty, rule or regulation in order to establish such Bank's tax status
for withholding purposes.
(g) The Company will not be required to pay any additional amounts
in respect of United States federal income tax pursuant to subsection 4.01(d) to
any Bank for the account of any Lending Office of such Bank:
(i) if the obligation to pay such additional amounts would
not have arisen but for a failure by such Bank to comply with its
obligations under subsection 4.01(f) in respect of such Lending Office;
(ii) if such Bank shall have delivered to the Company a Form
4224 in respect of such Lending Office pursuant to subsection
4.01(f)(i)(A), and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States federal income
tax in respect of payments by the Company hereunder for the account of
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such Lending Office for any reason other than a change in United States
law or regulations or in the official interpretation of such law or
regulations by any governmental authority charged with the interpretation
or administration thereof (whether or not having the force of law) after
the date of delivery of such Form 4224; or
(iii) if the Bank shall have delivered to the Company a Form
1001 in respect of such Lending Office pursuant to Section 4.01(f)(i)(B),
and such Bank shall not at any time be entitled to exemption from
deduction or withholding of United States Federal income tax in respect of
payments by the Company hereunder for the account of such Lending Office
for any reason other than a change in United States law or regulations or
any applicable tax treaty or regulations or in the official interpretation
of any such law, treaty or regulations by any governmental authority
charged with the interpretation or administration thereof (whether or not
having the force of law) after the date of delivery of such Form 1001.
(h) If the Company is required to pay additional amounts to any
Bank or the Agent pursuant to subsection 4.01(d), then such Bank shall use its
reasonable best efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue if such change in
the judgment of such Bank is not otherwise disadvantageous to such Bank.
4.02 Illegality.
(a) If any Bank shall determine that the introduction of any
Requirement of Law or any change in or in the interpretation or administration
thereof has made it unlawful, or that any central bank or other Governmental
Authority has asserted that it is unlawful, for any Bank or its Lending Office
to make Eurodollar Rate Loans, then, on notice thereof by the Bank to the
Company through the Agent, the obligation of the Bank to make Eurodollar Rate
Loans shall be suspended until the Bank shall have notified the Agent and the
Company that the circumstances giving rise to such determination no longer
exists.
(b) If a Bank shall determine that it is unlawful to maintain any
Eurodollar Rate Loan, the Company shall prepay in full all Eurodollar Rate Loans
of the Bank then outstanding, together with interest accrued thereon, either on
the last day of the Interest Period thereof if the Bank may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Eurodollar Rate Loans. The Company may in
such event borrow one or more Reference Rate Loans or CD Rate Loans in
accordance with Article II hereof.
(c) If the obligation of any Bank to make or maintain Eurodollar
Rate Loans has been terminated, the Company may elect, by giving notice to the
Bank through the Agent, that all Loans requested by it which would otherwise be
made by the Bank as Eurodollar Rate Loans shall be instead Reference Rate Loans.
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(d) Before giving any notice to the Agent pursuant to this Section
4.02, the affected Bank shall designate a different Lending Office with respect
to its Eurodollar Rate Loans if such designation will avoid the need for giving
such notice or making such demand and will not, in the judgment of the Bank, be
illegal or otherwise significantly disadvantageous to the Bank.
4.03 Increased Costs and Reduction of Return.
(a) If any Bank shall determine that, due to either (i) the
introduction of or any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the CD Rate or
the Eurodollar Rate or in respect of the assessment rate payable by any Bank to
the FDIC for insuring U.S. Deposits) in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
there shall be any increase in the cost to such Bank or any corporation
controlling such Bank of agreeing to make or making, funding or maintaining any
Eurodollar Rate Loans or CD Rate Loans or participating in Letters of Credit,
or, in the case of the Issuing Bank, any increase in the cost to the Issuing
Bank of agreeing to issue, issuing or maintaining any Letter of Credit or of
agreeing to make or making, funding or maintaining any unpaid drawing under any
Letter of Credit, then the Company shall be liable for, and shall from time to
time, upon demand therefor by such Bank (with a copy of such demand to the
Agent), pay to the Agent for the account of such Bank, additional amounts as are
sufficient to compensate such Bank for such increased costs.
(b) If any Bank shall have determined that the introduction of any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change therein or any change in the interpretation or administration thereof by
any central bank or other Governmental Authority charged with the interpretation
or administration thereof, or compliance by the Bank (or its Lending Office) or
any corporation controlling the Bank, with any request, guideline or directive
regarding capital adequacy (whether or not having the force of law) of any such
central bank or other authority, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased as at
consequence of its Commitments, loans, credits or obligations under this
Agreement, then, upon demand of such Bank (with a copy of such demand to the
Agent), the Company shall immediately pay to the Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate the Bank for
such increase. In determining any amount due under subsection (a) or (b) of this
Section, the affected Bank may use any reasonable averaging and attribution
methods. No Bank shall be able to recover any amounts under this Section where
such amounts were incurred or accrued more than 180 days prior to the date
demand for such amounts is given to the Company.
4.04 Funding Losses. The Company agrees to reimburse each Bank and to
hold each Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of:
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(a) the failure of the Company to make any payment (when due) or
prepayment of principal of any Eurodollar Rate Loan or CD Rate Loan (including
payments made after any acceleration thereof in accordance with Section 9.02);
(b) the failure of the Company to borrow, continue or convert a
Loan after the Company has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation (other than as a result of
Section 4.05);
(c) the failure of the Company to make any prepayment after the
Company has given a notice in accordance with Section 2.06; or
(d) the prepayment of a Eurodollar Rate Loan or a CD Rate Loan on
a day which is not the last day of the Interest Period with respect thereto
(other than as a result of an event requiring prepayment by the Company under
subsection 2.12(b));
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Eurodollar Rate Loans or CD Rate Loans
hereunder or from fees payable to terminate the deposits from which such funds
were obtained. For purposes of calculating amounts payable by the Company to the
Banks under this Section and under subsection 4.03(a), each Eurodollar Rate Loan
and CD Rate Loan made by a Bank (and each related reserve, special deposit or
similar requirement) shall be conclusively deemed to have been funded at the
IBOR used in determining the Eurodollar Rate for such Eurodollar Rate Loan or at
the Certificate of Deposit Rate used in determining the CD Rate for such CD Rate
Loan, as applicable, by a matching deposit or other borrowing in the interbank
eurodollar market, or dollar certificates of deposit, as applicable, for a
comparable amount and for a comparable period, whether or not such Eurodollar
Rate Loan or CD Rate Loan is in fact so funded.
4.05 Inability to Determine Rates. If the Agent shall have determined
that for any reason adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate or the CD Rate for any requested Interest Period with
respect to a proposed Eurodollar Rate Loan or CD Rate Loan or if the Majority
Banks shall have determined that for any reason the Eurodollar Rate or the CD
Rate applicable pursuant to subsection 2.08(a) for any requested Interest Period
with respect to a proposed Eurodollar Rate Loan or CD Rate Loan does not
adequately and fairly reflect the cost to such Banks of funding such Loan, the
Agent will forthwith give notice of such determination to the Company and each
Bank. Thereafter, the obligation of the Banks to make or maintain CD Rate Loans
or Eurodollar Rate Loans, as the case may be, hereunder shall be suspended until
the Agent revokes such notice in writing. Upon receipt of such notice, the
Company may revoke any Notice of Borrowing or Notice of Conversion/ Continuation
then submitted by it; provided, however, that the Company shall not be obligated
to pay any amounts pursuant to Section 4.04 as a result of such revocation of
notice. If the Company does not revoke such notice, the Banks shall make,
convert or continue the Loans, as proposed by the Company, in the amount
specified in the applicable notice submitted by the Company, but such Loans
shall be made, converted or continued as Reference Rate Loans instead of CD Rate
Loans or Eurodollar Rate Loans, as the case may be.
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4.06 Certificates of Banks. Any Bank claiming reimbursement or
compensation pursuant to this Article IV shall deliver to the Company (with a
copy to the Agent) a certificate setting forth in reasonable detail the amount
payable to the Bank hereunder and such certificate shall be conclusive and
binding on the Company in the absence of manifest error.
4.07 Survival. The agreements and obligations of the Company in this
Article IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Effectiveness of Agreement. The effectiveness of this
Agreement is subject to the conditions that the principal payment due on the
term loan under the Prior Credit Agreement on June 30, 1997 in the amount of
$5,000,000 shall have been paid and the Agent shall have received on or before
the Closing Date all of the following, in form and substance satisfactory to the
Agent and its counsel and in sufficient copies for each Bank:
(a) Credit Agreement, Exhibits, Schedules and Guaranty.
(i) This Agreement executed by the Company, the Agent, and
each of the Banks (including, in the case of BofA, in its capacity as
Issuing Bank);
(ii) Copies of all Exhibits and Schedules referenced in this
Agreement reviewed and approved by the Banks;
(iii) The Guaranty, dated as of the Closing Date, executed by
each Subsidiary of the Company.
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of directors of
the Company and each Guarantor approving and authorizing the execution,
delivery and performance of this Agreement, the other Loan Documents to be
delivered by it hereunder and, as applicable, authorizing the borrowing of
the Loans or the guaranty of the Obligations, certified as of the Closing
Date by the Secretary or an Assistant Secretary of such corporation;
(ii) A certificate of the Secretary or Assistant Secretary of
the Company, and each Guarantor, certifying the names and true signatures
of the officers, of such corporation, authorized to execute and deliver,
as applicable, this Agreement, the Guaranty, and all other Loan Documents
to be delivered hereunder (which may, if applicable, be satisfied by a
certificate from the Secretary or Assistant Secretary of such corporation
dated as of the Closing Date to the effect that officers so forth in the
incumbency certificates
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previously provided to the Agent and the Banks are unchanged), certifying
that the articles or certificate of incorporation and bylaws of the
Company or such Guarantor as delivered to BofA as the Agent under the
Prior Credit Agreement have not been amended or modified in any respect,
and certifying that the Company and each such Guarantor is in good
standing in their respective jurisdictions of incorporation and in each
jurisdiction where the failure to so qualify would have a Material Adverse
Effect;
(c) Legal Opinion. An opinion of Michael Futch, general counsel to
the Company and the Guarantors, addressed to the Agent and the Banks,
substantially in the form of Exhibit D;
(d) Certificate. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article
VI are true and correct on and as of such date, as though made on and as
of such date, except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and
correct as of such earlier date;
(ii) no Default or Event of Default exists or would result
from the Borrowing made or requested on the Closing Date;
(iii) there has occurred since December 31, 1996, no Material
Adverse Effect;
(iv) the Company and each Guarantor are each in good standing
in their respective states of incorporation and in the case of
Intermountain Slurry Seal, Inc., Bear River Contractors, Pozzolan Products
Company (P.P.C.), and GILC Incorporated, of each state where such
Guarantor is qualified to do business as a foreign corporation, all as
more fully set forth in Schedule 5.01(d); and
(e) Other Documents. Such other approvals, opinions or documents
as any Bank may reasonably request.
5.02 Conditions to all Credit Extensions. The obligation of each Bank to
make, continue or convert any Loan to be made by it hereunder, and the
obligation of the Issuing Bank to Issue any Letter of Credit, is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing,
conversion, continuation or Issuance date:
(a) Notice. The Agent shall have received a Notice of Borrowing or
a Notice of Conversion/Continuation or, in the case of any Issuance of any
Letter of Credit (other than the Existing Letters of Credit), the Issuing Bank
and the Agent shall have received a Letter of Credit Application or Amendment
Application, as required under Section 3.02;
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(b) Continuation of Representations and Warranties. The
representations and warranties made by the Company contained in Article VI, and
the representations and warranties made by the Guarantor(s) in the
Guaranty(ies), shall be true and correct on and as of such date with the same
effect as if made on and as of such date, except to the extent such
representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct as of such earlier date; and
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Borrowing, conversion, continuation or Issuance.
Each Borrowing, conversion, continuation, or request for the Issuance of a
Letter of Credit by the Company hereunder shall constitute a representation and
warranty by the Company hereunder as of the date of each such Borrowing,
conversion, continuation or Issuance that the conditions in this Section 5.02
have been satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank that:
6.01 Corporate Existence and Power. The Company and each of its
Subsidiaries:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all material governmental
licenses, authorizations, consents and approvals to own its assets, to carry on
its business and to execute, deliver and perform its obligations under the Loan
Documents;
(c) is duly qualified as a foreign corporation, licensed 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
or license, except where the failure to be so qualified or licensed would not
have a Material Adverse Effect; and
(d) is in compliance with all Requirements of Law, except to the
extent that noncompliance would not result in liability in excess of $300,000 in
the aggregate.
6.02 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company and its Subsidiaries of this Agreement and any
other Loan Document to which such Person is party have been duly authorized by
all necessary corporate action and do not and will not:
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(a) contravene the terms of that Person's certificate of
incorporation, bylaws or other organization document;
(b) conflict with or result in any material breach or
contravention of, or the creation of any Lien under, any material indenture,
agreement, lease, instrument, Contractual Obligation, injunction, order, decree
or undertaking to which such Person is a party; or
(c) to the best knowledge of the Company, violate any Requirement
of Law.
6.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by or enforcement against the Company or any
of its Subsidiaries of this Agreement or any other Loan Document or any other
instrument or agreement required hereunder to be made by the Company or any of
its Subsidiaries.
6.04 Binding Effect. This Agreement and each other Loan Document to which
the Company or any of its Subsidiaries is a party constitute the legal, valid
and binding obligations of the Company, enforceable against such Person in
accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws generally affecting the rights
of creditors, and subject to equitable principles of general application.
6.05 Litigation. There are no actions, suits, proceedings, claims or
disputes pending or, to the best knowledge of the Company, threatened or
contemplated at law, in equity, in arbitration or before any Governmental
Authority, against the Company or any of its Subsidiaries or any of their
respective properties which:
(a) purport to affect or pertain to this Agreement, or any Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Company or any of its
Subsidiaries, is reasonably likely to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery and performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
6.06 No Default No Default or Event of Default exists or would result
from the incurring of obligations by the Company under this Agreement or any
other Loan Document. Neither the Company, nor any of its Subsidiaries, is in
default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such defaults, is reasonably likely to
have a Material Adverse Effect.
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6.07 ERISA Compliance.
(a) Schedule 6.07 lists all Plans maintained or sponsored by the
Company or its Subsidiaries to which they are obligated to contribute, and
separately identifies Plans intended to be Qualified Plans and Multiemployer
Plans. All written descriptions thereof provided to the Agent are true and
complete in all material respects.
(b) Except as set forth in Schedule 6.07, each Qualified Plan is
in compliance in all material respects with the applicable provisions of ERISA,
the Code and other federal or state law, including all requirements under the
Code or ERISA for filing reports (which are true and correct in all material
respects as of the date filed), and benefits have been paid in accordance with
the provisions of such Qualified Plan.
(c) Each Qualified Plan has been determined by the IRS to qualify
under Section 401 of the Code, and the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the
Code, and to the best knowledge of the Company nothing has occurred which would
cause the loss of such qualification or tax-exempt status.
(d) Except as set forth in Schedule 6.07, the Company has no
outstanding liability under Title IV of ERISA with respect to (i) any Plan
maintained or sponsored by the Company or its Subsidiaries or any ERISA
Affiliate (as to which the Company or its Subsidiaries is or may be liable), or
(ii) any Plan to which the Company and its Subsidiaries or any ERISA Affiliate
(wherein the Company or its Subsidiaries is or may be liable) contributes or is
obligated to contribute.
(e) Except as set forth on Schedule 6.07, none of the Qualified
Plans subject to Title IV of ERISA has any Unfunded Pension Liability as to
which the Company and its Subsidiaries is or may be liable.
(f) Except as set forth in Schedule 6.07, no Qualified Plan
provides medical or other welfare benefits or extends coverage relating to such
benefits beyond the date of a participants termination of employment with the
Company or its Subsidiaries, except to the extent required by Section 4980B of
the Code and at the sole expense of the participant or the beneficiary of the
participant to the fullest extent permissible under such Section of the Code.
The Company and its Subsidiaries have complied in all material respects with the
notice and continuation coverage requirements of Section 4980B of the Code.
(g) Except as set forth in Schedule 6.07, (i) no ERISA Event has
occurred or is reasonably expected to occur with respect to any Qualified Plan,
and (ii) the Company and its Subsidiaries have not received notice that an ERISA
Event has occurred or is reasonably expected to occur with respect to any
Multiemployer Plan.
(h) There are no pending or, to the best knowledge of the Company,
threatened claims, actions or lawsuits, other than routine claims for benefits
in the usual and ordinary
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course, asserted or instituted against (i) any Plan maintained or sponsored by
the Company or its Subsidiaries or, its assets, (ii) any member of the
Controlled Group with respect to any Qualified Plan of the Company or its
Subsidiaries, or (iii) any fiduciary with respect to any Plan for which the
Company or its Subsidiaries may be directly or indirectly liable, through
indemnification obligations or otherwise.
(i) Except as set forth in Schedule 6.07, the Company and its
Subsidiaries have not incurred nor reasonably expects to incur any liability in
excess of $1,000,000 in the aggregate (i) under Section 4201 or 4243 of ERISA
with respect to a Multiemployer Plan (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability) or
(ii) under Title IV of ERISA (other than premiums due and not delinquent under
Section 4007 of ERISA) with respect to a Plan.
(j) Except as set forth in Schedule 6.07, the Company and its
Subsidiaries have not transferred any Unfunded Pension Liability outside of the
Controlled Group or otherwise engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
(k) The Company and its Subsidiaries have not engaged, directly or
indirectly, in a non-exempt prohibited transaction (as defined in Section 4975
of the Code or Section 406 of ERISA) in connection with any Plan which is
reasonably likely to have a Material Adverse Effect.
6.08 Use of Proceeds, Margin Regulations. The proceeds of the Loans shall
be used solely for the purposes set forth in and permitted by Section 7.11 and
Section 8.20. Neither the Company nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock. The aggregate value of all
Margin Stock directly or indirectly owned by the Company and its Subsidiaries is
less than 25% of the aggregate value of the consolidated assets of the Company
and its Subsidiaries.
6.09 Title to Properties. The Company and each of its Subsidiaries has
good record and marketable title in fee simple to or valid leasehold interests
in all its property, except for such defects in title as could not, individually
or in the aggregate, have a Material Adverse Effect. The property is free and
clear of all Liens, except Permitted Liens.
6.10 Taxes. The Company and each of its Subsidiaries have filed all
federal and other material tax returns and reports required to be filed and have
paid all federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP and no Notice of Lien has been filed or
recorded. The Company has no knowledge of any proposed tax assessment against
the Company or any of its Subsidiaries which would, if the assessment were made,
have a Material Adverse Effect.
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6.11 Financial Condition.
(a) The audited consolidated financial statements of the Company
and its Subsidiaries dated December 31, 1996, and the related consolidated
statements of operations, stockholders' equity and cash flows for the fiscal
year ended on that date:
(i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise
expressly noted therein;
(ii) are complete, accurate and fairly present the financial
condition of the Company and its Subsidiaries as of the date thereof and
results of operations for the period covered thereby; and
(iii) show all material indebtedness and other liabilities,
direct or contingent of the Company and its consolidated Subsidiaries as
of the date thereof (including liabilities for taxes and material
commitments).
(b) Since December 31, 1996, there has been no Material Adverse
Effect.
(c) Schedule 6.11(c) sets forth the Company's and its
Subsidiaries' leases, obligation to pay a dividend, and letters of credit
existing as of the Closing Date.
6.12 Environmental Matters.
(a) The on-going operations of the Company and each of its
Subsidiaries, after the Closing Date, comply in all respects with all
Environmental Laws, except such non-compliance which would not result in
liability in excess of $2,000,000 in the aggregate.
(b) Except as specifically identified in Schedule 6.12, and except
to the extent that noncompliance would not result in liability in excess of
$300,000 in the aggregate, the Company and each of its Subsidiaries have
obtained all licenses, permits, authorizations and registrations required under
any Environmental Law ("Environmental Permits") necessary for its operations,
and all such Environmental Permits are in good standing, and the Company and
each of its Subsidiaries is in compliance with all terms and conditions of such
Environmental Permits.
(c) Except as specifically identified in Schedule 6.12, none of
the Company or any of its Subsidiaries or any of their present property or
operations is subject to any outstanding written order from or agreement with
any Governmental Authority or other Person, nor is subject to any judicial or
docketed administrative proceeding respecting any Environmental Law,
Environmental Claim or Hazardous Material.
(d) There are no conditions or circumstances relating to any
property of the Company or its Subsidiaries, or arising from operations of the
Company or its Subsidiaries conducted prior to the Closing Date which, together
with all other such conditions and circumstances relating to all other
Properties and operations, may give rise to Environmental Claims
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with a potential liability as to the Company and its Subsidiaries together in
excess of $9,000,000 in the aggregate. Schedule 6.12 contains the Company's good
faith estimate of clean-up costs associated with hydrocarbon contamination at
the Properties described therein. Notwithstanding the foregoing, (i) neither the
Company nor any of its Subsidiaries has any underground storage tanks (x) that
are not properly registered or permitted under applicable Environmental Laws or
(y) that are leaking or disposing of Hazardous Materials off-site, (ii) the
Company and its Subsidiaries have notified all of their employees of the
existence, if any, of any health hazard arising from the conditions of their
employment and have met all notification requirements under Title III of CERCLA
or any other Environmental Law, and (iii) no Hazardous Materials have been
Released at, on or under any site, facility or vessel now or previously owned,
operated or leased by the Company or any of its Subsidiaries that would have a
Material Adverse Effect.
(e) Except as specifically identified in Schedule 6.12, the
Company has no knowledge of any oral or written notification of a Release of a
Hazardous Material has been filed by or on behalf of the Company or any of its
Subsidiaries and no site, facility or vessel now or previously owned, operated
or leased by the Company or any of its Subsidiaries is listed or proposed for
listing on the NPL, CERCLIS or any similar state list of sites requiring
investigation or clean-up.
6.13 Regulated Entities. None of the Company, any Person controlling the
Company, or any Subsidiaries of the Company, is (a) an "Investment Company"
within the meaning of the Investment Company Act of 1940; or (b) subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code or any
other federal or state statute or regulation limiting its ability to incur
Indebtedness.
6.14 No Burdensome Restrictions. Neither the Company nor any of its
Subsidiaries is a party to or bound by any Contractual Obligation or is subject
to any charter or corporate restriction or any Requirement of Law which is
reasonably likely to have a Material Adverse Effect.
6.15 Solvency. The Company and is Subsidiaries, when taken together as a
whole, are Solvent.
6.16 Labor Relations. There are no strikes, lockouts or other labor
disputes against the Company or any of its Subsidiaries, or, to the best of the
Company's knowledge, threatened against or affecting the Company or any of its
Subsidiaries, and no significant unfair labor practice complaint is pending
against the Company or any of its Subsidiaries or, to the best knowledge of the
Company, threatened against any of them before any Governmental Authority, which
is reasonably likely to result in a Material Adverse Effect.
6.17 Copyrights, Patents. Trademarks and Licenses, etc. The Company and
its Subsidiaries own or are licensed or otherwise have the right to use all of
the patents, trademarks, service marks, trade names, copyrights, franchises,
authorizations and other rights that are reasonably necessary for the operation
of their respective businesses, without conflict with the
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rights of any other Person. To the best knowledge of the Company, no slogan or
other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed by the Company or any
of its Subsidiaries infringes upon any rights owned by any other Person; except
as set forth on Schedule 6.17, no claim or litigation regarding any of the
foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Company, proposed, which, in either case,
is reasonably likely to result in a Material Adverse Effect.
6.18 Subsidiaries. The Company has no Subsidiaries other than those
listed on Schedule 6.18 hereto or those notified to the Agent pursuant to
subsection 7.03(i) and has no equity investments in any other corporation or
entity other than those listed on Schedule 6.18 hereto.
6.19 Insurance. The properties of the Company and its Subsidiaries are
insured with financially sound and reputable insurance companies, in such
amounts, with such deductibles and covering such risks as is customarily carried
on by companies engaged in similar businesses and owning similar properties in
localities where the Company or such Subsidiary operates.
6.20 Swap Obligations. Neither the Company nor any of its Subsidiaries
has incurred any outstanding obligations under any Swap Contracts, other than
Permitted Swap Obligations. The Company and its Subsidiaries have each
voluntarily entered into each Swap Contract to which it is a party based upon
its own independent assessment of its consolidated assets, liabilities and
commitments in each case as an appropriate means of mitigating and managing
risks associated with such matters.
6.21 Full Disclosure. The documents, certificates and written statements
(including the Loan Documents) furnished to the Agent by the Company or any
Subsidiary for use in connection with the transactions contemplated by this
Agreement, taken as a whole, do not contain any untrue statement of a material
fact or omit to state a material fact (known to the Company in the case of any
document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading (it being recognized by the Agent and
the Banks that projections and forecasts provided to them by the Company are not
to be viewed as facts and that actual results during the period or periods
covered by any such projections and forecasts may differ from the projected or
forecasted results).
ARTICLE VII
AFFIRMATIVE COVENANTS
The Company covenants and agrees that so long as any Bank shall have any
Commitment hereunder, any Letter of Credit shall be outstanding, or any Loan or
other amount shall remain unpaid, unless the Majority Banks waive compliance in
writing:
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7.01 Financial Statements. The Company shall deliver to the Agent in form
and detail satisfactory to the Agent, with copies for each Bank:
(a) as soon as available, but not later than 90 days after the end
of each fiscal year of the Company, a copy of the audited consolidated balance
sheet of the Company as at the end of such year and the related consolidated
statements of income, stockholders' equity and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
year, and an opinion of Coopers & Lybrand or another nationally recognized
independent public accounting firm stating that such consolidated financial
statements present fairly the financial position for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years, all as set
forth on the Company's Form 10-K Annual Report filed with SEC for such fiscal
year;
(b) as soon as available, but not later than 45 days after the end
of each of the first three calendar quarters of each fiscal year, a copy of the
unaudited consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statements of income, stockholders' equity and cash flows for the period
commencing on the first day and ending on the last day of such quarter, all as
set forth in the Company's Form 10-Q Quarterly Report for such quarter, and
certified by an appropriate Responsible Officer as being complete and correct
and fairly presenting, in accordance with GAAP, the financial position and the
results of operations of the Company and its Subsidiaries;
(c) as soon as available, but no later than 45 days after the
close of each month (other than the last month) of each of its fiscal years, or
no later than 90 days after the close of the last month of each of its fiscal
years, a job status report describing each construction project which is ongoing
or which the Company or any Subsidiary or any Joint Venture into which any of
them has entered has contracted to undertake and for which any of them over the
term of the contract is contractually entitled to be paid an aggregate amount of
$2,000,000 or more, in substantially the form of Exhibit E;
(d) as soon as available, but no later than 45 days after the end
of each calendar quarter (other than the last calendar quarter) of each year, or
no later than 90 days after the end of the last calendar quarter of each year, a
list of any anticipated construction bids for any Subsidiary where the bid
amount is anticipated to exceed $25,000,000 (including any bids made by a Joint
Venture in which such Subsidiary will participate) in substantially the form of
Exhibit E; and
(e) as soon as available, but not later than 45 days after the end
of each calendar quarter, a description of any equity investment in excess of
$1,000,000 by the Company or any Subsidiary in a project, with a brief
description of any financial results for the relevant reporting period that
deviate materially from the Company's good faith estimates previously furnished
to the Agent and the Banks.
7.02 Certificates: Other Information. The Company shall furnish to the
Agent with sufficient copies for each Bank:
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(a) concurrently with the delivery of the financial statements
referred to in subsection 7.01 (a) above, a certificate of the independent
certified public accountants reporting on such financial statements stating that
in making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.01 (a) and (b) above, a certificate of a
Responsible Officer of the Company (i) stating that, to the best of such
officer's knowledge, the Company, during such period, has observed or performed
all of its covenants and other agreements, and satisfied every condition
contained in this Agreement to be observed, performed or satisfied by it, and
that such officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate, and (ii) showing in detail the
calculations supporting such statement in respect of Sections 8.04(d), 8.09(c),
8.10, 8.11, 8.12, 8.13 and 8.18(e);
(c) to the extent not previously delivered by the Company pursuant
to Section 7.01, (i) promptly after the same are sent, copies of all financial
statements and reports which the Company sends to its stockholders, and (ii)
promptly after the same are filed, copies of all financial statements and
regular, periodical or special reports which the Company may make to, or file
with, the SEC; and
(d) promptly, such additional financial and other information as
the Agent, at the request of any Bank, may from time to time reasonably request.
7.03 Notices. The Company shall promptly notify the Agent and each Bank:
(a) of the occurrence of any Default or Event of Default and of
the occurrence or existence of any event or circumstance which is reasonably
likely to become a Default or Event of Default;
(b) of any (i) breach or non-performance of, or any default under
any Contractual Obligation of the Company or any of its Subsidiaries which is
reasonably likely to result in a Material Adverse Effect; or (ii) dispute,
litigation, investigation, proceeding or suspension which may exist at any time
between the Company or any of its Subsidiaries and any Governmental Authority
and which relates to or affects the ability of the Company or its Subsidiaries
to do business substantially in accordance with past practice, or which, if
adversely determined, would have a Material Adverse Effect;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting the Company or any Subsidiary (i) in which
the amount of damages claimed and not fully covered by insurance is $2,000,000
(or its equivalent in another currency or currencies) or more, (ii) in which
injunctive or similar relief is sought and which, if adversely determined, is
reasonably likely to have a Material Adverse Effect, or (iii) in which the
relief sought is an injunction or other stay of the performance of (x) this
Agreement or any Loan Document or (y) the operations of the Company or any of
its Subsidiaries;
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(d) upon, but in no event later than ten days after, becoming
aware of (i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions involving a potential liability in excess of $1,000,000 in
the aggregate instituted, completed or threatened against the Company or any
Subsidiary or any of their properties pursuant to any applicable Environmental
Laws, (ii) all other Environmental Claims involving the Company or a Subsidiary
with a potential liability in excess of $1,000,000 in the aggregate, and (iii)
any environmental or similar condition on any real property adjoining or in the
vicinity of the property of the Company or any Subsidiary that could reasonably
be anticipated to cause such property or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use of such
property under any Environmental Laws and involving a potential liability in
excess of $1,000,000 in the aggregate;
(e) of any other litigation or proceeding affecting the Company or
any of its Subsidiaries which the Company would be required to report to the SEC
pursuant to the Exchange Act, within four days after reporting the same to the
SEC;
(f) any and all ERISA Events affecting the Company or any member
of its Controlled Group involving a potential liability in excess of $1,000,000
in the aggregate (but in no event more than ten days after any such ERISA Event)
together with (i) a copy of any notice with respect to any such ERISA Events
that may be required to be filed with the PBGC and (ii)any notice delivered by
the PBGC to the Company or any member of its Controlled Group with respect to
any such ERISA Events;
(g) promptly upon becoming aware thereof, of any Material Adverse
Effect subsequent to the date of the most recent audited financial statements of
the Company delivered to the Banks pursuant to subsection 7.01(a);
(h) upon becoming aware thereof, of any labor controversy
resulting in or threatening to result in, any strike, work stoppage, boycott,
shutdown or other labor disruption against or involving the Company or any
Subsidiary which would materially impact the operations of the Company or any
Subsidiary;
(i) within three Business Days after the date of such occurrence,
if any Person shall become a Subsidiary of the Company; and
(j) if applicable, upon the request from time to time of the
Agent, the Swap Termination Values, together with a description of the method by
which such values were determined, relating to any then-outstanding Swap
Contracts to which the Company or any of its Subsidiaries is party.
Each notice pursuant to this Section shall be accompanied by a
written statement by a Responsible Officer of the Company, setting forth details
of the occurrence referred to therein and, in the case of subsections (a)
through (h), stating what action the Company proposes to take with respect
thereto.
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7.04 Preservation of Corporate Existence, Etc. The Company shall and
shall cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its State or jurisdiction of
incorporation;
(b) preserve and maintain in fall force and effect all rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business except in connection with
transactions permitted by Section 8.03 and sales of assets permitted by Section
8.02;
(c) use its reasonable efforts, in the ordinary course and
consistent with past practice, to preserve its business organization and
preserve the goodwill and business of the customers, suppliers and others having
business relations with it; and
(d) preserve or renew all of its registered trademarks, trade
names and service marks, the non-preservation of which are reasonably likely to
have a Material Adverse Effect.
7.05 Maintenance of Property. Except as permitted in Section 8.02 and
Section 8.03, the Company shall maintain, and shall cause each of its
Subsidiaries to maintain, and preserve all its property which is used or useful
in its business in good working order and condition, ordinary wear and tear
excepted and make all necessary repairs thereto and renewals and replacements
thereof except where the failure to do so would not have a Material Adverse
Effect. The Company shall, and shall cause each of its Subsidiaries to, use the
standard of care typical in the industry in the operation of its facilities.
7.06 Insurance. The Company shall maintain, and shall cause each
Subsidiary to maintain, with financially sound and reputable insurers, insurance
with respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons, including workers' compensation insurance,
public liability and property and casualty insurance which amount shall not be
reduced by the Company or such Subsidiary in the absence of thirty days' prior
notice to the Agent. Upon request of the Agent, the Company shall furnish the
Agent, with copies for each Bank, at reasonable intervals (but not more than
once per calendar year) a certificate of a Responsible Officer of the Company
(and, if requested by the Agent any insurance broker of the Company or any
Subsidiary) setting forth the nature and extent of all insurance maintained by
the Company and its Subsidiaries in accordance with this Section 7.06 (and
which, in the case of a certificate of a broker, were placed through such
broker).
7.07 Payment of Obligations. Except to the extent that noncompliance
would not result in liability in excess of $1,000,000 in the aggregate, the
Company shall, and shall cause its Subsidiaries to, pay and discharge as the
same shall become due and payable, all their respective obligations and
liabilities, including:
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(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, might by law become a Lien
upon its property; and
(c) all Indebtedness as and when due and payable but subject to
any subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
7.08 Compliance with Laws. The Company shall comply, and shall cause each
of its Subsidiaries to comply, in all material respects with all Requirements of
Law of any Governmental Authority having jurisdiction over it or its business
(including the federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
7.09 Inspection of Property and Books and Records. The Company shall
maintain, and shall cause each of its Subsidiaries to maintain, proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Company and such Subsidiaries.
The Company will permit, and will cause each of its Subsidiaries to permit,
representatives of the Agent or any Bank to visit and inspect any of their
respective properties, to examine their respective corporate, financial and
operating records and make copies thereof or abstract therefrom, and to discuss
their respective affairs, finances and accounts with their respective directors,
officers, employees and independent public accountants, all at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Company, but at no expense to the Company;
provided, however, when an Event of Default exists the Agent or any Bank may
visit and inspect at the expense of the Company such properties at any time
during normal business hours and without advance notice.
7.10 Environmental Laws.
(a) The Company shall, and shall cause each of its Subsidiaries
to, conduct its operations and keep and maintain its property in compliance with
all Environmental Laws.
(b) Upon written request of the Agent or any Bank, the Company
shall submit and cause each of its Subsidiaries to submit, to the Agent and such
Bank, at the Company's sole cost and expense and at reasonable intervals, a
report providing an update of the status of any environmental, health or safety
compliance, hazard or liability issue identified in any notice or report
required pursuant to subsection 7.03(d) and any other environmental, health or
safety compliance obligation, remedial obligation or liability, that could,
individually or in the aggregate, result in liability in excess of $1,000,000.
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7.11 Use of Proceeds. The Company shall use the proceeds of the Revolving
Loans solely for working capital and other general corporate purposes (including
stock repurchases and acquisitions not prohibited hereunder) not in
contravention of any Loan Document or any Requirement of Law.
7.12 Solvency. The Company shall continue to be, and cause each of its
Subsidiaries to be, Solvent.
ARTICLE VIII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Bank shall
have any Commitment hereunder, any Letter of Credit shall be outstanding, or any
Loan or other amount payable hereunder shall remain unpaid, unless the Majority
Banks waive compliance in writing:
8.01 Limitation on Liens. The Company shall not, nor shall it permit any
of its Subsidiaries to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property or
assets, whether now owned or hereafter acquired, or offer or agree to do so,
other than the following ("Permitted Liens"):
(a) any lien existing on the Closing Date on the property of the
Company or its Subsidiaries, which is set forth in Schedule 8.01 securing
Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 7.07, provided that no
Notice of Lien has been filed or recorded;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the Ordinary Course
of Business which are not delinquent or remain payable without penalty;
(e) Liens (other than any Lien imposed by ERISA) on the property
of the Company or any of its Subsidiaries incurred, or pledges or deposits
required, in connection with workmen's compensation, unemployment insurance and
other social security legislation;
(f) Liens on the property of the Company or any of its
Subsidiaries securing (i) the performance of bids, trade contracts (other than
for borrowed money), leases, and statutory obligations, and (ii) obligations on
surety and appeal bonds, and (iii) other obligations of a like nature incurred
in the Ordinary Course of Business provided all such Liens in the aggregate are
not reasonably likely to result in a Material Adverse Effect;
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(g) Easements, rights-of-way, restrictions and other similar
encumbrances incurred in the Ordinary Course of Business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its Subsidiaries,
taken as a whole;
(h) liens on assets acquired after the date of this Agreement
provided, however, that such Liens existed at the time such assets were acquired
and were not created in anticipation thereof;
(i) Purchase money security interests and Liens with respect to
any conditional sale or other title retention agreements and any lease in the
nature thereof (other than capital leases) on any property acquired or held by
the Company or its Subsidiaries in the Ordinary Course of Business (including
accessions thereto and proceeds arising from the disposition thereof), securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such property; provided that (A) any such Lien attaches to
such property concurrently with or within 30 days after the acquisition thereof,
(B) any such Lien with respect to purchase money security interests, conditional
sales or other title retention agreements encumber only property and accessions
thereto (and proceeds arising from the disposition thereof) which are subject to
such conditional sale or other title retention agreement or lease in the nature
thereof or acquired using the proceeds of Indebtedness secured by such purchase
money security interest, and (C) the aggregate outstanding principal amount of
the Indebtedness secured by any such arrangements shall not exceed $12,000,000;
(j) Liens on any property securing Indebtedness permitted to be
incurred pursuant to subsections 8.08(c) and 8.08(d);
(k) Liens on the partnership interests of Granite SR 91 L.P., a
Subsidiary of the Company, in California Private Transportation Company, L.P.,
granted in connection with the financing of that certain construction project
known as SR-91;
(l) Leases or subleases and licenses and sublicenses entered into
in the Ordinary Course of Business granted to others not interfering in any
material respect with the businesses of the Company and its Subsidiaries, taken
as a whole, and any interest or title of a lessor or licensor under any lease or
license;
(m) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.01(h);
(n) 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;
(o) Liens securing reimbursement obligations of the Company or its
Subsidiaries with respect to commercial letters of credit obtained in the
Ordinary Course of
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Business and not prohibited hereby; provided, that such Liens shall attach only
to documents or other property relating to such letters of credit and products
and proceeds thereof;
(p) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided, that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution; and
(q) Any Lien renewing, extending, or refunding any Lien permitted
under clauses (a) to (p), inclusive, of this Section 8.01, provided, that the
principal amount secured is not increased and that such Lien is not extended to
other property (other than pursuant to its original terms).
8.02 Disposition of Assets. The Company shall not, nor shall it permit
any of its Subsidiaries to, directly or indirectly, sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one or a series of transactions)
all or a substantial part of its assets, business or property (including
accounts and notes receivable (with or without recourse) and equipment
sale-leaseback transactions) or enter into any agreement to do any of the
foregoing, except:
(a) dispositions by the Company or any of its Subsidiaries of
inventory, used or worn-out property, or property which is no longer necessary
to the operations of the Company or any of its Subsidiaries in the Ordinary
Course of Business;
(b) equipment which is sold by the Company or any of its
Subsidiaries in the Ordinary Course of Business; provided, however, that the
sale proceeds from each sale of equipment are used within 12 months of such sale
to replace the equipment sold with other equipment and/or real property of
equivalent fair market value and for use in the Ordinary Course of Business;
(c) real property which is sold by the Company or any of its
Subsidiaries in the Ordinary Course of Business; provided, however, that the
sale proceeds from each sale of real property are used within 12 months of such
sale to replace the real property sold with other real property and/or equipment
of equivalent fair market value and for use in the Ordinary Course of Business;
and
(d) other sales of assets not described in subparagraphs (a), (b)
or (c); provided, however, that the aggregate consideration from such sales
received by the Company and its Subsidiaries, including aggregate cash received
and the aggregate fair market value of non-cash property received, shall not
exceed $12,000,000 in each fiscal year.
8.03 Consolidations and Mergers. The Company shall not, nor shall it
permit any of its Subsidiaries to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of
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(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) or enter into any
Joint Venture or partnership with, any Person except:
(a) any Subsidiary of the Company may merge, consolidate or
combine with or into, or transfer assets to the Company (provided that the
Company shall be the continuing or surviving corporation) or with any one or
more Subsidiaries of the Company (provided that if any transaction shall be
between a Subsidiary and a wholly owned Subsidiary, the wholly owned Subsidiary
shall be the continuing or surviving corporation);
(b) any Subsidiary of the Company may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation or
otherwise), to the Company or another wholly owned Subsidiary of the Company; if
immediately after giving effect thereto, no Default or Event of Default would
exist;
(c) the Company may merge, consolidate or combine with another
entity if (i) the Company is the corporation surviving the merger, and (ii)
immediately after giving effect thereto, no Default or Event of Default would
exist; and
(d) the Company or any of its Subsidiaries may enter into any
Joint Venture or partnership with any Person in the Ordinary Course of Business.
8.04 Loans and Investments. The Company shall not, directly or
indirectly, purchase or acquire, or permit any of its Subsidiaries to purchase
or acquire, or make any commitment therefor, any capital stock, equity interest,
assets, obligations or other securities of or any interest in, any Person, or
make any advance, loan, extension of credit or capital contribution to or any
other investment in, any Person including any Affiliates of the Company, except
for: (a) investments in accordance with Schedule 8.04;(b) extensions of credit
in the nature of accounts receivable or notes receivable arising from the sale
or lease of goods or services in the Ordinary Course of Business; (c) extensions
of credit by the Company to any of its wholly owned Subsidiaries or by any of
its wholly owned Subsidiaries to another of the wholly owned Subsidiaries of the
Company; (d) investments in up to 33.334% (when aggregated with the amount of
any such investments made in 1996) of the capital stock of TIC Holdings, Inc.,
not to exceed in aggregate amount (when aggregated with the amount of any such
investments made in 1996) the amount of $21,000,000; provided, that, such
investments are made during the calendar year 1997; or (e) additional purchases
of or investments in the stock of Subsidiaries or the capital stock, assets,
obligations or other securities of or interest in other Persons not exceeding in
any fiscal year 1O% of the Company's consolidated Tangible Net Worth as of the
last day of the immediately preceding fiscal year.
8.05 Transactions with Affiliates. The Company shall not and shall not
permit any of its Subsidiaries to enter into any transaction will any affiliate
of the Company or of any such Subsidiary except as contemplated by this
Agreement or in the Ordinary Course of Business and pursuant to the reasonable
requirements of the business of the Company or such Subsidiary and upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than would
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obtain in a comparable arm's-length transaction with a Person not an Affiliate
of the Company or such Subsidiary.
8.06 Contingent Obligations. The Company shall not, nor shall it permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the Ordinary Course
of Business;
(b) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 8.06;
(c) the assumption and performance of the Company's co-joint
venturers' Joint Venture obligations when, in the Company's good faith judgment,
such financial arrangement best serves the Company's financial interests;
(d) any guaranty of or contingent liability for the obligation of
a subcontractor of the Company or its Subsidiaries on a construction project,
provided the Company or such Subsidiary determines in good faith that such
financial arrangement best serves the Company's or such Subsidiary's financial
interests;
(e) any guaranty of or, without duplication, contingent liability
for, any letters of credit issued for the account of the Company or any
Subsidiary (but not including Letters of Credit issued hereunder) entered into
in the Ordinary Course of Business in an aggregate amount outstanding not to
exceed $12,000,000, which limit shall include letters of credit set forth on
Schedule 6.11(c);
(f) pursuant to the Guaranty(ies);
(g) reimbursement obligations in respect of letters of credit
Issued under this Agreement or not prohibited hereby;
(h) Permitted Swap Obligations; or
(i) the guaranty of the obligations of California Private
Transportation Company, L.P. represented by the Lien on the partnership
interests of Granite SR 91 L.P. permitted pursuant to subsection 8.01(k).
8.07 Compliance with ERISA. The Company shall not directly or indirectly
and shall not permit any ERISA Affiliate directly or indirectly (i) to terminate
any Plan subject to Title IV of ERISA so as to result in any material (in the
opinion of the Majority Banks) liability to the Company or any ERISA Affiliate
(ii) to permit to exist any ERISA Event or any other event or condition which
presents the risk of a material (in the opinion of the Majority Banks) liability
of the Company or any ERISA Affiliate, or (iii) to make a complete or partial
withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer
Plan so as to result in any material (in the opinion of the Majority Banks)
liability to the Company or any ERISA Affiliate, (iv) to
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enter into any new Plan or modify any existing Plan so as to increase its
obligations thereunder except in the ordinary course of business consistent with
past practice which could result in any material (in the opinion of the Majority
Banks) liability to the Company or any ERISA Affiliate, or (v) permit the
present value of all nonforfeitable accrued benefits under each Plan (using the
actuarial assumptions utilized by the PBGC upon termination of a Plan)
materially (in the opinion of the Majority Banks) to exceed the fair market
value of Plan assets allocable to such benefits, all determined as of the most
recent valuation date for each such Plan.
8.08 Lease Obligations. The Company shall not, nor shall it permit any of
its Subsidiaries to, create or suffer to exist any obligations for the payment
of rent for any property under lease or agreement to lease, except for:
(a) leases of the Company and its Subsidiaries in existence on the
Closing Date and listed on Schedule 6.11(d) and any renewal, extension or
refinancing thereof;
(b) after the Closing Date, any leases entered into by the Company
or any of its Subsidiaries in the Ordinary Course of Business;
(c) after the Closing Date, any lease entered into by the Company
or any of its Subsidiaries; provided, that:
(i) immediately prior to giving effect to such lease, the
property or asset subject to such lease was sold by the Company or any
such Subsidiary to the lessor under such lease for not less than fair
market value; and
(ii) no Default or Event of Default would occur as a result
of such sale and subsequent lease;
(d) after the Closing Date, capital leases other than those
permitted under clauses (a), (b) and (c) of this Section 8.08 entered into by
the Company or any of its Subsidiaries to finance the acquisition of equipment,
provided that Capital Lease Obligations shall not exceed in any fiscal year
$6,000,000.
8.09 Restricted Payments. The Company shall not acquire for value (or
permit any of its Subsidiaries to do so) any shares of its capital stock or any
warrants, rights or options to acquire such shares, now or hereafter
outstanding; except that the Company may, in accordance with applicable
Requirements of Law (a) purchase, redeem or otherwise acquire shares of its
common stock or warrants or options to acquire any such shares with the proceeds
received from the substantially concurrent issue of new shares of its common
stock, (b) purchase, redeem or otherwise acquire shares of common stock for cash
in order to contribute such shares to the Company's employee stock-ownership
plan provided that the aggregate amount paid by the Company in connection with
such transactions does not exceed in any fiscal year the amount equal to 15% of
plan compensation (as such term is interpreted for purposes of Section
4.01(a)(17) of the Code) paid by the Company in such fiscal year, and such
shares are promptly so contributed; and (c) purchase, redeem or otherwise
acquire shares of its capital stock or warrants,
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rights or options to acquire any such shares for cash in an aggregate amount not
to exceed $35,000,000 computed on a cumulative basis during the term of this
Agreement; provided, that, notwithstanding the aggregate amount of
consideration, the number of shares (or warrants, rights or options to acquire
any such shares) allowed to be purchased under this clause (c) shall not exceed
15% of the number shares of capital stock of the Company outstanding as of the
Closing Date; and provided, further, that in each case (a), (b) and (c), both
immediately before and after giving effect to such proposed action, no Default
or Event of Default exists or would exist.
8.10 Current Ratio. The Company shall not permit (as of the end of any
fiscal quarter) the ratio of Consolidated Current Assets to Consolidated Current
Liabilities to be less than (i) 1.25 to 1.00 at the end of the first quarter of
each fiscal year and (ii) 1.30 to 1.00 at the end of the second, third and
fourth quarter of each fiscal year.
8.11 Consolidated Tangible Net Worth. The Company shall not permit its
consolidated Tangible Net Worth at any time during any fiscal quarter to be less
than $174,200,000, plus 50% of net earnings (without reduction for losses)
accrued after March 31, 1997, plus 75% of the net proceeds of any new common
stock issued by the Company.
8.12 Leverage Ratio. The Company shall not at any time during any fiscal
quarter permit its ratio of total consolidated Indebtedness to consolidated
Tangible Net Worth to be greater than 0.75 to 1.00.
8.13 Cash Flow Ratio. The Company shall not permit (as of the end of any
fiscal quarter) the ratio of (a) its consolidated Cash Flow for the four most
recent quarters ending with such fiscal quarter to (b) its consolidated interest
expense and principal due and payable on Indebtedness for the four most recent
quarters ending with such fiscal quarter to be less than 1.75 to 1.00.
8.14 Change in Business. The Company shall not, and shall not permit any
of its Subsidiaries to, engage in any material line of business substantially
different from those lines of business carried on by it on the date hereof.
8.15 Change in Structure. Except as permitted under Section 8.03, the
Company shall not and shall not permit any of its Subsidiaries to, make any
changes in its capital structure (including in the terms of its outstanding
stock) or amend its certificate of incorporation or by-laws if, as a result,
there would be a reasonable likelihood of having a Material Adverse Change.
8.16 Accounting Changes. The Company shall not, and shall not permit any
of its Subsidiaries to, make any significant change in accounting treatment and
reporting practices, except as permitted by GAAP and as would not reasonably be
expected to result in any measurable change in the Company's consolidated
financial statements or in any financial test or measurement reference in this
Agreement, or change the fiscal year of the Company or any of its Subsidiaries.
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8.17 Other Contracts. The Company shall not, and shall not permit any of
its Subsidiaries to, enter into any employment contracts or other arrangements
whose terms, including salaries, benefits and other compensation, are different
from those entered into in the Ordinary Course of Business.
8.18 Limitation on Indebtedness. The Company shall not suffer or permit
any of its Subsidiaries to, create, incur, assume, suffer to exist, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 8.06;
(b) Indebtedness existing on the Closing Date and set forth in
Schedule 8.18;
(c) Indebtedness secured by Liens permitted by subsection 8.01
(i) in an aggregate amount outstanding not to exceed $12,000,000;
(d) Indebtedness incurred in connection with leases permitted
pursuant to Section 8.08;
(e) Without duplication, Indebtedness incurred in connection with
letters of credit issued for the account of the Company or any of its
Subsidiaries (but not including Letters of Credit issued hereunder) entered into
in the Ordinary Course of Business in an aggregate amount outstanding not to
exceed $12,000,000, which limit shall include letters of credit set forth on
Schedule 6.11(c);
(f) Indebtedness incurred in the Ordinary Course of Business in
connection with (i) securing the performance of bids, trade contracts (other
than for borrowed money), and statutory obligations, and (ii) obligations on
surety and appeal bonds, and (iii) other obligations of a like nature incurred
in the Ordinary Course of Business;
(g) Indebtedness of a wholly owned Subsidiary of the Company to
another wholly owned Subsidiary of the Company or to the Company and
Indebtedness of the Company to any wholly owned Subsidiary of the Company; and
(h) Indebtedness incurred under the Loan Documents, and Letters of
Credit Issued under the Loan Documents.
8.19 Use of Proceeds.
(a) Except in the case of clauses (i), (ii), and (iii), as the
same will not result in a violation of Regulation G, T, U or X of the FRB or any
other applicable Requirement of Law, the Company shall not, and shall not suffer
or permit any Subsidiary to, use any portion of the Loan proceeds or any Letter
of Credit, directly or indirectly, (i) to purchase or carry Margin Stock, (ii)
to repay or otherwise refinance indebtedness of the Company or others incurred
to
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purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
(b) The Company shall not, directly or indirectly, use any portion
of the Loan proceeds or any Letter of Credit (i) knowingly to purchase
Ineligible Securities from the Arranger during any period in which the Arranger
makes a market in such Ineligible Securities, (ii) knowingly to purchase during
the underwriting or placement period Ineligible Securities being underwritten or
privately placed by the Arranger, or (iii) to make payments of principal or
interest on Ineligible Securities underwritten or privately placed by the
Arranger and issued by or for the benefit of the Company or any Affiliate of the
Company. BancAmerica Securities, Inc. is a registered broker-dealer and
permitted to underwrite and deal in certain Ineligible Securities. "Ineligible
Securities" means securities which may not be underwritten or dealt in by member
banks of the Federal Reserve System under Section 16 of the Banking Act of 1933
(12 U.S.C. Section 24, Seventh), as amended.
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following events shall constitute an
"Event of Default":
(a) Non-Payment. The Company fails to pay when due any amount of
principal of any Loan or L/C Borrowing; or fails to pay within three Business
Days of when due any interest, fees or any other amount payable hereunder or
pursuant to any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by
the Company or any of its Subsidiaries herein, in any Loan Document or which is
contained in any certificate, document or financial or other statement furnished
at any time under this Agreement, or in or under any Loan Document, shall prove
to have been incorrect in any material respect on or as of the date made or
deemed made; or
(c) Other Defaults. (i) The Company fails to perform or observe
any term, covenant or agreement set forth in Sections 7.03(a), 7.04(a), 7.11,
7.12, 8.03(c), 8.10, 8.11, 8.12, 8.13 or 8.19;
(ii) The Company fails to perform or observe any term,
covenant or agreement set forth in Sections 2.14, 7.01, 7.02, 7.03 (other
than subsection (a) thereof) or 7.09 or Article VIII (except Sections
8.03(c), 8.10, 8.11, 8.12, 8.13 or 8.19) and such failure shall continue
unremedied for a period of five days after the earlier of (i) the date
upon which a Responsible Officer knew or reasonably should have known of
such failure or (ii) the date upon which written notice thereof is given
to the Company by the Agent or any Bank;
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(iii) The Company fails to perform or observe any term,
covenant or agreement contained in this Agreement not specifically
mentioned in this Article (including subparagraphs (c)(i) or (c)(ii)) and
such failure shall continue unremedied for a period of thirty days after
the earlier of (i) the date upon which a Responsible Officer knew or
reasonably should have known of such failure or (ii) the date upon which
written notice thereof is given to the Company by the Agent or any Bank;
or
(d) Cross-Default. The Company or any of its Subsidiaries (i)
fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Contingent Obligation having an aggregate principal amount of more than
$3,500,000 and such failure continues after the applicable grace or notice
period, if any, specified in the agreement or instrument relating thereto; (ii)
fails to perform or observe any other condition or covenant or any other event
shall occur or condition exist under any agreement or instrument relating to any
Indebtedness or Contingent Obligation, having an aggregate principal amount of
more than $3,500,000 if the effect of such failure, event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity (or any Guaranty
Obligation of such Person to become payable) or cash collateral in respect
thereof to be demanded; or (iii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (1) any event
of default under such Swap Contract as to which the Company or any Subsidiary is
the Defaulting Party (as defined in such Swap Contract) or (2) any Termination
Event (as so defined) as to which the Company or any Subsidiary is an Affected
Party (as so defined), and, in either event, the Swap Termination Value owed by
the Company or such Subsidiary as a result thereof is greater than $3,500,000;
provided, however, that no failure to perform described in subparagraph (d)(ii)
or (d)(iii) only shall constitute an Event of Default if, prior to any exercise
of remedies by the Agent and the Majority Banks under Section 9.02 hereof, such
failure to perform has been waived in writing by the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or by a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries); or
(e) Bankruptcy or Insolvency. The Company or any of its
Subsidiaries (i) becomes insolvent or generally fails to pay, or admits in
writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the Ordinary Course of Business;
(iii) commences any Insolvency Proceeding or files any petition or answer in any
Insolvency Proceeding; (iv) acquiesces in the appointment of a receiver,
trustee, custodian or liquidator for itself or a substantial portion of its
property, assets or business or effects a plan or other arrangement with its
creditors; (v) admits the material allegations of a petition filed against it in
any Insolvency Proceeding; or (vi) takes any action to effectuate any of the
foregoing; or
(f) Involuntary Proceedings. Any involuntary Insolvency Proceeding
is commenced or filed against the Company or any of its Subsidiaries or any
writ, judgment, warrant of attachment, execution or similar process, is issued
or levied against a substantial part
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of the Company's or any of its Subsidiaries' assets and any such proceedings or
petition shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within 60 days after commencement, filing or levy; or
(g) ERISA. (i) The Company or an ERISA Affiliate shall fail to pay
when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under a Multiemployer Plan;
(ii) the Company or an ERISA Affiliate shall fail to satisfy its contribution
requirements under Section 412(c)(11) of the Code, whether or not it has sought
a waiver under Section 412(d) of the Code; (iii) in the case of an ERISA Event
involving the withdrawal from a Plan of a "substantial employer" (as defined in
Section 4001 (a)(2) or Section 4062(e) of ERISA), the withdrawing employer's
proportionate share of that Plan's Unfunded Pension Liabilities is more than
$1,000,000; (iv) in the case of an ERISA Event involving the complete or partial
withdrawal from a Multiemployer Plan, the withdrawing employer has incurred a
withdrawal liability in an aggregate amount exceeding $1,000,000; (v) in the
case of an ERISA Event not described in clause (iii) or (iv), the Unfunded
Pension Liabilities of the relevant Plan or Plans exceed $1,000,000; (vi) a
Plan that is intended to be qualified under Section 401(a) of the Code shall
lose its qualification, and the loss can reasonably be expected to impose on the
Company or an ERISA Affiliate liability (for additional taxes, to Plan
participants, or otherwise) in the aggregate amount of $1,000,000 or more; (vi)
the commencement or increase of contributions to, the adoption of, or the
amendment of a Plan by, the Company or an ERISA Affiliate shall result in a net
increase in unfunded liabilities to the Company or an ERISA Affiliate in excess
of $1,000,000; or (vii) the occurrence of any combination of events listed in
clauses (iii) through (vii) that involves a net increase in aggregate Unfunded
Pension Liabilities and unfunded liabilities in excess of $1,000,000; or
(h) Monetary Judgments. One or more final judgments, orders or
decrees shall be entered against the Company or any of its Subsidiaries
involving in the aggregate a liability (not covered by insurance) of $1,500,000
or more and the same shall remain unvacated, undischarged, unstayed or unbonded
pending appeal for a period of ten days after the date upon which payment must
be made pursuant thereto; or
(i) Non-Monetary Judgments. Any non-monetary judgment, order or
decree shall be rendered against the Company or any of its Subsidiaries which
does have or is reasonably likely to have a Material Adverse Effect, and either
(i) enforcement proceedings shall have been commenced by any Person upon such
judgment or order or (ii) there shall be any period of ten consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(j) Adverse Change. There shall occur a Material Adverse Effect;
or
(k) Guarantor Defaults. Any Guarantor shall fail in any material
respect to perform or observe any term, covenant or agreement in the Guaranty to
which it is a party; or any Guaranty shall for any reason be partially
(including with respect to future advances) or wholly revoked or invalidated, or
otherwise cease to be in full force and effect (except in accordance
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with its terms), or any Guarantor or any other Person shall contest in any
manner the validity or enforceability thereof or deny that it has any further
liability or obligation thereunder.
9.02 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Majority Banks, (a) declare the
Commitments of each Bank to make Loans and any obligation of the Issuing Bank to
Issue Letters of Credit to be terminated, whereupon such Commitments and
obligation shall forthwith be terminated; (b) declare an amount equal to the
maximum aggregate amount that is or at any time thereafter may become available
for drawing under any outstanding Letters of Credit (whether or not any
beneficiary shall have presented, or shall be entitled at such time to present,
the drafts or other documents required to draw under such Letters of Credit) to
be immediately due and payable, and declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon and all other amounts
payable hereunder to be immediately due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Company; (c) exercise all rights and remedies available to it
under the Loan Documents or applicable law; provided, however, that upon the
occurrence of any event specified in subsections 9.01(e) or (f) above (in the
case of such subsection 9.01(f) upon the expiration of the 60 day period
mentioned therein), the obligation of each Bank to make Loans and any obligation
of the Issuing Bank to Issue Letters of Credit shall automatically terminate and
the unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of the Agent or any Bank.
9.03 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement.
ARTICLE X
THE AGENT
10.01 Appointment and Authorization; "Agent." (a) Each Bank hereby
irrevocably appoints, designates and authorizes the Agent to take such action on
its behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
(b) The Issuing Bank shall act on behalf of the Banks with respect
to any Letters of Credit Issued by it and the documents associated therewith
until such time and except for so long as the Agent may agree at the request of
the Majority Banks to act for such Issuing
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Bank with respect thereto; provided, however, that the Issuing Bank shall have
all of the benefits and immunities (i) provided to the Agent in this Article X
with respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Agent," as used in this Article X,
included the Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to the Issuing Bank.
(c) Without limiting the generality of the foregoing subsections
and notwithstanding any other provisions herein, the use of the term "agent" or
"Agent" in this Agreement with reference to the Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
(d) The provisions of this Article X shall survive the payment of
all Obligations hereunder and inure to the benefit of BofA, including after its
resignation or replacement as the Agent, as to any actions taken or omitted to
be taken by such BofA while it was the Agent.
10.02 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.03 Liability of Agent. None of the Agent, its Affiliates, or any of
their respective officers, directors, employees, agents, or attorneys-in-fact
(collectively, the "Agent-Related Persons") shall (i) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct) or (ii) be
responsible in any manner to any of the Banks for any recital, statement,
representation or warranty made by the Company or any Subsidiary or Affiliate of
the Company or any officer thereof contained in this Agreement or in any other
Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Company or any of its Subsidiaries or
Affiliates.
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10.04 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telecopy, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Banks as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Majority
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Sections 5.01 and 5.02, each Bank shall be deemed to have consented
to, approved or accepted or to be satisfied with each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Bank unless an officer of the Agent responsible for the
transactions contemplated by the Loan Documents shall have received notice from
the Bank prior to the Borrowing specifying its objection thereto and either such
objection shall not have been withdrawn by notice to the Agent to that effect or
the Bank shall not have made available to the Agent the Bank's ratable portion
of such Borrowing.
10.05 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees payable to
the Agent for the account of the Banks, unless the Agent shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Banks. The Agent shall take such action
with respect to such Default or Event of Default as shall be requested by the
Majority Banks in accordance with Article IX; provided, however, that unless and
until the Agent shall have received any such request, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Banks.
10.06 Credit Decision. Each Bank expressly acknowledges that none of the
Agent Related Persons has made any representation or warranty to it and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by the Agent to any Bank. Each Bank represents to the Agent that it
has, independently and without reliance upon the Agent and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, prospects, operations, property,
financial and other condition and
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creditworthiness of the Company and its Subsidiaries and made its own decision
to enter into this Agreement and extend credit to the Company hereunder. Each
Bank also represents that it will, independently and without reliance upon the
Agent 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 Agreement and the other Loan
Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Company. Except for notices, reports and
other documents expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Company which may come into the possession of any of the Agent-Related Persons.
10.07 Indemnification. The Banks agree to indemnify the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), ratably according to the
respective amounts of their outstanding Loans, or, if no Loans are outstanding,
their Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind whatsoever which may at any time (including at any
time following the repayment of the Loans) be imposed on, incurred by or
asserted against any such person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by any such person under or in connection with any of the foregoing; provided,
however, that no Bank shall be liable for the payment to any Agent-Related
Person of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such person's gross negligence or willful misconduct. Without limitation of
the foregoing, each Bank shall reimburse the Agent promptly upon demand for its
ratable share of any costs or out-of-pocket expenses (including fees and
expenses of counsel and the allocated cost of in-house counsel) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company.
10.08 Agent in Individual Capacity. BofA and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent or the Issuing
Bank hereunder and without notice to or consent of the Banks. The Banks
acknowledge that, pursuant to such activities, BofA or is Affiliates may receive
information regarding the Company or its Affiliates (including information that
may be subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BofA shall
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<PAGE> 80
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent or the Issuing Bank.
10.09 Successor Agent. The Agent may, and at the request of the Majority
Banks shall, reign as Agent upon 30 days' notice to the Banks. If the Agent
shall resign as Agent under this Agreement, the Majority Banks, after consulting
with the Company, shall appoint from among the Banks a successor agent for the
Banks. If no successor Agent is appointed prior to the effective date of the
resignation of the Agent, the Agent shall appoint, after consulting with the
Banks and the Company, a successor agent from among the Banks. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's rights,
powers and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article X and Sections
11.04 and 11.05 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. Notwithstanding the
foregoing, however, BofA may not be removed as the Agent at the request of the
Majority Banks unless BofA shall also simultaneously be replaced as "Issuing
Bank" hereunder pursuant to, documentation in form and substance reasonably
satisfactory to BofA.
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document and no consent with respect to any
departure by the Company therefrom, shall be effective unless the same shall be
in writing and signed by the Majority Banks, and then such waiver shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Banks do any of the following:
(a) increase the Commitment of any Bank or subject any Bank to any
additional obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest or (subject to clause (iii) below) fees or other amounts due hereunder
or under any Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (iii) below) of any fees or other
amounts payable hereunder or under any Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Banks or
any of them to take any action hereunder; or
(e) release any Guarantor from its obligations under its Guaranty;
or
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<PAGE> 81
(f) amend this Section 11.01 or Section 2.13;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Issuing Bank in addition to the Majority Banks or all
the Banks, as the case may be, affect the rights or duties of the Issuing Bank
under this Agreement or any L/C-Related Document relating to any Letter of
Credit issued or to be issued by it, (ii) no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Majority Banks,
affect the rights or duties of the Agent under this Agreement, and (iii) the Fee
Letter may be amended, or rights or privileges thereunder waived, in a writing
executed by the parties thereto.
11.02 Notices.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and mailed, telegraphed, telexed or
delivered, if to the Company to its address specified on Schedule 11.02 hereof;
if to any Bank, to its Domestic Lending Office set forth on Schedule 11.02; and
if to the Agent, to its address specified on Schedule 11.02 hereof; or, as to
the Company or the Agent, to such other address as shall be designated by such
party in a written notice to the other parties, and as to each other party at
such other address as shall be designated by such party in a written notice to
the Company and the Agent. All such notices and communications shall, when
mailed by overnight delivery, telegraphed, telexed, cabled, be effective when
delivered for overnight delivery or to the telegraph company, transmitted by
telecopier, confirmed by telex answerback or delivered to the cable company,
respectively, or if delivered, upon delivery, except that notices to the Agent
pursuant to Article II or IX shall not be effective until received by the Agent,
and notices pursuant to Article III to the Issuing Bank shall not be effective
until actually received by the Issuing Bank at the address specified for the
"Issuing Bank" on the applicable signature page hereof.
(b) Any agreement of the Agent or the Banks to receive certain
notices by telephone or facsimile is solely for the convenience and at the
request of the Company. The Agent and the Banks shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by the Company to
give such notice and the Agent and the Banks shall not have any liability to the
Company or other Person on account of any action taken or not taken by the Agent
or any Bank in reliance upon such telephonic or facsimile notice. The obligation
of the Company to repay the Loans and L/C Obligations shall not be affected in
any way or to any extent by any failure by the Agent or any Bank to receive
written confirmation of any telephonic or facsimile notice or the receipt by the
Agent and the Banks of a confirmation which is at variance with the terms
understood by the Agent and the Banks to be contained in the telephonic or
facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of any Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
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11.04 Costs and Expenses. The Company shall:
(a) pay or reimburse the Agent on demand for all reasonable costs
and expenses incurred in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver or
modification to, this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the reasonable costs and
expenses of counsel to the Agent (and the allocated cost of internal counsel)
with respect thereto;
(b) pay or reimburse each Bank and the Agent on demand for all
costs and expenses incurred by them in connection with the enforcement or
preservation of any rights (including in connection with any "workout" or
restructuring regarding the Loans) under this Agreement, any Loan Document, and
any such other documents, including fees and out-of-pocket expenses of counsel
(and the allocated cost of internal counsel) to the Agent and to each of the
Banks; and
(c) pay or reimburse the Agent on demand for all appraisal, audit,
search and filing fees, incurred or sustained by the Agent in connection with
the matters referred to under paragraphs (a) and (b) above.
11.05 Indemnity. The Company shall pay, indemnify, and hold the
Agent-Related Persons, and each Bank and each of their respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including reasonable fees and expenses of
counsel and allocated costs of internal counsel) of any kind or nature
whatsoever which may at any time be imposed on, incurred by or asserted against
any such Indemnified Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Indemnified Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding related to this
Agreement or the Loans or the Letters of Credit or the use of the proceeds
thereof (whether or not any Indemnified Person is a party thereto) (all the
foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this section shall
survive payment of all other Obligations.
11.06 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, subject to Section 11.07, except that the Company may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Bank.
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<PAGE> 83
11.07 Assignments, Participations etc.
(a) Any Bank may, with the written consent of the Company and the
Agent and the Issuing Bank, which consents shall not be unreasonably withheld,
at any time assign and delegate to one or more Eligible Assignees (each an
"Assignee") all or any ratable part of the Aggregate Commitment and of the
entire Aggregate Revolving Commitment, Aggregate Term Commitment and Aggregate
L/C Commitment or any other rights or obligations of such Bank hereunder in a
minimum amount of $10,000,000 or, if less, 100% of such Bank's Commitments;
provided, however, that with the consent of the Agent and the Issuing Bank
(which shall not be unreasonably withheld) but without the consent of the
Company, any Bank may assign all or any ratable part of the Aggregate Commitment
and of the entire Aggregate Revolving Commitment, Aggregate Term Commitment and
Aggregate L/C Commitment or any other rights or obligations of such Bank
hereunder in a minimum amount of $10,000,000, or, if less 100% of such Bank's
Commitments, to any entity described in subsection (iii) of the definition of
Eligible Assignee (together with the foregoing defined Assignees, "Assignees");
provided further, however, that the Company, the Issuing Bank and the Agent may
continue to deal solely and directly with such Bank in connection with the
interests so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Company
and the Agent by such Bank and the Assignee, (ii) such Bank and its Assignee
shall have delivered to the Company, the Issuing Bank and the Agent an
Assignment and Acceptance in the form of Exhibit G ("Assignment and Acceptance")
and (iii) the processing fee of $3,500 shall have been paid to the Agent.
(b) From and after the date that the Agent notifies the assignor
Bank that it has received the Assignment and Acceptance, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents.
(c) Immediately upon each Assignee's making its payment under the
Assignment and Acceptance, this Agreement, shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more banks or other
entities (a "Participant") participating interests in all or any ratable part of
the Loans and the entire Commitment of that Bank or any other interest of that
Bank hereunder; provided, however, that (i) the Bank's obligations under this
Agreement shall remain unchanged, (ii) the Bank shall remain solely responsible
for the performance of such obligations, (iii) the Company and the Agent shall
continue to deal solely and directly with the Bank in connection with the Bank's
rights and obligations under this Agreement, and (iv) no Bank shall transfer or
grant any participating interest under which the Participant shall have rights
to approve any amendment to,
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<PAGE> 84
or any consent or waiver with respect to this Agreement except to the extent
such amendment, consent or waiver would require unanimous consent as described
in the first proviso to Section 11.01. In the case of any such participation,
the Participant shall not have any rights under this Agreement, or any of the
other Loan Documents, and all amounts payable by the Company hereunder shall be
determined as if such Bank had not sold such participation, except that if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
11.08 Set-off; Payments Set Aside.
(a) In addition to any rights and remedies of the Banks provided
by law, if an Event of Default exists, each Bank is authorized at any time and
from time to time, without prior notice to the Company, any such notice being
waived by the Company to the fullest extent permitted by law, to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Bank to
or for the credit or the account of the Company against any and all obligations
of the Company now or hereafter existing under this Agreement or any other Loan
Document and any Loan held by such Bank irrespective of whether or not the Agent
or such Bank shall have made demand under this Agreement or any Loan Document
and although such obligations may be contingent or unmatured. Each Bank agrees
promptly to notify the Company and the Agent after any such set-off and
application made by such Bank; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Bank under this Section 11.08(a) are in addition to the other rights and
remedies (including without limitation, other rights of set-off) which the Bank
may have.
(b) To the extent that the Company or any Guarantor makes a
payment to the Agent or the Banks, or the Agent or any Bank exercises its right
of set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (i)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (ii)
each Bank severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.
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<PAGE> 85
11.09 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of As Eurodollar Lending Office and
its Domestic Lending Office, of payment instructions in respect of all payments
to be made to it hereunder and of such other administrative information as the
Agent shall reasonably request.
11.10 Confidentiality. Each Bank agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
non-public information provided to it by the Company or any Subsidiary of the
Company or by the Agent on such Company's or Subsidiary's behalf in connection
with this Agreement or any Loan Document and neither it nor any of its
Affiliates shall use any such information for any purpose or in any manner other
than pursuant to the terms contemplated by this Agreement, except to the extent
such information (i) was or becomes generally available to the public other than
as a result of a disclosure by the Bank, or (ii) was or becomes available on a
non-confidential basis from a source other than the Company, provided that such
source is not bound by a confidentiality agreement with the Company known to the
Bank; provided, however, that any Bank may disclose such information (A) at the
request of any Bank regulatory authority or in connection with an examination of
such Bank by any such authority; (B) pursuant to subpoena or other court
process; (C) when required to do so in accordance with the provisions of any
applicable law; (D) at the express direction of any other agency of any State of
the United States of America or of any other jurisdiction in which such Bank
conducts its business; (E) to such Bank's independent auditors and other
professional advisors; and (F) as to any Bank or its Affiliate, as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which the Company or any Subsidiary is party or is deemed
party with such Bank or such Affiliate. Notwithstanding the foregoing, the
Company authorizes each Bank to disclose to any Participant or Assignee (each, a
"Transferee") and any prospective Transferee such financial and other
information in such Bank's possession concerning the Company or its Subsidiaries
which has been delivered to the Banks pursuant to this Agreement or which has
been delivered to the Banks by the Company in connection with the Banks' credit
evaluation of the Company prior to entering into this Agreement; provided
further, however that such Transferee agrees in writing to such Bank to keep
such information confidential to the same extent required of the Banks
hereunder.
11.11 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
11.12 Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES
FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND
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<PAGE> 86
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND
THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT AND THE
BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
11.13 No Third Parties Benefitted. This Agreement is made and entered into
for the sole protection and legal benefit of the Company, the Banks, the Agent
and the Agent-Related Persons, and their permitted successors and assigns, and
no other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement.
11.14 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire Agreement and understanding among the Company,
the Banks and the Agent and supersedes all prior or contemporaneous Agreements
and understandings of such persons, verbal or written, relating to the subject
matter hereof and thereof except for the fee letters referenced in subsections
2.09(a) and Section 3.08 and any prior arrangements made with respect to the
payment by the Company of (or any indemnification for) any fees, costs or
expenses payable to or incurred (or to be incurred) by or on behalf of the Agent
or one or more of the Banks.
11.15 Effect of Amendment and Restatement. This Agreement is intended to
completely amend, restate and replace the Prior Credit Agreement, without
novation. The Company hereby acknowledges certifies and agrees that if, pursuant
to the Prior Credit Agreement the Banks have made advances on a revolving basis
to the Company that are outstanding as of the date of this Agreement, or the
Issuing Bank has issued letters of credit that are outstanding as of the date of
this Agreement, (a) the Company's obligation to repay those advances to the
Banks and to reimburse the Issuing Bank in respect of such drawings under such
letters of credit is not subject to any defense, counterclaim, set-off, right of
recoupment, abatement or other claim or determination; and (b) those loans shall
continue and. constitute Revolving Loans (or Term Loans, pursuant to subsection
2.01 (c), as applicable), and those letters of credit shall continue and
constitute Letters of Credit, of the Company, in each case under and subject to
the terms and provisions of this Agreement. Notwithstanding the foregoing, any
obligation of the Company under the Prior Credit Agreement that by its terms
survives the termination of the "Aggregate Commitments" or repayment of other
"Obligations" under the Prior Credit Agreement, including the Company's
obligations (if any) under Articles IV and X and Sections 11.04 and 11.05, shall
survive the execution and effectiveness of this Agreement.
11.16 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement in any number of separate counterparts, each of which,
when so executed, shall
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<PAGE> 87
be deemed an original, and all of said counterparts taken together shall be
deemed to constitute but one and the same instrument. A set of the copies of
this Agreement signed by all the parties shall be lodged with the Company and
the Agent.
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<PAGE> 88
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in the State of California by their proper and duly
authorized officers as of the day and year first above written.
GRANITE CONSTRUCTION INCORPORATED BANQUE NATIONALE DE PARIS
By: /s/ WILLIAM E. BARTON By:
--------------------------------- ---------------------------------
Title: William E. Barton Title:
------------------------------ ------------------------------
Vice President & CFO
By: /s/ R.C. ALBRITTON By:
--------------------------------- ---------------------------------
Title: R.C. Allbritton Title:
------------------------------ ------------------------------
Vice President & Treasurer
BANK OF AMERICA NATIONAL TRUST ABN-AMRO BANK N.V.,
AND SAVINGS ASSOCIATION, as Agent San Francisco International Branch
By: By:
--------------------------------- ---------------------------------
Title: Vice President Title:
------------------------------ ------------------------------
BANK OF AMERICA NATIONAL TRUST By:
AND SAVINGS ASSOCIATION, as a Bank and ---------------------------------
as Issuing Bank Title:
------------------------------
By:
--------------------------------
Title: Vice President
-----------------------------
UNION BANK OF CALIFORNIA, N.A.
By:
--------------------------------
Title:
-----------------------------
By:
--------------------------------
Title:
-----------------------------
<PAGE> 89
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in the State of California by their proper and duly
authorized officers as of the day and year first above written.
GRANITE CONSTRUCTION INCORPORATED BANQUE NATIONALE DE PARIS
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------ ------------------------------
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------ ------------------------------
BANK OF AMERICA NATIONAL TRUST AND ABN-AMRO BANK N.V.,
SAVINGS ASSOCIATION, as Agent San Francisco International Branch
By: /s/ [SIG] By:
--------------------------------- ---------------------------------
Title: Vice President Title:
------------------------------ ------------------------------
BANK OF AMERICA NATIONAL TRUST By:
AND SAVINGS ASSOCIATION, as a Bank and ---------------------------------
as Issuing Bank Title:
------------------------------
By: /s/ [SIG]
--------------------------------
Title: Vice President
-----------------------------
UNION BANK OF CALIFORNIA, N.A.
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------ ------------------------------
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------ ------------------------------
<PAGE> 90
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in the State of California by their proper and duly
authorized officers as of the day and year first above written.
GRANITE CONSTRUCTION INCORPORATED BANQUE NATIONALE DE PARIS
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------ ------------------------------
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------ ------------------------------
BANK OF AMERICA NATIONAL TRUST AND ABN-AMRO BANK N.V.,
SAVINGS ASSOCIATION, as Agent San Francisco International Branch
By: By:
--------------------------------- ---------------------------------
Title: Vice President Title:
------------------------------ ------------------------------
BANK OF AMERICA NATIONAL TRUST By:
AND SAVINGS ASSOCIATION, as a Bank and ---------------------------------
as Issuing Bank Title:
------------------------------
By:
--------------------------------
Title: Vice President
-----------------------------
UNION BANK OF CALIFORNIA, N.A.
By: /s/ [SIG]
--------------------------------
Title: Vice President
-----------------------------
By:
--------------------------------
Title:
-----------------------------
<PAGE> 91
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in the State of California by their proper and duly
authorized officers as of the day and year first above written.
GRANITE CONSTRUCTION INCORPORATED BANQUE NATIONALE DE PARIS
By: By: /s/ DEBRA WRIGHT
--------------------------------- ---------------------------------
Title: Title: Debra Wright
------------------------------ ------------------------------
Vice President
By: By: /s/ STEPHANE RONZE
--------------------------------- ---------------------------------
Title: Title: Stephane Ronze
------------------------------ ------------------------------
Assistant Vice President
BANK OF AMERICA NATIONAL TRUST ABN-AMRO BANK N.V.,
AND SAVINGS ASSOCIATION, as Agent San Francisco International Branch
By: By:
--------------------------------- ---------------------------------
Title: Vice President Title:
------------------------------ ------------------------------
BANK OF AMERICA NATIONAL TRUST By:
AND SAVINGS ASSOCIATION, as a Bank and ---------------------------------
as Issuing Bank Title:
------------------------------
By:
--------------------------------
Title: Vice President
-----------------------------
UNION BANK OF CALIFORNIA, N.A.
By:
--------------------------------
Title:
-----------------------------
By:
--------------------------------
Title:
-----------------------------
<PAGE> 92
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in the State of California by their proper and duly
authorized officers as of the day and year first above written.
GRANITE CONSTRUCTION INCORPORATED BANQUE NATIONALE DE PARIS
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------ ------------------------------
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------ ------------------------------
BANK OF AMERICA NATIONAL TRUST ABN-AMRO BANK N.V.,
AND SAVINGS ASSOCIATION, as Agent San Francisco International Branch
By: By: /s/ BRADFORD H. LEAHY
--------------------------------- ---------------------------------
Title: Vice President Title: Bradford H. Leahy
------------------------------ ------------------------------
Assistant Vice President
BANK OF AMERICA NATIONAL TRUST By: /s/ L.T. OSBORNE
AND SAVINGS ASSOCIATION, as a Bank and ---------------------------------
as Issuing Bank Title: L. T. Osborne
------------------------------
Group Vice President
By:
--------------------------------
Title: Vice President
-----------------------------
UNION BANK OF CALIFORNIA, N.A.
By:
--------------------------------
Title:
-----------------------------
By:
--------------------------------
Title:
-----------------------------
<PAGE> 93
SCHEDULE 2.01(a)
TERM COMMITMENT
<TABLE>
<CAPTION>
BANK TERM COMMITMENT
- ---- ---------------
<S> <C>
Bank of America
National Trust and
Savings Association $11,250,000
Banque Nationale
de Paris $ 6,562,500
ABN-AMRO Bank N.V. $ 6,562,500
Union Bank of California, N.A. $ 5,625,000
-----------
Total $30,000,000
===========
</TABLE>
<PAGE> 94
SCHEDULE 2.01(b)
REVOLVING COMMITMENT
<TABLE>
<S> <C>
BANK REVOLVING COMMITMENT
- ---- --------------------
Bank of America
National Trust and
Savings Association $28,125,000
Banque Nationale
de Paris $16,406,250
ABN-AMRO Bank TM $16,406,250
Union Bank of California, N.A. $14,062,500
-----------
Total $75,000,000
===========
</TABLE>
<PAGE> 95
SCHEDULE 3.03
EXISTING LETTERS OF CREDIT
1. Letter of Credit #1171, as amended
Applicant: Granite Construction Company
Beneficiary: State of California Self-Insurance Plans
Original Issue Date: February 10, 1987
Expiry Date: March 15, 1998*
Current Face Amount: $3,585,430.00
*"Evergreen" letter of credit: provides for automatic one-year extensions unless
a notice of non-renewal is provided to the beneficiary not less than 45 days
prior to the expiry date of such letter of credit.
<PAGE> 96
GRANITE CONSTRUCTION INCORPORATED
Schedule 5.01 (d)
Good Standing
<PAGE> 97
GRANITE CONSTRUCTION INCORPORATED
Schedule 5.01(d)
Granite Construction Incorporated G.G. & R., Inc.
- --------------------------------- ---------------
California Utah
Delaware
Nevada
Utah
Wyoming
Granite Construction Company Intermountain Slurry Seal. Inc.
- ---------------------------- -------------------------------
Alabama Arizona
Arizona California
Arkansas Colorado
California Idaho
Colorado Montana
Delaware Nevada
Florida Utah
Georgia
Hawaii
Idaho Bear River Contractors
Illinois ----------------------
Kentucky Arizona
Louisiana California
Maryland Colorado
Minnesota Idaho
Mississippi Montana
Missouri Nevada
Montana New Mexico
Nebraska Oregon
Nevada Utah
New Jersey Washington
New Mexico Wyoming
New York
North Carolina
North Dakota GTC, Inc.
Ohio ---------
Oklahoma Texas
Oregon
South Carolina
Tennessee Desert Aggregates Inc.
Texas ----------------------
Utah Arizona
Virginia California
Washington
Washington D.C.
West Virginia
Wyoming
<PAGE> 98
Granite SR91 Corporation Granite SR91 LP
- ------------------------ ---------------
California California
Wilcott Corporation Pozzolan Products Company (P.P.C.)
- ------------------- ----------------------------------
California Arizona
Colorado Nevada
Utah
GILC LP GILC Incorporated
- ------- -----------------
Arizona California
California Florida
Colorado Utah
Florida Wyoming
Georgia
Idaho
Nevada
New Mexico
Texas
Utah
Wyoming
<PAGE> 99
GRANITE CONSTRUCTION INCORPORATED
Schedule 6.07
ERISA Compliance
<PAGE> 100
GRANITE CONSTRUCTION INCORPORATED
SCHEDULE 6.07
QUALIFIED PLANS
PLAN NAME SPONSOR
Granite Construction Profit Sharing Granite Construction Incorporated
and 401-K Plan
Granite Construction Employee Stock Granite Construction Incorporated
Ownership Plan
Gibbons Company Profit Sharing and G. G. & R., Incorporated
Retirement Plan*
* During the due diligence process Granite uncovered ERISA defined an
operational defect (under Code 401 (l) with Gibbons Company Profit Sharing
and Retirement Plan. A Voluntary Compliance Resolution in compliance with
the requirements of Rev. Proc. 94-62 was filed on August 5, 1995.
Preliminary information indicates that to correct the defect will cost
between $100,000 (probable) to $250,000 (worst case), and as of February
14, 1997 has been assigned to an Internal Revenue Service agent for
review.
MULTIEMPLOYER PLANS
Signatory to the Agreement with, the Cement Masons, Operating Engineers,
Teamsters, Laborers, and Carpenters unions.
<TABLE>
<S> <C>
Carpenters Local #1620 (Wyoming) Operating Engineers (Material Testers) - Sacramento, CA
Carpenters (Construction) - Arizona Operating Engineers (MTL. Producers- PVT. Wk.) - Marysville, CA
Carpenters (Construction) - Northern and Southern California Operating Engineers (R, S & G) - Imperial County, CA
Carpenters (Construction) - Northern Nevada Operating Engineers (R, S & G) - Riverside/San Bernardino, CA
Carpenters (Construction) - San Diego, CA Piledrivers (Construction) - Northern and Southern California
Cement Masons (Construction) - Northern and Southern California Pipefitters Local #192 (Wyoming)
Cement Masons (Construction) - Northern Nevada Plasterers & Cement Masons Local No. 588 (Utah)
Cement Masons (Construction) - San San Diego, CA Plasters (Construction) - Barbara County, CA
Cement Masons (Farm Ditch) - Imperial County, CA Plumbers, Local 355 (Utility Construction)-Northern California
Laborers Local No. 295 (Utah) Teamsters Local No. 222 (Utah)
Laborers Local #12711 (Wyoming) Teamsters Local No. 976 (Utah)
Laborers (Construction) - Northern and Southern California Teamsters Local #307 (Wyoming)
Laborers (Construction) - Northern Nevada and Las Vegas, NV Teamsters (Construction) - Northern and Southern California
Laborers (Construction) - San Diego, CA Teamsters (Construction) - Northern Nevada and Las Vegas, NV
Laborers (Farm Ditch) - Imperial County, CA Teamsters (Construction)-San Diego, CA
Laborers (Tunnel Construction) - Northern and Southern California Teamsters (R, S & G) - Coalinga, CA
Operating Engineers Local No. 3 (Utah) Teamsters (R, S & G) - Imperial County, CA
Operating Engineers Local No. 800 (Wyoming) Teamsters (R, S & G) - METZ (Greenfield) CA
Operating Engineers (Construction) - Northern California Teamsters (R, S & G) - Riverside/San Bernardino, CA
Operating Engineers (Construction ) - Northern Nevada and
Las Vegas, NV Teamsters (Readymix) - Reno, NV
Operating Engineers (Construction) - Southern California and
San Diego, CA Utah District Council of Carpenters
Operating Engineers (Farm Ditch) - Imperial County, CA Wyoming Building and Trades
</TABLE>
In addition to above referenced plans, contributions have been made to the
Taft-Hartley Trust funds as required under collective bargaining agreements in
the states where Granite has performed work as follows:
Colorado Oklahoma
Georgia Oregon
Illinois Texas
Maryland Utah
Mississippi Washington
New Mexico Washington DC - Virginia
<PAGE> 101
GRANITE CONSTRUCTION INCORPORATED
Schedule 6.11 (c)
Leases, Dividends and Letters of Credit
<PAGE> 102
GRANITE CONSTRUCTION INCORPORATED
SCHEDULE 6.11 (c)
LEASES: (GCC AS LESSEE)
<TABLE>
<CAPTION>
ANNUAL
LESSOR DESCRIPTION MATURITY PAYMENTS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona State Labor Department Pit 01/31/00 21,318
Associates Construction Equipment 10/31/99 50,460
Associates Construction Equipment 06/30/99 240,000
Associates Construction Equipment 05/31/99 56,552
Associates Construction Equipment 04/30/99 234,000
Associates Construction Equipment 01/31/99 286,000
Associates Construction Equipment 12/31/98 172,980
Associates Construction Equipment 12/31/98 127,368
Associates Construction Equipment 10/31/98 117,600
Associates Construction Equipment 03/31/00 312,312
Athens Avenue - Steve Mehalakis Pit 06/16/99 1,170
CIT Construction Equipment 04/30/99 54,131
CIT Construction Equipment 09/06/98 42,216
CIT Construction Equipment 03/31/97 32,211
City of Calpatria Plant Property 06/30/98 1,200
Crawford Pit 12/31/99 40,000
Dawn Eskelson Pit 03/31/99 30,000
Finch Living Trust Pit 12/31/97 23,250
First Union Construction Equipment 05/25/97 54,735
GE Capital Modular Space Office Building 09/06/98 $29,340
Gibbons Realty Company Building 05/08/05 30,000
Granite Rock Company Office & Yard 12/31/00 165,100
Hanson, Clarence & Sinnott Quarry Property 07/31/99 50,000
Jackling Aggregate Limited Pit 12/31/05 72,000
Julia C. Matthews Pit 12/31/98 24,000
Kansallis Construction Equipment 05/25/98 27,255
Kansallis Construction Equipment 04/25/97 49,052
Kansallis Construction Equipment 04/25/97 8,624
Little Rock Sand & Gravel Pit 04/30/01 132,480
Loughman & Peto Pit 12/31/97 25,440
L. R. Peterson and E. W. McGah Pit 01/02/06 70,000
Maria Bazzi Pit 12/31/00 62,783
Mariposa Ranch Limited Part. Pit 09/30/99 12,500
Meredit, Parker, Key, Bath Pit 12/31/97 137,100
M. L. Hillcock & B.C. Hillcock Pit 01/31/98 12,688
Pebble Beach Corporation Pit 12/31/00 24,000
Schaefer-Flouret Plant property 09/30/97 7,500
Settlemeyer Ranch & Scarscelli Pit 04/30/98 15,000
State of Arizona Pit 03/01/99 13,624
S. Martinelli & Company Office Building 09/30/97 54,000
TOKAI Construction Equipment 10/25/97 79,095
Topo Ranch (Singleton Group) Pit 06/30/97 3,013
Walker Development Pit 12/31/19 75,000
Western Pacific Railroad Co. Pit 06/01/01 50,000
Woodland - Reiff Pit 05/31/03 2,000
Woodland - Schneegas Pit 05/31/03 750
- -----------------------------------------------------------------------------------------------------------------
$3,129,847
LEASES: (DESERT AGGREGATES AS LESSEE)
- -----------------------------------------------------------------------------------------------------------------
Raymond J. Fanchon/L. Muller Pit 03/07/16 24,000
William Barry Shannon Pit 02/29/96 7,200
- -----------------------------------------------------------------------------------------------------------------
$31,200
LEASES: (BRC AS LESSEE)
- -----------------------------------------------------------------------------------------------------------------
State of Utah Office Building 08/01/38 14,504
State of Utah Office Building 11/01/38 6,883
- -----------------------------------------------------------------------------------------------------------------
$21,387
LEASES: (PPC AS LESSEE)
- -----------------------------------------------------------------------------------------------------------------
S W Souvall Company Office Building 03/31/99 23,313
- -----------------------------------------------------------------------------------------------------------------
$23,313
</TABLE>
<PAGE> 103
GRANITE CONSTRUCTION INCORPORATED
SCHEDULE 6.11 (c)
<TABLE>
<S> <C> <C> <C> <C> <C>
DIVIDENDS: (GCI OBLIGATION)
MATURITY AMOUNT
- --------------------------------------------------------------------------------------------------------
Second Quarter 1997 $.06 dividend
declared for holders of record as of 07/18/97 $1,096,564
June 30, 1997 (approximately)
LETTERS OF CREDIT:
BENEFICIARY TYPE SECURED LENDER MATURITY AMOUNT
- --------------------------------------------------------------------------------------------------------
Sierra Pacific Power Performance N B of A 05/16/98 104,000
Company (GCC)
Granite SR91 L.P. Performance N B of A 07/14/98 3,111,112
(SR91 Corp. & GCI)
- --------------------------------------------------------------------------------------------------------
$3,215,112
----------
$7,517,423
----------
</TABLE>
<PAGE> 104
GRANITE CONSTRUCTION INCORPORATED
Schedule 6.12
Environmental Matters
<PAGE> 105
GRANITE CONSTRUCTION INCORPORATED
SCHEDULE 6.12
ENVIRONMENTAL
Granite Construction in the normal course of business utilizes petroleum
(hydrocarbon) products which by definition are considered hazardous materials.
The utilization of these asphalt products, diesel, and gasoline over the years
of operations have the potential of creating exposure to environmental clean up
requirements. All underground tanks meet current requirements. There is no
pending governmental ordered clean up. However, the following represents
estimates based on construction industry housekeeping practices as encountered
during our normal course of business. Except as indicated with an "*", these
costs do not represent actual identified exposures.
<TABLE>
<CAPTION>
Locations Description Amount
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Arvin, CA Asphalt Batch Plant 100,000
Arvin, Ca Surface Spills 50,000
Bakersfield, CA Surface Spills 100,000
Bakersfield, CA Diesel Aboveground Storage Tanks 25,000
Bakersfield, CA Asphalt Batch Plant 100,000
Coalinga, CA Asphalt Batch Plant 50,500
Coalinga, CA Surface Spills 10,000
Felton, Ca Asphalt Batch plant 200,000
French Camp, CA Diesel/Gasoline Underground Storage Tanks 100,000
Gardnerville, NV Surface Spills 25,000
Gardnerville, NV Asphalt Batch Plant 50,000
Indio, CA * Asphalt Batch Plant 250,0OO
Palmdale, CA Surface Spills 10,000
Palmdale, CA Asphalt Batch Plant 50,000
Patrick, NV Asphalt Batch Plant 75,000
Patrick, NV Surface Spills 50,000
Sacramento, CA Diesel/Gasoline Underground Storage Tanks 50,000
Sacramento, CA Asphalt Batch Plant 300,000
Sacramento, CA Surface Spills 200,000
Sacramento, CA Diesel Aboveground Storage Tanks 50,000
Salinas, CA Surface Spills 250,000
Santa Barbara, CA Surface Spills 100,000
Santa Barbara, CA Diesel/Gasoline Underground Storage Tanks 75,000
Santa Barbara, CA Asphalt Batch Plant 50,000
Santa Cruz, CA Asphalt Batch Plant 75,000
Sparks, NV Diesel/Gasoline Underground Storage Tanks 25,000
Thousand Palms, CA * Asphalt Batch Plant 533,000
(Garnet)
Tracy, CA Asphalt Batch Plant 75,000
Tracy, CA Surface Spills 25,000
Tucson, AZ Surface Spills 25,000
Tucson, AZ Diesel/Gasoline Underground Storage Tanks 50,000
Tucson, AZ Asphalt Batch Plant 150,000
Watsonville, CA Diesel/Gasoline Underground Storage Tanks 150,000
Watsonville, CA Surface Spills 50,000
Webb, UT * Asphalt Batch Plant 1,400,000
Whitehall, UT * Asphalt Batch Plant 55,000
Salt Lake City, UT * Asphalt Batch Plant 250,000
(2200 North)
Salt Lake City, UT * Diesel/Gasoline Underground Storage Tanks 1,106,000
(9th North)
Salt Lake County, UT * Surface Spills 30,000
(Hercule)
Weber County, UT * Surface Spills 100,000
(Ogden)
Salt Lake County, UT * Aggregate and smelter site 1,250,000
(CPC)
Cahoon, UT * Surface Spills 100,000
Fireclay Battery, UT * Surface Spills 25,000
- -----------------------------------------------------------------------------------------------------
$7,794,000
==========
</TABLE>
<PAGE> 106
GRANITE CONSTRUCTION INCORPORATED
Schedule 6.17
Intellectual Property Disputes
There is no claim or litigation regarding any copyrights, patents, trademarks or
licenses.
<PAGE> 107
GRANITE CONSTRUCTION INCORPORATED
Schedule 6.18
Subsidiaries and Equity Investments
<PAGE> 108
GRANITE CONSTRUCTION INCORPORATED
SCHEDULE 6.18
EQUITY INVESTMENTS:
<TABLE>
<CAPTION>
COMPANY DESCRIPTIONS QUANTITY INVESTMENT MARKET
VALUE 06/03/97
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Morrison-Knudsen Common Stock 100 shares $1,325
Perini Corporation Common Stock 100 shares 725
Guy F. Atkinson Common Stock 100 shares 688
Calmat Company Common Stock 100 shares 2,038
Cascade Corporation Common Stock 100 shares 1,713
TIC Holdings Minority Interest 257,126 Shares 20,119,081
Furin-Colnon/Granite Joint Venture 201,169
Granite/Groves Joint Venture (255,981)
Kiewit/Granite (TCA) Joint Venture 9,094,030
Kiewit/Granite (KG Leasing) Joint Venture 9,072,746
Kiewit/Granite (E. Dam) Joint Venture 2,814,542
- ----------------------------------------------------------------------------------------------------
$41,052,075
===========
</TABLE>
<PAGE> 109
[TABLE NOT SHOWN]
<PAGE> 110
GRANITE CONSTRUCTION INCORPORATED
Schedule 8.01 (a)
Liens Existing on Closing Date
Please see Schedule 8.18 for Liens
<PAGE> 111
GRANITE CONSTRUCTION INCORPORATED
Schedule 8.04
Investment Policy
<PAGE> 112
GRANITE CONSTRUCTION INCORPORATED
INVESTMENT POLICY GUIDELINES
OBJECTIVES
Within the spectrum of activities of this organization, it is necessary to
provide a framework for the regular and continuous management of its investment
funds. Short term and intermediate term investments provide earnings on excess
cash while maintaining liquidity and working funds for the present and future
operations.
In order to provide control of all investments and cash, this policy shall limit
investment activities to: first, preserve principal; second, meet liquidity
needs; third, avoid inappropriate concentration of investments; and fourth,
deliver good yield in relationship to these GUIDELINES and market conditions.
DURATION
Cash investments are restricted to the average duration of one (1) year from
date of settlement. Any investments with longer maturity than one year must be
invested in instruments issued by, guaranteed by, or insured by the U.S.
Government or any of its agencies. The average portfolio duration of escrows and
deposit agreements shall not exceed five (5) years. Short term investments shall
be defined as instruments maturing in ninety-one (91) days or more.
LIQUIDITY
The duration of the portfolio including escrows & deposits shall be consistent
with the cash needs as determined by the cash forecast. The portfolio will be
constructed in order to provide funds that will enable the company to meet its
day to day requirements and short term needs. Any excess cash above the
aforementioned requirements may be invested in instruments with longer maturity.
MARKETABILITY
Holdings should be of sufficient size and held in issues which are traded
actively (except time deposits, loan participation, and master notes) to
facilitate transactions at a minimum cost and accurate market valuation.
Effective 01/96
Page 1 of 5
<PAGE> 113
TRADING
The following individuals are authorized traders:
Jigisha Desai R. C. Allbritton A. B. Nickerson
Any individual transaction conforming to the policy set forth herein or, any
transaction of an Investment Manager not conforming to the respective Investment
Manager's policy shall be approved by one of the following officers or, any
transaction not conforming to the policy set forth herein must be approved by
any two of the following officers:
D. H. Watts W. E. Barton
W. G. Dorey M. E. Boitano
DEALERS AND BANKS FOR TRADING
The preferred dealers and banks designated as safekeeping depositories in order
of choice are:
Bank of America, Glendale, CA (Wentworth,
Hauser & Violich)
Bank of New York
Wells Fargo
Additional dealer(s): ABN - AMRO Securities
BA Securities
Merrill Lynch
Smith Barney
Investments purchased through other than preferred dealers will be delivered to
Bank of New York for safekeeping and paid for upon receipt.
ESCROW
Escrows in lieu of retention are allowed at the following bank(s):
Bank of America
Bank One of Arizona
First Trust of California, NA
Merrill Lynch Trust Company
Nations Bank
Pioneer Citizens Bank, Nevada
SunTrust Bank
The types of investments will be guided by the terms of the escrow, but in all
cases the
Effective 01/96
Page 2 of 5
<PAGE> 114
investment will be governed by the investment policy stated herein. Banks not
listed, but required by escrow agreement, will also be acceptable.
REPORTING
* Daily - An Investment Transaction sheet, sequentially numbered will be
processed for approval by an authorized officer.
* Weekly and Monthly - A Portfolio listing will be provided to the Chief
Financial Officer and the traders.
Effective 01/96
Page 3 of 5
<PAGE> 115
GRANITE CONSTRUCTION INCORPORATED
INVESTMENT POLICY GUIDELINES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
IF INSTRUMENT CARRIES A GUARANTEE, CONSIDER GUARANTOR TO BE ISSUER
-----------------------------------------------------------------------------------
ELIGIBLE INVESTMENTS CONCENTRATION LIMITS CREDIT QUALITY
-------------------------------------------------
The portfolio will be limited Maximum concentration at
time of purchase Rating Limitations
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Obligations issued by U.S. Government limited to:
U.S. Treasury Bills
U.S. Treasury Notes N/A N/A
U.S. Treasury Bonds No Maximum
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations of agencies of the U.S. Government
limited to:
Federal Farm Credit Bank 25% of the portfolio
Federal Home Loan Bank Any one issuer not to N/A N/A
Federal Home Loan Mortgage Corporation exceed $1,000,000 or 10%
Federal National Mortgage Association of total portfolio
Student Loan Marketing Association (whichever is greater)
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations collateralized by U.S. Government Delivered to authorized
securities limited to: 25% of the portfolio Fully collateralized by safekeeping account.
Repurchase Agreements Any one issuer not to U.S. Gov't and Agency Collateral value plus
Reverse Repurchase Agreements exceed $1,000,000 or 10% securities included in accrued interest must
of total portfolio these guidelines exceed and be maintained
(whichever is greater) at level exceeding
value of agreement
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations issued by U.S. owned domestic 50% of the portfolio A-1/P-1
commercial banks limited to: Any one issuer not to AND Top 40 U.S. Banks
Bankers' Acceptance exceed $1,000,000 or 10% AAA/NR or AA/Aa by deposit and assets
Certificates of Deposit of total portfolio or better underlying (see attached list)
(whichever is greater) credit quality
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations issued by U.S. bank subsidiaries of
Non U.S. banks so long as they are a state 40% of the portfolio A-1/P-1
chartered bank limited to: Any one issuer not to AND Top 50 World Banks
Yankee Bankers' Acceptances exceed $1,000,000 or 10% AAA/NR or AA/Aa by deposit and assets
Yankee Certificates of Deposit of total portfolio or better underlying (see attached list)
(all securities U.S. dollar denominated) (whichever is greater) credit quality
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Effective 01/96
<PAGE> 116
GRANITE CONSTRUCTION INCORPORATED
INVESTMENT POLICY GUIDELINES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
IF INSTRUMENT CARRIES A GUARANTEE, CONSIDER GUARANTOR TO BE ISSUER
--------------------------------------------------------------------------------------
ELIGIBLE INVESTMENTS CONCENTRATION LIMITS CREDIT QUALITY
The portfolio will be limited to Maximum concentration at --------------------------------------------------------
time of purchase Rating Limitations
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Obligations of major U.S. corporation 50% of the portfolio
and U.S. holding companies limited to: Any one issuer not to A-1/P-1/D-1 Any TWO of three
exceed $1,000,000 or 10% S&P, Moody's, Duff & rating services
Commercial Paper of total portfolio Phelps
(whichever is greater)
- ----------------------------------------------------------------------------------------------------------------------------------
25% of portfolio
Loan Participation Any one issuer not to Use issuer's Same as
Master Notes exceed $1,000,000 or 10% commercial commercial paper credit
of total portfolio paper credit rating quality requirements
(whichever is greater)
- ----------------------------------------------------------------------------------------------------------------------------------
Tax-exempt investments limited to: 25% of portfolio S&P: A-1, AA or
Commercial Paper Any one issuer not to better, Sp-1 Bonds NOT subject to
Floating Rate Put Bonds exceed $1,000,000 or 10% AND Alternative Minimum Tax
Floating Rate Put Notes of total portfolio Moody's: P-1, Aa and when advantageous in the
Municipal Notes (whichever is greater) better, VMIG-1. marketplace
Municipal Bonds
- ----------------------------------------------------------------------------------------------------------------------------------
Money Market Mutual Funds Consistent with Company's Limited to those approved
Liquidity requirements by the Board of Directors
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 117
GRANITE CONSTRUCTION INCORPORATED
INVESTMENT POLICY GUIDELINES
WENTWORTH, HAUSER & VIOLICH
OBJECTIVES
The assets are liquidity and working funds for the present and future operations
of the firm. It is essential that the assets be invested in a high quality
portfolio which: first, preserve principal; second, meet liquidity needs; third,
delivers good yield in relationship to these guidelines and market conditions;
fourth, avoids inappropriate concentrations of investments; and fifth, provides
fiduciary control of all investments and cash by the firm's appointed custodian.
DURATION
The portfolio's average duration shall not exceed two (2) years from date of
settlement. Short term investments shall be defined as instruments maturing in
ninety-one (91) days or more.
LIQUIDITY
The portfolio will be constructed so that it can provide $ 1,000,000.00 in 30
days and the remainder shall be consistent with the cash needs of the Company as
determined by the cash forecast, and be so constructed that it can provide funds
to match the Company's cash requirements.
MARKETABILITY
Holdings should be of sufficient size and held in issues which are traded
actively (except time deposits, loan participation, and master notes) to
facilitate transactions at a minimum cost and accurate market valuation.
TRADING
All purchases and sales will be executed at the best net price with the
principal dealers and banks in the particular securities. All securities
purchased will be in the name of client.
DEALERS AND RANKS FOR TRADING
As determined by Wentworth, Hauser & Violich, but within the confines of this
agreement emphasizing credit quality.
Effective 3/95
Page 1 of 4
<PAGE> 118
REPORTING
* Daily - Copy of confirmation slip.
* Monthly - Month-End regular accounting transaction, portfolio
listing and cash flow schedules, and rate of return reports.
REINVESTMENT
Principal (and interest when appropriate) will be reinvested immediately upon
receipt.
COMMUNICATION
Wentworth, Hauser & Hauser should maintain communications with client with as
reasonable frequency as market conditions and the portfolio warrant. Major
market condition changes and/or major portfolio changes should be called to the
attention of the client.
Any trading which will realize a net loss in principal or exceeds policy limits
must first be approved by the client.
DISCRETIONARY ACCOUNT
Wentworth, Hauser & Violich will have full discretion to invest the portfolio
within the guidelines.
PERFORMANCE BENCHMARK
The performance of the portfolio will be compared to appropriate market indices
for securities with longer maturity than one year. Overall performance should
not be less than 90-day Treasury Bill Index over a one year time horizon.
Effective 3/95
Page 2 of 4
<PAGE> 119
GRANITE CONSTRUCTION INCORPORATED
INVESTMENT MANAGER POLICY GUIDELINES
WENTWORTH, HAUSER & VIOLICH
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
IF INSTRUMENT CARRIES A GUARANTEE, CONSIDER GUARANTOR TO BE ISSUER
-----------------------------------------------------------------------------------
ELIGIBLE INVESTMENTS CONCENTRATION LIMITS CREDIT QUALITY
-------------------------------------------------
The portfolio will be limited Maximum concentration at
time of purchase Rating Limitations
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Obligations issued by U.S. Government limited to:
U.S. Treasury Bills
U.S. Treasury Notes No Maximum N/A N/A
U.S. Treasury Bonds
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations of agencies of the U.S. Government
limited to:
Federal Farm Credit Bank 50% of the portfolio
Federal Home Loan Bank Any one issuer not to N/A N/A
Federal Home Loan Mortgage Corporations exceed $1,000,000 or 10%
Federal National Mortgage Association of total portfolio
Student Loan Marketing Association (whichever is greater)
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations collateralized by U.S. Government Delivered to authorized
securities limited to: 25% of the portfolio Fully collateralized by safekeeping account.
Repurchase Agreements Any one issuer not to U.S. Gov't and Agency Collateral value plus
Reverse Repurchase Agreements exceed $1,000,000 or 10% securities included in accrued interest must
of total portfolio these guidelines exceed and be maintained
(whichever is greater) at level exceeding
value of agreement
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations issued by U.S. owned domestic 50% of the portfolio A-1/P-1
commercial banks limited to: Any one issuer not to AND Top 100 U.S. Banks
Bankers' Acceptance exceed $1,000,000 or 10% A/A by deposit and assets
Certificates of Deposit of total portfolio or better underlying
(whichever is greater) credit quality
- ------------------------------------------------------------------------------------------------------------------------------------
Obligations issued by Non U.S. bank domiciled
in countries that are approved sovereign risks 50% of the portfolio A-1/P-1
by Investment Manager limited to: Any one issuer not to AND Top 200 World Banks
Yankee Bankers' Acceptances exceed $1,000,000 or 10% A/A by deposit and assets
Yankee Certificates of Deposit of total portfolio or better underlying
(all securities U.S. dollar denominated) (whichever is greater) credit quality
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Effective 03/95
Page 3 of 4
<PAGE> 120
GRANITE CONSTRUCTION INCORPORATED
INVESTMENT MANAGER POLICY GUIDELINES
WENTWORTH, HAUSER & VIOLICH
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
IF INSTRUMENT CARRIES A GUARANTEE, CONSIDER GUARANTOR TO BE ISSUER
--------------------------------------------------------------------------------------
ELIGIBLE INVESTMENTS CONCENTRATION LIMITS CREDIT QUALITY
The portfolio will be limited to Maximum concentration at --------------------------------------------------------
time of purchase Rating Limitations
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Obligations of major corporations 50% of the portfolio
and U.S. holding companies limited to: Any one issuer not to A-1/P-1/F-1 Any TWO of three
exceed $1,000,000 or 10% S&P, Moody's, Fitch rating services
Commercial Paper of total portfolio
Medium Term Note (whichever is greater)
- ----------------------------------------------------------------------------------------------------------------------------------
50% of portfolio
Loan Participation Any one issuer not to Use issuer's Same as
Master Notes exceed $1,000,000 or 10% commercial commercial paper credit
of total portfolio paper credit rating quality requirements
(whichever is greater)
- ----------------------------------------------------------------------------------------------------------------------------------
Tax-exempt investments limited to: 25% of portfolio S&P: A-1, AA or
Commercial Paper Any one issuer not to better, Sp-1 Bonds subject to
Floating Rate Put Bonds exceed $1,000,000 or 10% AND Alternative Minimum Tax
Floating Rate Put Notes of total portfolio Moody's: P-1, Aa or only when advantageous
Municipal Notes (whichever is greater) better, VMIG-1. in the marketplace
Municipal Bonds
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 121
GRANITE CONSTRUCTION INCORPORATED
Schedule 8.06
Contingent Obligations
There are no contingent obligations outstanding.
<PAGE> 122
GRANITE CONSTRUCTION INCORPORATED
Schedule 8.18
Indebtedness
<PAGE> 123
GRANITE CONSTRUCTION INCORPORATED
SCHEDULE 8.18
INDEBTEDNESS
NOTES:
<TABLE>
<CAPTION>
LENDER TYPE SECURED INTEREST MATURITY BALANCE
Y/N RATE 05/31/97
- --------------------- ----------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Small Business Admin- Acquisition N 4.91% 01/04/99 129,050
Istration (GCC)
Raymond Flaschbarth Land Acquisition N 8.00% 06/30/00 260,000
(GCC)
C. B. Concrete Acquisition N 6.50% 04/14/02 2,638,387
Company, Inc. (GCC)
Scach, Inc. (BRC) Acquisition N 6.50% 04/14/02 788,091
$3,815,528
</TABLE>
NOTE: PLEASE SEE SCHEDULE 6.11 (C) FOR CAPITALIZED LEASES.
<PAGE> 124
SCHEDULE 11.02
ADDRESSES FOR NOTICES: PAYMENT AND LENDING OFFICES
<TABLE>
<S> <C>
Addresses for Notices
IF TO THE COMPANY:
Granite Construction Incorporated
Box 50085
Watsonville, CA 95077-5085
585 West Beach Street
Watsonville, CA 95076
Attn: Roxane Allbritton
Telephone: (408) 761-4772
Facsimile: (418) 728-1701
Payment and Lending Offices
IF TO THE AGENT: AGENT'S PAYMENT OFFICE:
Bank of America NT&SA Bank of America NT&SA
Agency Administrative Services #5596 (ABA 121-000-358-S.F.)
1455 Market Street, 13th Floor Attn: Agency Administrative Services
San Francisco, CA 94103 #5596
Attn: Peter Vistan
Telex: GRT 3726050 BA GA SFO 1850 Gateway Blvd.
Telephone: (415) 436-2778 Concord, CA 94520
Facsimile: (415) 436-2700 For credit to account
No. 12330-15118
ref: Bancontrol-Granite Construction
IF TO THE BANKS: BANKS' PAYMENT AND LENDING OFFICES:
BANK OF AMERICA NT&SA
BANK OF AMERICA NT&SA Global Payment Operations
San Francisco Credit Products #3838 Customer Service Americas #5693
555 California Street, 41st Floor 1850 Gateway Blvd.
San Francisco, CA 94104 Concord, CA 94520
Attention: Kevin Leader Attention: Karen Matthews
Telephone: (415) 622-8168 ABA No. 121-000-358 SF
Facsimile: (415) 622-4585
Domestic and Eurodollar Lending Office
1850 Gateway Boulevard
Concord, California 94520
</TABLE>
i
<PAGE> 125
<TABLE>
<S> <C>
Addresses for Notices Payment and Lending Offices
IF TO THE BANKS: BANKS' PAYMENT AND LENDING OFFICES:
UNION BANK OF CALIFORNIA, N.A. UNION BANK OF CALIFORNIA, N.A.
400 California Street, 17th Floor 400 California Street, l7th Floor
San Francisco, CA 94104 San Francisco, CA 94104
Attn: Alison Amonette Attention: Alison Amonette
Telephone: (415) 765-3696 ABA No. 122000496
Facsimile: (415) 765-2634
Domestic and Eurodollar Lending Office
400 California Street, 17th Floor
San Francisco, CA 94104
BANQUE NATIONALE DE PARIS BANQUE NATIONALE DE PARIS
180 Montgomery Street, 4th Floor 180 Montgomery Street, 4th Floor
San Francisco, CA 94104 San Francisco, CA 94104
Attn: Debra H. Wright Attention: Treasury
Telephone: (415) 956-0707 ABA No. 121027234
Facsimile: (415) 296-8954
Telex: 278900
Domestic and Eurodollar Lending Office
180 Montgomery Street, 4th Floor
San Francisco, CA 94104
ABN-AMRO BANK N.V. ABN-AMRO BANK N.V.
101 California Street, Suite 4550 101 California Street, Suite 4550
San Francisco, CA 94111 San Francisco, CA 94111
Attn: Bradford H. Leahy Attention: Gloria Lee
Telephone: (415) 984-3729 Acct No. 651001054541
Facsimile: (415) 362-3524 ABA No. 026009580
Telex: 278137
Domestic and Eurodollar Lending Office
101 California Street, Suite 4550
San Francisco, CA 94111
IF TO THE ISSUING BANK:
Bank of America NT&SA
International Trade
Banking Division #5655
333 S. Beaudry Ave, 19th Floor
Los Angeles, CA 90017
Attention: Sandra Leon
Telephone: (213) 345-6632
Facsimile: (213) 345-6694
</TABLE>
ii
<PAGE> 126
EXHIBIT A
NOTICE OF BORROWING
-------------------
Date:______________
To: Bank of America National Trust and Savings Association as Agent for the
Banks parties to the Credit Agreement dated as of June 30, 1997 (as
extended, renewed, amended or restated from time to time, the "Credit
Agreement") among Granite Construction Incorporated, certain Banks which
are signatories thereto and Bank of America National Trust and Savings
Association, as Agent
Ladies and Gentlemen:
The undersigned, Granite Construction Incorporated (the "Company"),
refers to the Credit Agreement, the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably, pursuant to Section
2.03 of the Credit Agreement, of the Borrowing specified below:
1. The Business Day of the proposed Borrowing is ________, 19___.
2. The aggregate amount of the proposed Borrowing is $__________.
3. The Borrowing is to be comprised of $_____ of [CD Rate]
[Eurodollar Rate] [Reference Rate] Loans.
4. The duration of the Interest Period for the CD Rate Loans or
Eurodollar Rate Loans included in the Borrowing shall be [____ days]
[___ months].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Company contained
in Article VI of the Credit Agreement are true and correct as though
made on and as of such date (except to the extent such representations
and warranties expressly refer to an earlier date, in which case they
are true and correct as of such earlier date);
A-1
<PAGE> 127
Default has occurred and is continuing, or would result
from [text missing] nd
(c) The proposed Borrowing will not cause the aggregate principal amount
of all outstanding Revolving Loans plus the aggregate amount available for
drawing under all outstanding Letters of Credit plus the aggregate principal
amount of all outstanding L/C Borrowings to exceed the Aggregate Revolving
Commitment.
GRANITE CONSTRUCTION
INCORPORATED
By:_____________________________
Title:__________________________
By:_____________________________
Title:__________________________
A-2
<PAGE> 128
EXHIBIT B
NOTICE OF CONVERSION/CONTINUATION
Date:
To: Bank of America National Trust and Savings Association, as Agent for the
Banks parties to the Credit Agreement dated as of June 30, 1997 (as
extended, renewed, amended or restated from time to time, the "Credit
Agreement") among Granite Construction Incorporated, certain Banks which
are signatories thereto and Bank of America National Trust and Savings
Association, as Agent
Ladies and Gentlemen:
The undersigned, Granite Construction Incorporated (the "Company"),
refers to the Credit Agreement, the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably, pursuant to Section
2.04 of the Credit Agreement, of the [conversion] [continuation] of the Loans
specified herein, that:
1. The Conversion/Continuation Date is _____, 19___.
2. The aggregate amount of the Loans [converted] is $_______ or
[continued] is $____________.
3. The Loans are to be [converted into] [continued as] [CD Rate]
[Eurodollar Rate] [Reference Rate] Loans.
4. [If applicable:] The duration of the Interest Period for the
Loans included in the [conversion] [continuation] shall be [___ days]
[___ months].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the proposed Conversion/Continuation
Date, before and after giving effect thereto and to the application of the
proceeds therefrom:
(a) the representations and warranties of the Company contained
in Article VI of the Credit Agreement are true and correct as though
made on and as of such date (except to the extent such representations
and warranties expressly refer to an earlier date, in which case they
are true and correct as of such earlier date);
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed [conversion]
[continuation]; and
B-1
<PAGE> 129
(c) If the proposed [conversion] [continuation] is of Revolving
Loans, the proposed [conversion][continuation] will not cause the
aggregate principal amount of all outstanding Revolving Loans plus the
aggregate amount available for drawing under all outstanding Letters of
Credit plus the aggregate principal amount of all outstanding L/C
Borrowings to exceed the Aggregate Revolving Commitment.
GRANITE CONSTRUCTION
INCORPORATED
By:_____________________________
Title:__________________________
By:_____________________________
Title:__________________________
B-2
<PAGE> 130
Exhibit C
[LOGO]
================================================================================
APPLICATION AND AGREEMENT
FOR STANDBY LETTER OF CREDIT
TO: Bank of America National Trust and Savings Association ("Bank")
For Bank Use Only
L/C NO._________
A. APPLICATION.
_______________("Customer") requests Bank to issue an irrevocable standby letter
of credit ("Letter of Credit") as follows:
[ ] Full text teletransmission [ ]airmail with brief preliminary
teletransmission advice [ ] Airmail [ ] Courier
<TABLE>
<S> <C>
For account of (Customer Name and Address) In favor of (Beneficiary Name and Address)
_________________________________________ _________________________________________
_________________________________________ _________________________________________
_________________________________________ _________________________________________
</TABLE>
Advising Bank
_________________________________________
_________________________________________
_________________________________________
<TABLE>
<S> <C>
Amount __________________________(_____) Expiration Date: Drafts to be drawn on and presented at Bank's Issuing
(in words and figures)
Currency________________________________ unit on or before__________________________, 19____
</TABLE>
Available by drafts drawn at sight on Bank's issuing unit when accompanied by
the following documentation:
1. The original standby letter of credit.
2. The signed statement of the beneficiary worded as follows (state exact
wording that is to appear in the statement accompanying the draft):
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Special instructions:___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Customer understands that the risk to Customer is greater if Customer
requests a standby letter of credit which requires only a draft rather than a
standby letter of credit which requires supporting documentation.
Customer understands that the final form of the Letter of Credit may be
subject to such revisions and changes as are deemed necessary or appropriate by
Bank's letter of credit issuing unit and Customer hereby consents to such
revisions and changes.
<PAGE> 131
B. AGREEMENT
In consideration of Bank issuing for the account of Customer the Letter
of Credit, Customer agrees to the following:
1. Customer shall pay Bank, on demand, all amounts paid by Bank under or
in respect of the Letter of Credit.
2. On each fee payment date, so long as any undrawn amount of the Letter
of Credit remains available, Customer shall pay Bank a Letter of Credit fee. The
fee payment dates shall be the dates as Customer and Bank may agree, or in the
absence of such agreement, the fee payment date shall be the date on which the
Bank issues such Letter of Credit. The fee shall be at such rate per annum as
Customer and Bank may agree, or in the absence of such agreement, at the rate
customarily charged by Bank at the time such fee is payable. The applicable
Letter of Credit fee shall be calculated and payable on the undrawn amount of
the Letter of Credit as of such fee payment date, and shall be for the period
commencing on such fee payment date and ending on the day preceding the next fee
payment date (or the expiration date of the Letter of Credit, as the case may
be), both dates inclusive. The Letter of Credit fee will be computed on the
basis of a 365 day year and actual days elapsed. Bank shall not be required to
refund any portion of the Letter of Credit fee paid for any period during which
(a) the Letter of Credit expires of otherwise terminates, or (b) the undrawn
amount of the Letter of Credit is reduced by drawings or by amendment.
3. Customer shall pay Bank, on demand, commissions and fees for
amendments to the Letter of Credit, payments under the Letter of Credit,
extensions of the Letter of Credit, cancellation of the Letter of Credit, and
other services in the amounts Customer and Bank may agree, or, in the absence of
such agreement, in the amounts customarily charged by Bank on the date of Bank's
demand.
4. All payments and deposits by Customer under this Application and
Agreement shall be made at the branch or office Bank may designate from time to
time. Bank shall have no obligation to pay Customer interest on any deposit made
by Customer under this Application and Agreement.
5. (a) All payments and deposits by Customer under this Application and
Agreement shall be in the currency in which the Letter of Credit is payable
except that Bank may, at its option, require payments and deposits by Customer
under this Application and Agreement to be made in U.S. Dollars if the Letter of
Credit is payable in a foreign currency.
(b) The amount of each payment and each deposit by Customer under
this Application and Agreement in U.S. Dollars for a Letter of Credit payable in
a foreign currency shall be determined by converting the relevant amount to U.S.
Dollars at the Conversion Rate in effect:
(i) with respect to each payment under Paragraph B.1., on the
date the payment is made by Bank under or in respect of the Letter of Credit;
and
(ii) with respect to each payment not falling under the
preceding clause (i) and each deposit, on the date of Bank's demand for such
payment or deposit.
(c) If a U.S. Dollar deposit by Customer under this Application and
Agreement for a Letter of Credit payable in a foreign currency becomes less than
the U.S. Dollar equivalent of the undrawn amount of the Letter of Credit because
of any variation in rates of exchange, Customer shall deposit with Bank, on
demand, additional amounts in U.S. Dollars so that the total amount deposited by
Customer under this Application and Agreement is not less than the U.S. Dollar
equivalent of the undrawn amount of the Letter of Credit, determined by using
the Conversion Rate on the date of Bank's latest demand.
(d) "Conversion Rate" means the rate quoted by Bank in San
Francisco, California for the purchase from Bank of the relevant foreign
currency with U.S. Dollars.
6. Customer shall reimburse or compensate Bank, on demand, for all costs
incurred, losses suffered and payments made by Bank which are applied or
allocated by Bank to the Letter of Credit (as determined by Bank) by reason of
any and all present or future reserve, deposit, assessment or similar
requirements against (or against any class of or change in or in the amount of )
assets or liabilities of, or commitments or extensions of credit by, Bank.
7. If Bank determines that any law, rule, regulation or guideline
regarding capital adequacy affects or would affect the amount of capital
required to be maintained by Bank or any corporation controlling Bank and that
(taking into consideration Bank's policies with respect to capital adequacy and
Bank's desired return on capital) the amount of required capital is increased as
a result of Bank's obligations under the Letter of Credit, then, on demand,
Customer shall pay Bank additional amounts sufficient as specified by Bank to
compensate Bank for such increase.
8. Upon the occurrence of any of the following events, Customer shall
deposit with Bank, on demand and as cash security for Customer's obligations to
Bank under this Application and Agreement, an amount equal to the undrawn amount
of the Letter of Credit:
(a) Customer defaults under any provision of this Application and
Agreement;
(b) Any bankruptcy or similar proceeding is commenced with respect
to Customer;
(c) Any default occurs under any other agreement involving the
borrowing of money or the extension of credit under which Customer may be
obligated as borrower, instalment purchaser or guarantor, if such default
consists of the failure to pay any indebtedness when due or if such default
permits or causes the acceleration of any indebtedness or the termination of any
commitment to lend or to extend credit;
(d) Customer defaults on any other obligation to Bank;
(e) In the opinion of Bank, any material adverse change occurs in
Customer's business, operations, financial condition or ability to perform its
obligations under this Applications and Agreement;
(f) Any court order, injunction or other legal process is issued
restraining or seeking to restrain drawing or payment under the Letter of
Credit,
(g) Any person other than Beneficiary attempts, or in any way claims
any right, to draw under the Letter of Credit, including, without limitation,
any debtor in possession, custodian, receiver, trustee, assignee for benefit of
creditors, personal representative or other successor.
9. Customer shall pay interest, on demand, on any amount not paid when
due under this Application and Agreement from the due date until payment in full
at a rate per annum equal to the rate of interest publicly announced from time
to time by Bank in San Francisco, California, as its reference rate plus three
percentage points. The reference rate is set by Bank based on various factors
including Bank's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some credits. Bank may
price credit at, above or below the reference rate. Any change in Bank's
reference rate shall take effect at the opening of business on the day specified
in Bank's public announcement of change in Bank's reference rate. Interest will
be computed on the basis of a 365 day year and actual days elapsed.
10. Customer authorizes Bank to charge any of Customer's accounts with
Bank for all amounts then due and payable to Bank under this Application and
Agreement.
11. Customer shall pay, on demand, all costs, expenses and attorney's
fees (including allocated costs for in-house legal services) incurred by Bank in
connection with (a) any dispute concerning the Letter of Credit or this
Application and Agreement, or (b) the enforcement of this Application and
Agreement.
12. If any arbitration award, judgment or orders is given or made for
the payment of any amount due under this Application and Agreement and such
arbitration award, judgment or order is expressed in a currency other than the
currency required under this Application and Agreement, Customer shall indemnify
Bank against and hold Bank harmless from all lost and damage incurred by Bank as
a result of any variation in rates of exchange between the date of such
arbitration award, judgment or order and the date of payment (or ii) the case of
partial payments, the date of each partial payment) thereof. This indemnity
shall constitute an obligation separate and independent from the other
obligations contained in this Applications and Agreement, shall give rise to a
separate and independent cause of action, shall apply irrespective of any
indulgence granted by Bank form time to time, and shall continue in full force
and effect notwithstanding any arbitration award, judgment or order for a
liquidated sum respect of an amount due under this Application and Agreement.
13. The word "Customer" in this Application and Agreement refers to each
signer (other than Bank) of this Application and Agreement. If this Application
and Agreement is signed by more than one Customer, their obligations under this
Application and Agreement shall be joint and several.
14. Subject to the laws, customs and practices of the trade in the area
where the beneficiary is located, the Letter of Credit will be subject to, and
performance under the Letter of Credit by Bank, its correspondents, and the
beneficiary will be governed by, the "Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication No. 500", or by later Uniform Customs and Practice fixed by later
Congresses of the International Chamber of Commerce as in effect on the date the
Letter of Credit is issued.
15. This Application and Agreement shall be governed by and construed
under the laws of the State of California, to the jurisdiction of which the
parties hereto submit.
16. Any controversy among the parties arising out of or relating to this
Application and Agreement or the Letter of Credit shall at the request of any
party be determined by arbitration. The arbitration shall be conducted in San
Francisco, California, under the United States Arbitration Act (Title 9, U.S.
Code), notwithstanding any choice of law provision in this Application and
Agreement or the Letter of Credit, and pursuant to the Commercial Rules of the
American Arbitration Association. The arbitrator shall give effect to statutes
of limitation in determining any claim. Any controversy concerning whether an
issue is arbitrable shall be determined by the arbitrator. Judgment upon the
arbitration award may be entered in any court having jurisdiction. This
Paragraph shall not limit the right of any party to this Application and
Agreement or the Letter of Credit to exercise lawful self-help remedies or to
obtain provisional or ancillary remedies from a court of competent jurisdiction
before, during, or after the pendency of any arbitration. The seeking, obtaining
or exercising of such a remedy does not waive the right of any party, including
the party who sought such remedy, to resort to arbitration. Notwithstanding the
foregoing, no controversy shall be submitted to arbitration under this Paragraph
without the consent of all parties if, at the time of the proposed submission,
such controversy arises from or relates to an obligation to Bank which is
secured by real property collateral.
17. Customer represents and warrants to Bank that Customer has obtained
all import and export licenses and other governmental approvals required for the
goods and the documents described in the Letter of Credit. Without limiting the
generality of the foregoing, Customer further expressly represents and warrants
to Bank that the transactions underlying the Letter of Credit are not prohibited
under the Foreign Assets Control Regulations of the United States Treasury
Department.
This Application and Agreement is executed by Customer on______________, 19___.
____________________________________________
Name of Customer
By__________________________________________ Title________________________
By__________________________________________ Title________________________
FOR OFFICE USE ONLY
FX-149 TO: [ ] International Trade Banking Division-Los Angeles
Operations Center #5666
COMMISSION [ ] Per MISC-42 [ ] Other
[ ] Charge Branch [ ] Charge directly
[ ] Commissions and Charges only
[ ] Drawings, Commissions and Charges
FINANCIAL SERVICES OFFICER NAME (Type or Print) BANKAMERINET NO.
__________________________________________________ ________________________
CDA/DDA CUSTOMER A/C#
__________________________________________________
FINANCIAL SERVICES OFFICER SIGNATURE BRANCH/DEPT. NAME
__________________________________________________ ________________________
BRANCH/DEPT.NO.
__________________________________________________
<PAGE> 132
Granite Construction Incorporated
Exhibit D
Form of Legal Opinion
JUNE 30, 1997
1070405-901700
Bank of America National Trust and Savings Association,
for itself and as Agent
for the Banks from time to time
party to the Credit Agreement, referred to below
555 California Street, 41st Floor
Credit Products 3838
San Francisco, CA 94104
Ladies and Gentlemen:
I have acted as counsel for Granite Construction Incorporated, a Delaware
corporation ("Borrower"), in connection with that certain Credit Agreement dated
as of June 30, 1997 including Exhibits and Schedules (the "Credit Agreement"),
by and among Borrower, the several financial institutions parties to the Credit
Agreement (the "Banks") and Bank of America National Trust and Savings
Association as agent for the Banks (the "Agent") and as issuing bank. I have
also represented each of Granite Construction Company, a California corporation
("GCC"), Granite SR91 Corporation, a California corporation ("SR91"), Wilcott
Corporation, a Colorado corporation ("Wilcott"), Desert Aggregates, Inc., a
California corporation ("Desert"), G.G. & R., Inc., a Utah corporation ("G.G. &
R."), Intermountain Slurry Seal, Inc., a Utah corporation ("Intermountain"),
Bear River Contractors, a Wyoming corporation ("Bear River"), Pozzolan Products
Company ("P.P.C."), a Utah corporation ("Pozzolan"), GTC, Inc., a Texas
corporation ("GTC"), GILC, L.P., a California limited partnership ("GILC,
L.P."), SR91, L.P., a California limited partnership ("SR91, L.P.") and GILC
Incorporated, a California corporation ("GILC", and together with GCC SR91,
Desert, Wilcott, G.G. & R., Intermountain, Bear River, GILC, L.P., SR91, L.P.,
Pozzolan and GTC, the "Subsidiaries"), each of which is a direct or indirect
wholly owned subsidiary of Borrower, in connection with the Guaranty given by
each of the Subsidiaries in favor of the Agent for the benefit of Banks
guaranteeing the obligations of Borrower under the Credit
<PAGE> 133
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 2
Agreement. I am rendering this opinion pursuant to subsection 5.01 (c) of the
Credit Agreement. Except as otherwise defined herein, capitalized terms used but
not defined herein shall have the meanings given to them in the Credit
Agreement.
As used herein, the term "Loan Documents" shall mean the Credit
Agreement and the Guaranty.
I am admitted to practice law only in the State of California, and I
express no opinion concerning any law other than the law of the State of
California, the Delaware General Corporation law, the law of the United States
of America, and, to the extent necessary to render my opinion in paragraphs
1(b), 1(d), 1(e), l(f), the second sentence of paragraph 3 and paragraphs 5(d),
6 and 8, the Colorado Corporations Code, the Utah Revised Business Corporations
Act, the Wyoming Business Corporations Act and the Texas Business Corporation
Act. In so far as the opinions contained herein purport to relate to the
Delaware General Corporation Law, the Colorado Corporations Code, the Utah
Revised Business Corporations Act, the Wyoming Business Corporations Act and the
Texas Business Corporation Act (collectively, the "Laws"), I have relied on such
Laws as reported in standard compilations.
In rendering this Opinion, I have assumed the genuineness and
authenticity of all signatures (other than that of Borrower and each Subsidiary)
on original documents; the authenticity of all documents submitted to me as
originals; the conformity of originals to all documents submitted to me as
copies; the accuracy, completeness and authenticity of certificates of public
officials; the due authorization, execution and delivery of all documents
(except the due authorization, execution and delivery by Borrower of the Credit
Agreement and by each Subsidiary of the Guaranty) where authorization,
execution and delivery are prerequisites to the effectiveness of such documents;
the power and authority of the Banks to enter into and perform their obligations
under the Loan Documents; that the Banks are duly qualified in the State of
California to do business of the type contemplated by the Loan Documents; that
each of the Banks qualifies for the exemption from the otherwise applicable
interest rate limitations of California law for loans or forbearances by, as the
case may be, (i) national banks provided by Article XV, Section 1 of the
California Constitution or (ii) certain "foreign (other nation) banks" provided
by California Financial Code Section 1716 or (iii) state banks provided by
Article XV, Section 1 of the California Constitution; that all loans under me
Credit Agreement will be made by the Banks for their own accounts or for the
account of another person or entity that qualifies for an exemption hunk me
interest rate limitations of California law, and there is no present agreement
or plan, express or implied, on the part of the Banks to sell participations or
any other interest in the loans to be made under the Credit Agreement to any
person or entity other than a person or entity that also qualifies for an
exemption. From the interest rate limitations of California law; and with
<PAGE> 134
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 3
respect to matters of fact (as distinguished from matters of law), I also have
relied upon and assumed that the representations of the Borrower and each
Subsidiary and the other parties set forth in the Loan Documents and any other
certificates, instruments or agreements executed in connection therewith or
delivered to me are true, correct, complete and not misleading, although to my
knowledge the representations of the Borrower and each Subsidiary set forth in
the Loan Documents and any such other certificates, instruments and agreements
ant true, correct, complete and not misleading. I have also assumed that all
individuals executing and delivering documents on behalf of the Banks and Agent
had the legal capacity to so execute and deliver and that the Loan Documents are
obligations binding upon Banks and Agent.
With respect to my opinions in paragraph 4(c) and 5(c) below, I have
relied solely upon copies, supplied to me by the Borrower or a Subsidiary, of
each undertaking, contract, indenture, mortgage, deed. of trust or other
instrument document or agreement listed in Exhibit A, (i) of the Borrower listed
on the Index to Form 10K Exhibits to the Borrower's Annual Report on Form 10K
for the fiscal year ending December 31, 1996 and (ii) of the Borrower involving
amounts in excess of $50,000,000 to which Borrower or any Subsidiary is a party
or by which Borrower or any Subsidiary is bound.
In rendering my opinion in paragraph 6, I have relied solely on a
certificate of good standing from each of the Secretary of State's office of
each of the states listed below the Borrower's and each Subsidiary's name on
Exhibit B.
Where I render an opinion "to the best of my knowledge" or concerning an
item "known to me" or my opinion otherwise refers to my "knowledge," it is
intended to indicate that during the course of my representation of Borrower and
the Subsidiaries, no information that would give me current actual knowledge of
the inaccuracy of such statement has come to my attention in rendering legal
services to Borrower or the Subsidiaries.
On the basis of the foregoing, in reliance thereon, and with the
foregoing qualifications, I am of the opinion that:
1. (a) Borrower is a corporation, duly incorporated and validly existing
under the laws of Delaware and has the requisite corporate power and authority
to own its property and to conduct the business in which it is currently
engaged. (b) Wilcott is a corporation duly incorporated and validly existing
under the laws of Colorado and has the requisite corporate power and authority
to own its property and to conduct the business in which it is currently
engaged. (c) Each of GCC, SR91, GILC and Desert is a corporation duly
incorporated and
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Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 4
validly existing under the laws of California and has the requisite corporate
power and authority to own its property and to conduct the business in which it
is currently engaged. (d) Each of G.G. & R., Intermountain, and Pozzolan is a
corporation duly incorporated and validly existing under the laws of Utah and
has the requisite corporate power and authority to own its property and to
conduct the business in which it is currently engaged. (e) Bear River is a
corporation duly incorporated and validly existing under the laws of Wyoming and
has the requisite corporate power and authority to own its property and to
conduct the business in which it is currently engaged. (f) GTC is a corporation
duly incorporated and validly existing under the laws of Texas and has the
requisite corporate power and authority to own its property and to conduct the
business in which it is currently engaged. (g) GILC, L.P. and SR91, L.P. are
California limited partnerships validly existing under the laws of California
and each has the requisite partnership power and authority to own its property
and to conduct the business in which it is currently engaged.
2. Borrower (a) has taken all necessary and appropriate corporate action
to authorize the execution, delivery and performance of the Credit Agreement,
and (b) has the corporate power and authority to execute, deliver and perform
the Credit Agreement. Each Subsidiary (a) has taken all necessary and
appropriate corporate action or partnership action, as applicable, to authorize
the execution, delivery and performance of the Guaranty, and (b) has the
corporate power or partnership power, as applicable, and authority to execute,
deliver and perform the Guaranty.
3. The Credit Agreement has been duly executed and delivered by the
Borrower. The Guaranty has been duly executed and delivered by each of the
Subsidiaries. The Credit Agreement constitutes a legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms. The Guaranty constitutes a legal, valid and binding obligation of each
Subsidiary, enforceable against each Subsidiary in accordance with its terms.
4. The execution, delivery and performance by Borrower of the Credit
Agreement do not (a) violate or contravene any injunction, order, writ,
judgment, decree, determination or award of any United States or California
Governmental Authority as presently in effect applicable to Borrower; (b)
conflict with or result in a breach of or constitute a default under the
certificate of incorporation and bylaws of Borrower; (c) violate or result in a
breach of or constitute any default under any agreements of Borrower set forth
in Exhibit A, and, do not result in or require the creation or imposition of any
lien on any of Borrower's properties or revenues pursuant to any injunction,
order, decree or undertaking as presently in effect or any such agreements of
Borrower set forth in Exhibit A; or (d) result in or require the creation or
imposition of any lien on any of its properties or revenues pursuant to any
provision of any law, rule or regulation as presently in effect.
<PAGE> 136
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 5
5. The execution, delivery and performance by each Subsidiary of the
Guaranty do not (a) violate or contravene any injunction, order, writ judgment,
decree, determination or award of any United States or California Governmental
Authority as presently in effect applicable to each Subsidiary; (b) conflict
with or result in a breach of or constitute a default under the
articles/certificates of incorporation and bylaws or partnership agreement, as
applicable, of each Subsidiary; (c) violate or result in a breach of or
constitute any default under any agreements of each Subsidiary set forth in
Exhibit A, and do not result in or require the creation or imposition of any
lien on any Subsidiary's its properties or revenues pursuant to any injunction,
order, decree or undertaking as presently in effect or any such agreements of
each Subsidiary; or (d) result in or require the creation or imposition of any
lien on any of its properties or revenues pursuant to any provision of any law,
rule or regulation as presently in effect.
6. Each of Borrower, and the Subsidiaries is duly qualified to do
business and is in good standing in the states listed below its name on Exhibit
B hereto.
7. No authorization, consent, approval, license, qualification or formal
exemption from, nor notice to, nor any filing, recordation, declaration or
registration with, any United States or California Governmental Authority, or to
my knowledge any other Governmental Authority, is necessary or required on the
part of Borrower in connection with the execution, delivery, or performance by
Borrower of the Credit Agreement.
8. No authorization, consent, approval, license, qualification or formal
exemption from, nor notice to, nor any filing, recordation, declaration or
registration with any United States or California Governmental Authority, or to
my knowledge any other Governmental Authority, is necessary or required on the
part of each Subsidiary in connection with the execution, delivery, or
performance by each Subsidiary of the Guaranty.
9. To the best of my knowledge, there is no claim, dispute, injunction,
temporary restraining order, action, litigation, investigation or proceeding
pending or threatened against Borrower before any court, arbitrator,
administrative agency or Governmental Authority of any kind (a) with respect to
the Credit Agreement or (b) which, if adversely determined, would have a
Material Adverse Effect.
10. To the best of my knowledge, there is no claim, dispute, injunction,
temporary restraining order, action, litigation, investigation or proceeding
pending or threatened against any Subsidiary before any court, arbitrator,
administrative agency or Governmental Authority of any kind (a) with respect to
the Guaranty or (b) which, if adversely determined, would have a Material
Adverse Effect.
<PAGE> 137
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 6
11. Neither the Borrower nor any Subsidiary is an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended. Neither the Borrower nor any
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Interstate Commerce Act (49 U.S.C Sections 10101 et seq. (Supp.
1992) or the Federal Power Act which would limit its ability to incur
Indebtedness.
12. Neither the Borrower nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock. The aggregate value of all
Margin Stock directly or indirectly owned by the Borrower and its Subsidiaries
is less than 25% of the aggregate value of the consolidated assets of the
Borrower and its Subsidiaries.
13. The only subsidiaries of Borrower are the Subsidiaries and Granite
SR91 L.P. a limited partnership, of which Granite SR91 Corporation is the
general partner and the Borrower is the sole limited partner.
The opinions expressed in this letter are qualified to the extent that
the validity, binding nature or enforceability of any provisions of the Loan
Documents may be limited or otherwise affected by:
a. The effects of bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, or other similar laws now or hereafter in effect
limiting the validity or enforceability of creditor's rights and remedies
generally;
b. General principles of equity, regardless of whether considered in
proceedings in equity or at law;
c. The covenant of good faith and fair dealing implied in every
agreement under common law (and to similar provisions of federal law, where
applicable); and
d. The effect of any law or legal principle which provides that a court
may refuse to enforce, or may limit the application of; a contract or any clause
thereof which the court finds as a matter of law to have been unconscionable at
the time it was made.
e. The opinions expressed in this letter are further qualified to the
extent that the validity, binding nature or enforceability of any provisions of
the Loan Documents may be limited or otherwise affected by:
i. The unenforceability under certain circumstances under
California or
<PAGE> 138
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 7
federal law or court decisions of provisions (i) releasing a party against
liability for wrongful or negligent acts, (ii) indemnifying a party to the
extent that the events giving rise to the indemnity arise in whole or in part
from the wrongful or negligent acts of the indemnitee, or (iii) where such
release or indemnification is contrary to public policy, including but not
limited to indemnification and/or releases relating to any issues of securities
laws;
ii. The effect of California Civil Code Section 1717 and other
applicable statutes and judicial decisions which provide, among other things,
that a court may limit the granting of attorneys' fees to those attorneys' fees
which are determined by the court to be reasonable and that attorneys' fees may
be granted only to a prevailing party and that a contractual provision for
attorneys' fees is deemed to extend to both parties (notwithstanding that such
provision by its express terms benefits only one party);
iii. The assumption that if the Agent or the Banks enforce their
remedies, they will do so in a commercially reasonable manner;
iv. The effect of California court decisions invoking statutes or
principles of equity which have held that certain covenants and provisions of
agreements are unenforceable where (i) the breach of such covenants or
provisions imposes restrictions or burdens upon the debtor, including the
acceleration of indebtedness due under debt instruments, and it cannot be
demonstrated that the enforceability of such restrictions or burdens is
reasonably necessary for the protection of the creditors, or (ii) the creditor's
enforcement of such covenants or provisions under the circumstances would
violate the creditor's implied covenants of good faith and fair dealing;
v. The unenforceability under certain circumstances of
contractual provisions self-help or summary remedies; and
vi. Decisions by California courts admitting evidence extrinsic
to a written agreement between the parties thereto that the parties intended a
meaning contrary to that expressed by the parties in writing.
The foregoing opinions are also subject to the following additional
assumptions, limitations, qualifications and exceptions:
a. Provisions in the Loan Documents requiring Borrower or any Subsidiary
to execute, in the future, additional instruments and documents may be
unenforceable.
b. Any provision contained in the Loan Documents that purports to
require that any action or decision of Agent or Banks is conclusively binding
upon Borrower or any
<PAGE> 139
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 8
Subsidiary may be unenforceable.
c. You are advised that any provision in the Loan Documents purporting
to waive, limit or restrict the right of Borrower or Subsidiary to offset
against obligations owing under the Loan Documents may not be enforceable.
d. Those provisions in the Loan Documents imposing late charges
(interest or otherwise) and/or additional interest in the event of default are
governed by the rules relating to "liquidated damages" as set forth in
California Civil Code Sections 1671 et seq., and relevant case law (see, e.g.,
Garrett v. Coast and Southern Federal Savings & Loan, 9 Cal.3d 731 (1973)). I
express no opinion as to the effect of judicial decisions and statutes limiting
the enforceability of provisions imposing penalties, forfeitures, late payment
charges, an increase in interest rate, or payment of other additional
consideration, (i) upon prepayment, late payment, maturity, default or a
lender's election to accelerate a loan, particularly in cases where the
occurrence of a default or waiving the benefit of a statutory right bears no
reasonable relation to the damage suffered by the lender or is otherwise held to
be a penalty; or (ii) as a consequence of costs incurred by the lender or
imposition of governmental charges, taxes, levies or requirements upon a lender.
e. Those provisions in the Loan Documents requiring the consent of Agent
and Banks or allowing Agent or Banks to take certain actions may be interpreted
by a court to contain an implied covenant of reasonableness and/or fair dealing
(see, e.g., Kendall v. Pestana, 40 Cal.3d 488 (1985); Cohen v. Ratinoff, 147
Cal.App.3d 321 (1983)).
f. You should be aware of the unenforceability, under certain
circumstances, of provisions waiving broadly or vaguely stated rights or unknown
future rights, or rights which may not be waived on statutory or public policy
grounds, or provisions stating that rights or remedies are not exclusive, that
every right or remedy is cumulative and may be exercised in addition to or with
any other right or remedy or that the election of some particular remedy or
remedies does not preclude recourse to one or more others.
g. You should be aware of limitations based on public policy on
provisions stating that a borrower's obligations are unaffected by reason of any
default or failure on the part of a lender to perform or comply with the terms
of the subject loan documents.
h. I express no opinion as to the enforceability of the consent to
service, jurisdiction or forum of any claim, demand, action or cause of action
arising under or related to the Loan Documents or the transactions contemplated
therein.
i. I express no opinion as to the enforceability of any right of any
creditor to
<PAGE> 140
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 9
collect any payment due under the Loan Documents to the extent that such payment
constitutes a penalty or forfeiture.
j. I express no opinion as to the enforceability of provisions in the
Loan Documents creating presumptions or creating rights of set-off.
k. I express no opinion on the accuracy of any representations or
warranties of Borrower or any Subsidiary. Furthermore I express no opinion as to
the survivability of any warranties, indemnities or other obligations.
l. I express no opinion as to the enforceability of those provisions in
the Loan Documents purporting to appoint the Agent or Banks as attorney-in-fact
for Borrower or to grant an irrevocable power of attorney to Agent or Banks.
m. I express no opinion as to the enforceability of provisions in the
Loan Documents purporting to provide that any approval, consent, authorization
or satisfaction required of Agent or Banks or any notice given by or other
action taken by Agent or Banks under the Loan Documents shall be presumed to be
reasonable.
n. I express no opinion as to the effect of laws and judicial decisions
that provide that in certain circumstances a surety may be exonerated if the
creditor materially alters the original obligation of the principal without the
surety's consent, or otherwise takes any action without notifying the surety
that materially prejudices the surety.
o. I express no opinion as to any securities, anti-trust, tax, land use,
safety, environmental, hazardous materials, insurance company or banking laws,
rules or regulations, or laws, rules or regulations applicable to Agent or
Banks.
p. I express no opinion as to any provision providing for the exclusive
jurisdiction of a particular court or purporting to waive rights to trial by
jury, service of process or objections to the laying of venue or to forum on the
basis of forum non conveniens in connection with any litigation arising out of
or pertaining to the Loan Documents.
q. I express no opinion as to the effect of California Civil Code
Section 1698 and similar statutes and federal laws and judicial decisions (a)
providing that oral modifications to a contract or waivers of contractual
provisions may be enforceable, if the modification was performed,
notwithstanding any express provision in the agreement that the agreement may
only be modified or an obligation thereunder waived in writing, or (b) creating
an implied agreement from trade practices or course of conduct.
<PAGE> 141
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 10
r. I express no opinion as to the effect of certain rights, remedies and
waivers contained in the Loan Documents being limited or rendered ineffective by
applicable statutory law or judicial decisions governing such provisions, but
such laws and judicial decisions do not render the Loan Documents unenforceable
as a whole, and there exists, in the Loan Documents and pursuant to applicable
law, legally adequate remedies for realization of the principal benefits
purported to be afforded by the Loan Documents.
s. With respect to my opinions expressed in paragraphs 4(d), 5(d), 7 and
8, I have not conducted any special investigation of statutes laws, rules or
regulations and my opinion with respect thereto are limited to such Laws that to
my knowledge and as in my experience are of general application to transactions
of the sort contemplated by the Loan Documents.
I further advise you that:
a. The enforceability of the Guaranty against a Subsidiary may be
subject to California statutory provisions and case law to the effect that a
guarantor may be exonerated if the beneficiary of the guaranty alters the
original obligation of the principal, fair to inform the guarantor of material
information pertinent to the principal or any collateral, elects remedies that
may impair the subrogation rights of the guarantor against the principal or that
may impair the value of the collateral, fails to accord the guarantor the
protections afforded a debtor under the Uniform Commercial Code or otherwise
takes any action that materially prejudices the guarantor unless, in any such
case, the guarantor validly waives such rights or the consequences of any such
action. See, e.g., California Civil Code Section 2799 through Section 2855;
Sumitomo Bank of California v. Iwasaki, 70 Cal. 2d 81, 73 Cal. Rptr. 564 (1968);
Union Bank v. Gradsky, 265 Cal. App. 2d 40, 71 Cal, Rptr 64 (1968); Connolly v.
Bank of Sonoma County., 184 Cal. App. 3d II 19, 229 Cal Rptr. 396 (1986); C.I.T.
Corp. v. Anwright Corp., 191 Cal. App. 3d 1420, 237 Cal. Rptr, 108 (1987);
American National Bank v. Perma-Tile Roof Co., 200 Cal. App. 3d 889, 246 Cal
Rptr. 381 (1988); In re Kirkland, 915 F.2d 1236 (9th Cir. 1990); and Cathay
Bank. v. Lee, 18 Cal. Rptr. 2d 420 (1993). While express and specific waivers of
a guarantor's right to be exonerated, such as those contained hi the Guaranty
are generally enforceable under California law we express no opinion as to
whether the Guaranty contains an express and specific waiver of each exoneration
defense a guarantor might assert or as to whether each of the waivers contained
in the Guaranty is fully enforceable.
b. It could be contended that the Guaranty has not been given for a fair
or reasonably equivalent consideration, that a Subsidiary is, or, by entering
into the Guaranty may become, insolvent, and that die Guaranty may be voidable
by creditors of a Subsidiary or by a trustee or receiver of a Subsidiary in
bankruptcy or similar proceedings pursuant to
<PAGE> 142
GRANITE CONSTRUCTION INCORPORATED
Exhibit E
Form of Job Status Report
<PAGE> 143
GRANITE CONSTRUCTION INCORPORATED
INCOMPLETE MAJOR CONTRACTS * (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CONTRACT PERCENT BACKLOG COMPLETION
JOB # JOB NAME AMOUNT COMPLETE AMOUNT DATE AGENCY/OWNER STATE
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 144
GRANITE CONSTRUCTION INCORPORATED
Exhibit F
Form of List of Anticipated Construction Bids
<PAGE> 145
GRANITE CONSTRUCTION INCORPORATED
<TABLE>
<CAPTION>
HEAVY CONSTRUCTION DIVISION Tentative Bidding Schedule DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
BID -- PROJECT -- -- BID -- $ MIL AREA MGR JOINT
DATE NAME LOCATION AGENCY CITY TIME DAYS BUDGET ESTIMATOR VENTURE DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 146
EXHIBIT G
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") dated
as of __________ is made between _________________________ (the "Assignor") and
_____________________________ (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Restated Credit
Agreement dated as of June 30, 1997 (as amended, amended and restated, modified,
supplemented or renewed, the "Credit Agreement") among Granite Construction
Incorporated, a Delaware corporation (the "Company"), the several financial
institutions from time to time party thereto (including the Assignor, the
"Banks"), and Bank of America National Trust and Savings Association, as letter
of credit issuing bank ("Issuing Bank") and as agent for the Banks (the
"Agent"). Any terms defined in the Credit Agreement and not defined in this
Agreement are used herein as defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to make term loans and revolving loans (the "Loans") to the Company
and to issue or participate in standby letters of credit ("Letters of Credit")
issued for the account of the Company or its Subsidiaries in an aggregate amount
not to exceed $_______ (the "Commitment");
WHEREAS, [the Assignor has made Loans in the aggregate principal
amount of $________ to the Company] [no Loans are outstanding under the Credit
Agreement];
WHEREAS, [the Assignor has acquired a participation in the
Issuing Bank's liability under Letters of Credit in an aggregate principal
amount of $_________ (the "L/C Obligations")] [no Letters of Credit are
outstanding under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part of
the] [all] rights and obligations of the Assignor under the Credit Agreement in
respect of its Commitment, [together with a corresponding portion of each of its
outstanding Loans and L/C Obligations,] in an amount equal to $_________ (the
"Assigned Amount") on the terms and subject to the conditions set forth herein
and the Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Assumption.
(a) Subject to the terms and conditions of this Agreement,
(i) the Assignor hereby sells, transfers and assigns to the Assignee, and (ii)
the Assignee hereby purchases,
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<PAGE> 147
assumes and undertakes from the Assignor, without recourse and without
representation or warranty (except as provided in this Agreement) _% (the
"Assignee's Percentage Share") of (A) the Commitment [and the Loans and the L/C
Obligations] of the Assignor and (B) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor under and in connection with the
Credit Agreement and the Loan Documents.
[If appropriate, add paragraph specifying payment to Assignor by
Assignee of outstanding principal of, accrued interest on, and fees with respect
to, Loans and L/C Obligations assigned.]
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Bank under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank. It is the intent
of the parties hereto that the Commitment of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; provided, however, the Assignor shall not relinquish its rights under
Sections 11.4 and 11.5 of the Credit Agreement to the extent such rights relate
to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignee's Commitment will be
$__________.
(d) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignor's Commitment will be
$___________.
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $______,
representing the Assignee's pro rata share of the principal amount of all Loans.
(b) The [Assignor] [Assignee] further agrees to pay to the Agent
a processing fee in the amount specified in Section 11.07(a) of the Credit
Agreement.
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date with
respect to the Commitment[,] [and] Loans [and L/C Obligations] shall be for the
account of the Assignor. Any interest, fees and other payments accrued on and
after the Effective Date with respect to the Assigned Amount shall be for the
account of the Assignee. Each of the Assignor and the
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<PAGE> 148
Assignee agrees that it will hold in trust for the other party any interest,
fees and other amounts which it may receive to which the other party is entitled
pursuant to the preceding sentence and pay to the other party any such amounts
which it may receive promptly upon receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements referred to in Section 7.01 (a) [and (b)] of
the Credit Agreement, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Agreement; and (b) agrees that it will, independently and without reliance
upon the Assignor, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit and legal decisions in taking or not taking action under the Credit
Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective date
for this Agreement shall be ______________(the "Effective Date"); provided that
the following conditions precedent have been satisfied on or before the
Effective Date:
(i) this Agreement shall be executed and delivered by the
Assignor and the Assignee;
(ii) the consent of the Company, the Issuing Bank and the
Agent required for an effective assignment of the Assigned Amount by the
Assignor to the Assignee under Section 11.07(a) of the Credit Agreement shall
have been duly obtained and shall be in full force and effect as of the
Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts
due to the Assignor under this Agreement;
(iv) the Assignee shall have complied with Section 4.01(f)
of the Credit Agreement (if applicable); and
(v) the processing fee referred to in Section 2(b) hereof
and in Section 11.07(a) of the Credit Agreement shall have been paid to the
Agent;
(b) Promptly following the execution of this Agreement, the
Assignor shall deliver to the Company, the Issuing Bank and the Agent for
acknowledgment by the Agent a Notice of Assignment substantially in the form
attached hereto as Schedule 1.
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<PAGE> 149
6. Agent.
(a) The Assignee hereby appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the Banks pursuant to the terms of
the Credit Agreement.
[(b) [INCLUDE ONLY IF ASSIGNOR IS AGENT] The Assignee shall
assume no duties or obligations held by the Assignor in its capacity as Agent
under the Credit Agreement.]
7. Withholding Tax.
The Assignee (a) represents and warrants to the Agent and the Company
that under applicable law and treaties no tax will be required to be withheld by
the Agent with respect to any payments to be made to the Assignee hereunder, (b)
agrees to furnish (if it is organized under the laws of any jurisdiction other
than the United States or any State thereof) to the Agent and the Company prior
to the time that the Agent or Company is required to make any payment of
principal, interest or fees hereunder, duplicate executed originals of either
U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service
Form 1001 (wherein the Assignee claims entitlement to the benefits of a tax
treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms 4224
or 1001 upon the expiration of any previously delivered form or comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by the Assignee, and (c) agrees to comply
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any Lien or other adverse claim; (ii) it is
duly organized and existing and it has the full power and authority to take, and
has taken, all action necessary to execute and deliver this Agreement and any
other documents required or permitted to be executed or delivered by it in
connection with this Agreement and to fulfill its obligations hereunder; (iii)
no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Agreement, and apart from any agreements or
undertakings or filings required by the Credit Agreement, no further action by,
or notice to, or filing with, any Person is required of it for such execution,
delivery or performance; and (iv) this Agreement has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignor, enforceable against the Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in
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connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or any
other instrument or document furnished pursuant thereto. The Assignor makes no
representation or warranty in connection with, and assumes no responsibility
with respect to, the solvency, financial condition or statements of the Company,
or the performance or observance by the Company, of any of its respective
obligations under the Credit Agreement or any other instrument or document
furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Agreement and any other
documents required or permitted to be executed or delivered by it in connection
with this Agreement, and to fulfill its obligations hereunder; (ii) no notices
to, or consents, authorizations or approvals of, any Person are required (other
than any already given or obtained) for its due execution, delivery and
performance of this Agreement; and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignee, enforceable
against the Assignee in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles; and (iv) it is an Eligible Assignee.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, including the delivery of any notices or other documents or
instruments to the Company or the Agent, which may be required in connection
with the assignment and assumption contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this Agreement
shall be in writing and signed by the parties hereto. No failure or delay by
either party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof and any waiver of any breach of the provisions of
this Agreement shall be without prejudice to any rights with respect to any
other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off
or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation, execution
and performance of this Agreement.
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(d) This Agreement may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.
(e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. The Assignor and the
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in California over any suit, action or proceeding
arising out of or relating to this Agreement and irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such California State or Federal court. Each party to this Agreement hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS Agreement, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER
ORAL OR WRITTEN).
[Other provisions to be added as may be negotiated between the
Assignor and the Assignee, provided that such provisions are not inconsistent
with the Credit Agreement.]
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IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
[ASSIGNOR]
By:___________________________
Title:________________________
By:___________________________
Title:________________________
Address:
______________________________
______________________________
______________________________
[ASSIGNEE]
By:___________________________
Title:________________________
By:___________________________
Title:________________________
Address:
______________________________
______________________________
______________________________
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SCHEDULE 1
NOTICE OF ASSIGNMENT AND ASSUMPTION
[Date]
Bank of America National Trust
and Savings Association, as Agent
Credit Products #3838
555 California Street, 41st Floor
San Francisco, CA 94104
Attn: Kevin Leader, Vice President
Bank of America National Trust
and Savings Association, as Issuing Bank
International Trade
Banking Division #5655
333 S. Beaudry Ave., 19th Floor
Los Angeles, CA 90017
Granite Construction Incorporated
585 West Beach Street
Watsonville, California 95076
Attn: Treasurer
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of June 30, 1997 (as
amended, amended and restated, modified, supplemented or renewed from time to
time the "Credit Agreement") among Granite Construction Incorporated (the
"Company") the Banks referred to therein and Bank of America National Trust and
Savings Association, as letter of credit issuing bank ("Issuing Bank") and as
agent for the Banks (the "Agent"). Terms defined in the Credit Agreement are
used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by ____________ (the "Assignor") to ____________ (the "Assignee") of
______% of the right, title and interest of the Assignor in and to the Credit
Agreement (including, without limitation, the right, title and interest of the
Assignor in and to the Commitments of the Assignor[,] [and] all outstanding
Loans made by the Assignor [and the Assignor's participation in the Letters of
Credit]) pursuant to the Assignment and Assumption Agreement attached hereto
(the "Agreement"). Before giving effect to such assignment the Assignor's
Commitment is $ ____________[,] [and] the aggregate amount of its outstanding
Loans is $_______________[, and its participation in L/C Obligations is
$____________].
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2. The Assignee agrees that, upon receiving the consent of the
Agent, the Issuing Bank and the Company to such assignment, the Assignee will be
bound by the terms of the Credit Agreement as fully and to the same extent as
if the Assignee were the Bank originally holding such interest in the Credit
Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name:_________________________
Address:_________________________
_________________________
_________________________
Attention:_________________________
Telephone: ( )_________________________
Telecopier: ( )_________________________
(B) Payment Instructions:
Account No.:_________________________
At:_________________________
_________________________
_________________________
Reference:_________________________
Attention:_________________________
4. You are entitled to rely upon the representations, warranties
and covenants of each of the Assignor and Assignee contained in the Agreement.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
this Notice of Assignment and Assumption to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:________________
Title:______________
By:_________________
Title:________________
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[NAME OF ASSIGNEE]
By:______________
Title:____________
By:_________________
Title:_______________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
GRANITE CONSTRUCTION INCORPORATED
By:_____________________________
Title:___________________________
By:_____________________________
Title:___________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By:_____________________________
Its: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Issuing Bank
By:_____________________________
Its: Vice President
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EXHIBIT H
FORM OF GUARANTY
This Guaranty is entered into as of June 30, 1997, jointly and
severally by each of the parties set forth under the caption "GUARANTORS" on the
signature pages hereto (each, a "Guarantor"), in favor of each Lender Party (as
defined below).
Recitals
A. Pursuant to a Credit Agreement, dated as of June 30, 1997
(together with all amendments and other modifications, supplements, restatements
and extensions, if any, from time to time thereafter made thereto, the "Credit
Agreement"), among Granite Construction Incorporated, a Delaware corporation
(the "Company"), the various financial institutions (individually, a "Bank" and
collectively, the "Banks") as are, or may from time to time become, parties
thereto, and Bank of America National Trust and Savings Association, as the
agent for such Banks (together with any successors) thereto in such capacities,
the "Agent"), the Banks have provided the Commitments and agreed to make Loans
to the Company and to participate in Letters of Credit issued by the Issuing
Bank for the account of the Company or its Subsidiaries.
B. One of the conditions precedent to the effectiveness of the
Credit Agreement is the execution and delivery of this Guaranty by each
Guarantor.
C. Each Guarantor has duly authorized the execution, delivery and
performance by it of this Guaranty.
D. It is in the best interests of each Guarantor to execute this
Guaranty inasmuch as such Guarantor will derive substantial direct and indirect
benefits from the Loans made and the Letters of Credit issued from time to time
pursuant to the Credit Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, and in order to induce (i) the
Banks to make Loans (including the initial Loans) to the Company, (ii) the
Issuing Bank to issue and the Banks to participate in Letters of Credit issued
by the Issuing Bank for the account of the Company or its Subsidiaries, all
pursuant to the Credit Agreement, each Guarantor jointly and several agrees, for
the benefit of each Lender Party, as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used in
this Guaranty have the meanings given to them in the Credit Agreement, and as
used herein, "Lender Party" means, as the context may require, any Bank, the
Issuing Bank or the Agent and each of its successors, transferees and assigns.
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2. Guaranty.
2.1 Guaranty. Each Guarantor hereby jointly and severally
unconditionally guarantees and promises to pay to the Lender Parties or order,
on demand, any and all Obligations of the Company to the Lender Parties from
time to time outstanding under or in respect to the Credit Agreement or any
other Loan Document (the "Obligations"); provided, however, that each Guarantor
shall be jointly and severally liable under this Guaranty for the maximum amount
of such liability that can be hereby incurred by such Guarantor without
rendering this Guaranty, as it relates to such Guarantor, void or voidable under
applicable law relating to fraudulent conveyance, fraudulent transfer or similar
law (including the California Uniform Fraudulent Transfer Act and Sections 544
and 548 of the Federal Bankruptcy Reform Act of 1978, as amended (11 U.S.C.
Section 101, et seq.) (the "Bankruptcy Code")) and not for any greater amount,
and the Lender Parties by their acceptance hereof accept such limitation to the
extent needed to make this Guaranty fully enforceable and nonavoidable. Any
Lender Party may permit the indebtedness of the Company to such Lender Party to
include indebtedness other than the Obligations, and may apply any amounts
received from any source, other than from any Guarantor, to that portion of
Company's indebtedness to such Lender Party which is not a part of the
0bligations.
2.2 Obligations Independent. The obligations hereunder are joint and
several, and independent of the obligations of the Company, and a separate
action or actions may be brought and prosecuted against any Guarantor whether
action is brought against the Company or any other Guarantor or guarantor or
whether the Company or any other Guarantor or guarantor be joined in any such
action or actions. Each Guarantor waives the benefit of any statute of
limitations affecting its liability hereunder. Each Guarantor acknowledges that
in providing benefits to the Company, the Lender Parties are relying upon the
enforceability of this Guaranty and the Obligations as separate and distinct
indebtedness, obligations and liabilities of each Guarantor.
2.3 Authorization of Renewals, Etc. Each Guarantor authorizes each
Lender Party, without notice or demand and without affecting its liability
hereunder, from time to time to:
(a) renew, compromise, extend, accelerate or otherwise change the
time for payment, or otherwise change the terms, of the Obligations, including
increase or decrease of the rate of interest thereon, or otherwise change the
terms of the Credit Agreement or any other Loan Document;
(b) receive and hold security for the payment of this Guaranty or
the Obligations and exchange, enforce, waive, release, fail to perfect, sell, or
otherwise dispose of any such security;
(c) apply such security and direct the order or manner of sale
thereof as any Lender Party in its or their discretion may determine; and
(d) release or substitute any one or more of any endorsers or
guarantors of the Obligations.
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Further, the performance or occurrence of any of the acts or events described in
clauses (a), (b), (c), and (d) above with respect to indebtedness of the
Company, other than the Obligations, to any Lender Party shall not affect the
liability of any Guarantor hereunder.
2.4 Waiver of Certain Rights. Each Guarantor waives any right to require
any Lender Party to:
(a) proceed against the Company or any other Guarantor or
guarantor;
(b) proceed against or exhaust any security or other guaranty for
the Obligations or any other indebtedness of the Company to any Lender Party; or
(c) pursue any other remedy in the Lender Parties' power
whatsoever.
2.5 Waiver of Certain Defenses. Each Guarantor waives any defense
arising by reason of any disability, lack of corporate authority or other
defense of the Company, or the cessation from any cause whatsoever of the
liability of the Company, or any claim that such Guarantor's obligations exceed
or are more burdensome than those of the Company. Each Guarantor waives all
rights and defenses arising out of an election of remedies by the Lender
Parties, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for the Obligations, has destroyed the
Guarantor's rights of subrogation and reimbursement against the Company by
operation of Section 580d of the California Code of Civil Procedure or
otherwise, and all rights or defenses the Guarantor may have by reason of
protection afforded to the Company with respect to the Obligations pursuant to
the antideficiency laws or other laws of the state of California limiting or
discharging the Obligations. Each Guarantor waives any benefit of, and any right
to participate in, any security or other guaranty now or hereafter held by the
Lender Parties securing the Obligations. Each Guarantor waives, to the fullest
extent permitted by law, any defenses or benefits that may be derived from or
afforded by applicable law limiting the liability of or exonerating guarantors
or sureties, or which may conflict with the terms of this Guaranty, including
any and all benefits that otherwise might be available to any Guarantor under
California Civil Code Sections 1432, 2810, 2815, 2819, 2845, 2848, 2849, 2850,
2899 and 3433 and California Code of Civil Procedure Sections 580a, 580b, 580d
and 726.
2.6 Subrogation, etc. At any time that a payment is made by any
Guarantor with respect to the Obligations, such Guarantor shall have a right of
contribution against the Company and each other Person (other than any Lender
Party) obligated under, or otherwise a party to, any Loan Document (each, an
"Obligor") and each other Obligor shall have an obligation to indemnify such
Guarantor in me maximum amount permitted by applicable law, which right of
contribution and indemnity shall be subject to adjustment at the time of any
subsequent payment with respect to the Obligations; provided, however, that the
maximum aggregate liability of any Guarantor shall not exceed the maximum amount
of liability that such Guarantor can incur without rendering such contribution
and indemnity rights void or voidable under applicable law relating to
fraudulent conveyance or fraudulent transfers or similar law, and not for any
greater amount; provided, further, however, that no Guarantor will exercise any
rights which it may acquire by reason of any payment made hereunder, whether by
way of rights of subrogation,
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reimbursement or otherwise, until the prior payment, in full and in cash, of all
Obligations of the Company and each other Obligor and the termination of the
Commitments and the expiry of the Letters of Credit. Any amount paid to any
Guarantor on account of any payment made hereunder prior to the payment in full
of all Obligations of the Company and each other Obligor shall be held in trust
for the benefit of the Lender Parties and shall immediately be paid to the Agent
and credited and applied against the Obligations of the Company and each other
Obligor, whether matured or unmatured, in accordance with the terms of the
Credit Agreement; provided, however, that if
(a) any Guarantor has made payment to the Lender Parties of all
or any part of the Obligations of the Company or any other Obligor, and
(b) all Obligations of the Company and each other Obligor have
been paid in full and all Commitments and Letters of Credit have expired or been
permanently terminated, at such Guarantor's request, the Agent, on behalf of the
Lender Parties, will execute and deliver to such Guarantor appropriate documents
(without recourse and without representation or warranty) necessary to evidence
the transfer by subrogation to such Guarantor of an interest in the Obligations
of the Company and each other Obligor resulting from such payment by such
Guarantor. In furtherance of the foregoing, for so long as any Obligations,
Letters of Credit or Commitments remain outstanding, each Guarantor shall
refrain from taking any action or commencing any proceeding against the Company
or any other Obligor (or its successors or assigns, whether in connection with a
bankruptcy proceeding or otherwise) to recover any amounts in respect of
payments made under this Guaranty to any Lender Party.
2.7 Waiver of Presentments, Etc. Each Guarantor waives all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance of this Guaranty and of
the existence, creation, extension or incurring of the Obligations or any new or
additional Obligations or any other indebtedness of Company to any of the Lender
Parties, or the reliance by any Lender Party upon this Guaranty, or the exercise
of any right, power or privilege hereunder.
2.8 Information Relating to Company. Each Guarantor acknowledges and
agrees that it shall have the sole responsibility for obtaining from the Company
such information concerning the Company's financial condition or business
operations as such Guarantor may require, and that no Lender Party has any duty
at any time to disclose to any Guarantor any information relating to the
business operations or financial condition of the Company.
2.9 Right of Setoff. In addition to any rights and remedies of the
Lender Parties provided by law, if an Event of Default exists, each Lender Party
is authorized at any time and from time to time, without prior notice to any
Guarantor, any such notice being waived by each Guarantor to the fullest extent
permitted by law, to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender Party to or for the credit or the account of any
Guarantor against any and all obligations of such Guarantor now or hereafter
existing under this Guaranty or any other Loan
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Document, irrespective of whether or not the Lender Party shall have made demand
under this Guaranty or any other Loan Document and although such obligations may
be contingent or unmatured. Each Lender Party agrees promptly to notify the
applicable Guarantor and the Agent after any such set-off and application made
by such Lender Party; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Lender Party under this Section 2.9 are in addition to the other rights and
remedies (including without limitation, other rights of set-off) which such
Lender Party may have.
2.10 Subordination. Any obligations of the Company to any Guarantor, now
or hereafter existing, including but not limited to any obligations to any
Guarantor as subrogee of any Lender Party or resulting from any Guarantor's
performance under this Guaranty, are hereby subordinated to the Obligations and
all other indebtedness (including any interest that would accrue pursuant to the
terms of the Loan Documents or other agreements after commencement of any
Insolvency Proceeding, whether or not allowed as a claim) of the Company to the
Lender Parties. Such obligations of the Company to any Guarantor if the Majority
Banks so request shall be enforced and performance received by such Guarantor as
trustee for the Lender Parties and the proceeds thereof shall be paid over to
the Lender Parties on account of the Obligations, but without reducing or
affecting in any manner the liability of any Guarantor under the other
provisions of this Guaranty. The Lender Parties shall be entitled to enforce all
of such Guarantor's rights with respect to such obligations of the Company to
such Guarantor, including in any Insolvency Proceeding. Any amounts received by
any Guarantor in contravention of this Section 2.10 shall be held in trust for
the benefit of the Lender Parties and shall be paid over or delivered to the
Agent for application to the payment of all Obligations or held as cash
collateral to the extent necessary to give effect to this Guaranty.
2.11 Reinstatement of Guaranty. If this Guaranty is returned or
canceled, and subsequently any payment or transfer of any interest in property
by the Company to the any Lender Party in fulfillment of any Obligation is
rescinded or must be returned by the Lender Party to the Company, this Guaranty
shall be reinstated with respect to any such payment or transfer, regardless of
any such prior return or cancellation.
2.12 Powers. It is not necessary for the any Lender Party to inquire
into the powers of the Company or of the officers, directors, partners or agents
acting or purporting to act on its behalf, and any Obligations made or created
in reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
2.13 Taxes.
(a) Subject to subsection 2.13(g), any and all payments by any
Guarantor to each Lender Party under this Guaranty or any other Loan Documents
shall be made free and clear of, and without deduction or withholding for, any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender Party, such taxes (including income taxes or franchise taxes) as
are imposed on or measured by each Lender Party's net income by the jurisdiction
under the laws of which such Lender Party is organized or maintains a Lending
Office or any political subdivision thereof (all
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such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes").
(b) In addition, each Guarantor shall pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Guaranty or any other Loan Documents (hereinafter referred to as "Other Taxes").
(c) Subject to subsection 2.13(g), each Guarantor shall indemnify
and hold harmless each Lender Party for the full amount of Taxes or Other Taxes
(including without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.13) paid by the Lender
Party and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, in the amount necessary to
preserve the after-tax yield such Lender Party would have received if such Taxes
or Other Taxes had not been imposed, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Payment under this indemnification shall be
made within 30 days from the date the Lender Party makes written demand
therefor. Should such Lender Party determine in its sole discretion to seek a
refund or rebate of some or all of the amount of Taxes, Other Taxes or other
liability paid by it and for which it was indemnified by a Guarantor and should
it receive some or all of the refund or rebate which it sought, it shall return
to such Guarantor the difference between the amount of such refund or rebate and
its reasonable costs and expenses of counsel (and the allocated cost of internal
counsel) incurred by it in procuring such refund or rebate.
(d) If any Guarantor shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender Party, then, subject to subsection 2.13(g):
(i) the sum payable shall be increased as
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section
2.13) such Lender Party receives an amount equal to the sum it would
have received had no such deductions been made;
(ii) such Guarantor shall make such deductions; and
(iii) such Guarantor shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(e) Within 30 days after the date of any payment by any Guarantor
of Taxes or Other Taxes, such Guarantor shall furnish to the affected Lender
Party the original or a certified copy of a receipt evidencing payment thereof
or other evidence of payment satisfactory to such Lender Party
(f) Each Lender Party which is a foreign person (i.e., a person
other than a United States person for United States Federal income tax purposes)
agrees that:
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(i) it shall, no later than the Closing Date (or, in the
case of a Bank which becomes a Lender Party pursuant to Section 4.1 after the
Closing Date, the date upon which such Bank becomes a Lender Party) deliver to
the Guarantor through the Agent:
(A) if any Lending Office is located in the United States, two
accurate and complete signed originals of Internal Revenue Service Form
4224 or any successor thereto ("Form 4224"), and
(B) if any Lending Office is located outside the United States,
two accurate and complete signed originals of Internal Revenue Service
Form 1001 or any successor thereto ("Form 1001"), in each case
indicating that such Bank is on the date of delivery thereof entitled to
receive payments of principal, interest and fees for the account of such
Lending Office or Offices under this Guaranty free from withholding of
United States Federal income tax;
(ii) if at any time any Bank changes its Lending Office or
Offices or selects an additional Lending Office as herein provided, it shall
with reasonable promptness deliver to the Guarantor through the Agent in
replacement for, or in addition to, the forms previously delivered by it
hereunder:
(A) if such changed or additional Lending Office is located in
the United States, two accurate and complete signed originals of Form
4224; or
(B) otherwise, two accurate and complete signed originals of
Form 1001, in each case indicating that such Bank is on the date of
delivery thereof entitled to receive payments of principal, interest and
fees for the account of such changed or additional Lending Office under
this Guaranty free from withholding of United States federal income tax;
(iii) it shall, before or promptly after the occurrence of
any event (including the passing of time but excluding any event mentioned in
(ii) above) requiring a change in the most recent Form 4224 or Form 1001
previously delivered by such Bank and if the delivery of the same be lawful,
deliver to the Guarantor through the Agent two accurate and complete original
signed copies of Form 4224 or Form 1001 in replacement for the forms previously
delivered by the Bank; and
(iv) it shall, promptly upon any Guarantor's reasonable
request to that effect, deliver to such Guarantor such other forms or similar
documentation as may be required from time to time by any applicable law,
treaty, rule or regulation in order to establish such Bank's tax status for
withholding purposes.
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(g) No Guarantor will be required to pay any additional amounts
in respect of United States federal income tax pursuant to subsection 2.13(d) to
any Bank for the account of any Lending Office of such Bank:
(i) if the obligation to pay such additional amounts would
not have arisen but for a failure by such Bank to comply with its
obligations under subsection 2.13(f) in respect of such Lending Office;
(ii) if such Bank shall have delivered to such Guarantor a
Form 4224 in respect of such Lending Office pursuant to subsection
2.13(f)(i)(A), and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States federal income
tax in respect of payments by such Guarantor hereunder for the account
of such Lending Office for any reason other than a change in United
States law or regulations or in the official interpretation of such law
or regulations by any governmental authority charged with the
interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form 4224; or
(iii) if the Bank shall have delivered to such Guarantor a
Form 1001 in respect of such Lending Office pursuant to subsection
2.13(f)(i)(B), and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income
tax in respect of payments by such Guarantor hereunder for the account
of such Lending Office for any reason other than a change in United
States law or regulations or any applicable tax treaty or regulations or
in the official interpretation of any such law, treaty or regulations by
any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) after
the date of delivery of such Form 1001.
(h) If any Guarantor is required to pay additional amounts to any
Lender Party pursuant to subsection 2.13(d), then such Lender Party shall use
its reasonable best efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by such Guarantor which may thereafter accrue if such change
in the judgment of such Lender Party is not otherwise significantly
disadvantageous to such Lender Party.
(i) The agreements and obligations of each Guarantor contained in
this Section 2.13 shall survive the payment in full of all other Obligations.
2.14 Continuing Guaranty. This Guaranty is a continuing guaranty and
agreement of subordination and shall continue in effect and be binding upon each
Guarantor until termination of the Commitments, existing of the Letters of
Credit and payment and performance in full of the Obligations which may exist or
which may arise from time to time under successive transactions, and each
Guarantor expressly acknowledges that this Guaranty shall remain in full force
and effect notwithstanding that there may be periods in which no Obligations
exist. This Guaranty supersedes all prior guaranties executed from time to time
by any of the Guarantors in connection with the Second Amended and Restated
Credit Agreement dated as of June 15, 1995, as amended
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from time to time, among the Company, the financial institutions party thereto
as "Banks" and Bank of America NT & SA as the Agent for the Banks.
2.15 Substantial Benefits. The funds that have been borrowed from the
Banks by the Company and the Issuance of any Letter of Credit by the Issuing
Bank have been and are to be contemporaneously used for the benefit of the
Company and the Guarantors. The Company and the Guarantors have derived and will
derive significant and substantial benefits from the accommodations that have
been made by the Banks and the Issuing Bank under the Loan Documents. The
Guarantors have received at least "reasonably equivalent value" (as such phrase
is used in Section 548 of the Bankruptcy Code, in Section 3439.04 of the
California Uniform Fraudulent Transfer Act and in comparable provisions of other
applicable law) and more than sufficient consideration to support its
obligations hereunder in respect of the Obligations and under any of the Loan
Documents to which it is a party.
3. Representations and Warranties. Each Guarantor represents and warrants to the
Lender Parties that (a) such Guarantor and the Company are distinct and separate
entities operating independently; (b) such Guarantor has received copies of the
Credit Agreement and the other Loan Documents and is familiar with and fully
understands of all their respective terms and conditions; (c) no Lender Party
has made any representations or warranties to such Guarantor regarding the
creditworthiness of the Company or the prospects of repayment from sources other
than the Company; (d) this Guaranty is executed at the request of the Company;
(e) such Guarantor has established adequate means of obtaining from the Company
on a continuing basis financial and other information pertaining to the business
of the Company; and (f) such Guarantor is Solvent (both before and after giving
effect to this Guaranty, taking into account such Guarantor's rights of
contribution and indemnity as provided in Section 2.6).
2. Miscellaneous
4.1 Participations; Novations. Any Lender Party may from time to time,
without notice to any Guarantor and without affecting any Guarantor's
obligations hereunder, transfer its interest in the Obligations to Participants
and Assignees (each as defined in the Credit Agreement) as provided in the
Credit Agreement. Each Guarantor agrees that each such transfer will give rise
to a direct obligation of such Guarantor to each such Participant and Assignee
and that each such Participant and Assignee shall have the same rights and
benefits under this Guaranty as it would have if it were a Bank party to the
Credit Agreement and this Guaranty. Each Lender Party agrees to maintain the
confidentiality of all non-public information provided to it by any Guarantor or
by the Agent on such Guarantor's behalf to the same extent and with the same
exceptions as provided in the Credit Agreement. Notwithstanding the foregoing,
each Guarantor authorizes the Agent and each other Lender Party to disclose to
any prospective Participant and Assignee and any Participant and Assignee any
and all confidential information in the Agent's and such Lender Party's
possession concerning the Guarantor, this Guaranty and any security for this
Guaranty; provided, however, that such Participant or Assignee or such
prospective Participant or Assignee agrees in writing to the Agent or such
Lender Party, as the case may be, to keep such information confidential to the
same extent required by the Lender Parties under the Credit Agreement.
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4.2 Merger. In the event that (i) one or more Guarantors is merged into
the Company or another Guarantor or (ii) one or more of the Guarantors is sold
or liquidated, subject, in each case, to the provisions of the Credit Agreement,
such Guarantor shall cease to be a Guarantor hereunder without the necessity to
amend or re-issue this Guaranty, and each Guarantor agrees that its obligations
hereunder shall continue in full force and effect hereunder and shall not be
affected by any such merger, sale or liquidation.
4.3 Waivers; Writing Required. No delay or omission by any Lender Party
to exercise any right under this Guaranty shall impair any such right, nor shall
it be construed to be a waiver thereof. No waiver of any single breach or
default under this Guaranty shall be deemed a waiver of any other breach or
default. Any amendment or waiver of any provision of this Guaranty must be in
writing to be effective.
4.4 Remedies. All rights and remedies provided in this Guaranty and any
instrument or agreement referred to herein are cumulative and are not exclusive
of any rights or remedies otherwise provided by law. Any single or partial
exercise of any right or remedy shall not preclude the further exercise thereof
or the exercise of any other right or remedy..
4.5 Costs and Expenses. Each Guarantor agrees to pay to each Lender
Party on demand all costs, expenses and attorneys' fees (including allocated
costs for in-house legal services) incurred by each such Lender Party in
connection with the enforcement of this Guaranty.
4.6 Section Headings. Interpretation. Section headings are for reference
only, and shall not affect the interpretation or meaning of any provision of
this Guaranty. Unless otherwise provided, references to Articles, Sections and
Exhibits shall be deemed references to Articles, Sections and Exhibits of this
Guaranty. All references to the word "Guarantor" or "the Guarantors" shall mean
all and any one or more of them, as the context shall require.
4.7 Severability. The illegality or unenforceability of any provision of
this Guaranty or any instrument or agreement referred to herein shall not in any
way affect or impair the legality or enforceability of the remaining provisions
of this Guaranty or any instrument or agreement referred to herein.
4.8 Governing, Law and Jurisdiction.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND
BY EXECUTION AND DELIVERY OF THIS GUARANTY, EACH GUARANTOR AND EACH LENDER PARTY
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF
THOSE COURTS. EACH GUARANTOR AND EACH LENDER PARTY IRREVOCABLY WAIVES
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ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
GUARANTY OR ANY DOCUMENT RELATED HERETO. EACH GUARANTOR AND EACH LENDER PARTY
EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
4.9 Separate Obligations. This Guaranty creates separate obligations of
each Guarantor in favor of the Lender Parties. The fact that such obligations
are set forth in this one Guaranty rather than in a separate guaranty document
for each Guarantor is for the convenience of the Company and the Guarantors and
shall in no way impair or adversely affect the rights or benefits of any of the
Lender Parties hereunder. Each Guarantor agrees to execute and deliver a
separate agreement, immediately upon request at any time of the Majority Banks,
evidencing such Guarantor's obligations under this Guaranty.
4.10 Entire Agreement. This Guaranty and any instrument, agreement or
document attached hereto or referred to herein (a) integrate all the terms and
conditions mentioned herein or incidental hereto, (b) supersede all oral
negotiations and prior writings with respect to the subject matter hereof, and
(c) are intended by the parties as the final expression of the agreement with
respect to the terms and conditions set forth in this Guaranty and any such
instrument, agreement and document and as the complete and exclusive statement
of the terms agreed to by the parties. In the event of any conflict between the
terms, conditions and provisions of this Guaranty and any such instrument,
agreement or document, the terms, conditions and provisions of this Guaranty
shall prevail.
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IN WITNESS WHEREOF, each Guarantor has executed this Guaranty by
its duly authorized officers as of the day and year first above written.
GUARANTORS
GRANITE CONSTRUCTION COMPANY
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
GRANITE SR91 CORPORATION
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
<PAGE> 168
WILCOTT CORPORATION
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
DESERT AGGREGATES, INC.
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
<PAGE> 169
GG&R, INC.
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
INTERMOUNTAIN SLURRY SEAL, INC.
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
<PAGE> 170
BEAR RIVER CONTRACTORS
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
POZZOLAN PRODUCTS COMPANY (P.P.C.)
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
<PAGE> 171
GILC INCORPORATED
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
GILC, L.P.
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
<PAGE> 172
GRANITE SR91, L.P.
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
GTC, INC.
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________
Address:______________________________
Attention:
Telecopy:
<PAGE> 173
EXHIBIT I
FORM OF LETTER REQUESTING EXTENSION
OF REVOLVING TERMINATION DATE
Bank of America National Trust and
Savings Association, as Agent,
and the Banks party to the hereinafter
described Credit Agreement
Credit Products #3838
555 California Street, 41st Floor
San Francisco, CA 94104
Attn: Kevin Leader, Vice President
Ladies and Gentlemen:
In accordance with Section 2.15 of the Credit Agreement, dated as of
June 30, 1997, among Granite Construction Incorporated (the "Company") and you
(the "Credit Agreement"), the Company hereby requests that each Bank consent to
extend the Revolving Termination Date (as defined in the Credit Agreement) by
one year from June ___, _____, to June ____, _______.
The Company hereby represents and warrants that: (a) all of the
representations and warranties contained in Article VI of the Credit Agreement
are true and correct on and as of the date hereof with the same effect as though
made on the date hereof, except to the extent such representations and
warranties expressly refer to an earlier date, in which case they shall be true
and correct as of such earlier date, and (b) no Default or Event of Default has
occurred and is continuing on and as of the date hereof.
Attached hereto is a Guarantor Acknowledgement and Consent, in the form
of Schedule 1 hereto, duly executed by each Guarantor.
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Bank of America National Trust and
Savings Association, as Agent,
The Banks Party to the Credit Agreement
__________,_______
Page 2
Please indicate your consent to such extension by signing the enclosed
counterpart of this letter and returning it to the Agent on or before _____,
____ [15 Business Days after date that letter is sent]. If you fail to return an
executed counterpart on or before such date, you shall be deemed to have
declined to consent to such extension.
Very truly yours,
GRANITE CONSTRUCTION INCORPORATED
By:__________________________
Name:__________________________
Title:__________________________
By:__________________________
Name:__________________________
Title:__________________________
Consented to as of this
______day of _________, ____
[APPLICABLE PARTY]
By:_________________________
Title:______________________
By:_________________________
Title:______________________
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<PAGE> 175
Schedule I to Letter Requesting
Extension of Revolving Termination Date
GUARANTOR ACKNOWLEDGMENT
AND CONSENT
The undersigned, each a Guarantor with respect to the Company's
obligations to the Agent and the Banks under the Credit Agreement, each hereby
(i) acknowledge and consent to the execution, delivery and performance by the
Company of the foregoing letter requesting an extension of the Revolving
Termination date from June ___, ____ to June __, ___, and (ii) reaffirm and
agree that the respective guaranty to which the undersigned is party and all
other documents and agreements executed and delivered by the undersigned to the
Agent and the Banks in connection with the Credit Agreement are and, after
giving effect to the requested extension of the Revolving Termination Date (if
consented to by the Banks), will be in full force and effect, without defense,
offset or counterclaim. (Capitalized terms used herein have the meanings
specified in the foregoing letter.)
GUARANTORS
GRANITE CONSTRUCTION COMPANY
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
Date:_______________________________
GRANITE SR91 CORPORATION
By:_________________________________
Title:______________________________
By:_________________________________
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<PAGE> 176
Title:______________________________
Date:_______________________________
WILCOTT CORPORATION
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
Date:_______________________________
DESERT AGGREGATES, INC.
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
Date:_______________________________
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<PAGE> 177
GG&R, INC.
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
Date:_______________________________
INTERMOUNTAIN SLURRY SEAL, INC.
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
Date:_______________________________
BEAR RIVER CONTRACTORS
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
Date:_______________________________
POZZOLAN PRODUCTS COMPANY (P.P.C.)
By:_________________________________
Title:______________________________
S-3
<PAGE> 178
By:_________________________________
Title:______________________________
Date:_______________________________
GILC INCORPORATED
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
Date:_______________________________
GILC, L.P.
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
Date:_______________________________
GRANITE SR 91, L.P.
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
Date:_______________________________
GTC, INC.
S-4
<PAGE> 179
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
Date:_______________________________
[Add any other Guarantors]
S-5
<PAGE> 180
GUARANTY
This Guaranty is entered into as of June 30, 1997, jointly and
severally by each of the parties set forth under the caption "GUARANTORS" on the
signature pages hereto (each, a "Guarantor"), in favor of each Lender Party (as
defined below).
Recitals
A. Pursuant to a Credit Agreement, dated as of June 30, 1997
(together with all amendments and other modifications, supplements, restatements
and extensions, if any, from time to time thereafter made thereto, the "Credit
Agreement"), among Granite Construction Incorporated, a Delaware corporation
(the "Company"), the various financial institutions (individually, a "Bank" and
collectively, the "Banks") as are, or may from time to time become, parties
thereto, and Bank of America National Trust and Savings Association, as the
agent for such Banks (together with any successor(s) thereto in such capacities,
the "Agent"), the Banks have provided the Commitments and agreed to make Loans
to the Company and to participate in Letters of Credit issued by the Issuing
Bank for the account of the Company or its Subsidiaries.
B. One of the conditions precedent to the effectiveness of the
Credit Agreement is the execution and delivery of this Guaranty by each
Guarantor.
C. Each Guarantor has duly authorized the execution, delivery and
performance by it of this Guaranty.
D. It is in the best interests of each Guarantor to execute this
Guaranty inasmuch as such Guarantor will derive substantial direct and indirect
benefits from the Loans made and the Letters of Credit issued from time to time
pursuant to the Credit Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in order to induce (i) the
Banks to make Loans (including the initial Loans) to the Company, (ii) the
Issuing Bank to issue and the Banks to participate in Letters of Credit issued
by the Issuing Bank for the account of the Company or its Subsidiaries, all
pursuant to the Credit Agreement, each Guarantor jointly and several agrees, for
the benefit of each Lender Party, as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used in this
Guaranty have the meanings given to them in the Credit Agreement, and as used
herein, "Lender Party" means, as the context may require, any Bank, the Issuing
Bank or the Agent and each of its successors, transferees and assigns.
<PAGE> 181
2. Guaranty.
2.1 Guaranty. Each Guarantor hereby jointly and severally unconditionally
guarantees and promises to pay to the Lender Parties or order, on demand, any
and all Obligations of the Company to the Lender Parties from time to time
outstanding under or in respect to the Credit Agreement or any other Loan
Document (the "Obligations"); provided, however, that each Guarantor shall be
jointly and severally liable under this Guaranty for the maximum amount of such
liability that can be hereby incurred by such Guarantor without rendering this
Guaranty, as it relates to such Guarantor, void or voidable under applicable law
relating to fraudulent conveyance, fraudulent transfer or similar law (including
the California Uniform Fraudulent Transfer Act and Sections 544 and 548 of the
Federal Bankruptcy Reform Act of 1978, as amended (11 U.S.C. Section 101, et
seq.). (the "Bankruptcy Code")), and not for any greater amount, and the Lender
Parties by their acceptance hereof accept such limitation to the extent needed
to make this Guaranty fully enforceable and nonavoidable. Any Lender Party may
permit the indebtedness of the Company to such Lender Party to include
indebtedness other than the Obligations, and may apply any amounts received from
any source, other than from any Guarantor, to that portion of Company's
indebtedness to such Lender Party which is not a part of the Obligations.
2.2 Obligations Independent. The obligations hereunder are joint and
several, and independent of the obligations of the Company, and a separate
action or actions may be brought and prosecuted against any Guarantor whether
action is brought against the Company or any other Guarantor or guarantor or
whether the Company or any other Guarantor or guarantor be joined in any such
action or actions. Each Guarantor waives the benefit of any statute of
limitations affecting its liability hereunder. Each Guarantor acknowledges that
in providing benefits to the Company, the Lender Parties are relying upon the
enforceability of this Guaranty and the Obligations as separate and distinct
indebtedness, obligations and liabilities of each Guarantor.
2.3 Authorization of Renewals, Etc. Each Guarantor authorizes each Lender
Party, without notice or demand and without affecting its liability hereunder,
from time to time to:
(a) renew, compromise, extend, accelerate or otherwise change the
time for payment, or otherwise change the terms, of the Obligations, including
increase or decrease of the rate of interest thereon, or otherwise change the
terms of the Credit Agreement or any other Loan Document;
(b) receive and hold security for the payment of this Guaranty or
the Obligations and exchange, enforce, waive, release, fail to perfect, sell, or
otherwise dispose of any such security;
(c) apply such security and direct the order or manner of sale
thereof as any Lender Party in its or their discretion may determine; and
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<PAGE> 182
(d) release or substitute any one or more of any endorsers or
guarantors of the Obligations.
Further, the performance or occurrence of any of the acts or events described in
clauses (a), (b), (c), and (d) above with respect to indebtedness of the
Company, other than the Obligations, to any Lender Party shall not affect the
liability of any Guarantor hereunder.
2.4 Waiver of Certain Rights. Each Guarantor waives any right to require
any Lender Party to:
(a) proceed against the Company or any other Guarantor or guarantor;
(b) proceed against or exhaust any security or other guaranty for
the Obligations or any other indebtedness of the Company to any Lender Party; or
(c) pursue any other remedy in the Lender Parties' power whatsoever.
2.5 Waiver of Certain Defenses. Each Guarantor waives any defense arising
by reason of any disability, lack of corporate authority or other defense of the
Company, or the cessation from any cause whatsoever of the liability of the
Company, or any claim that such Guarantor's obligations exceed or are more
burdensome than those of the Company. Each Guarantor waives all rights and
defenses arising out of an election of remedies by the Lender Parties, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for the Obligations, has destroyed the Guarantor's rights of
subrogation and reimbursement against the Company by operation of Section 580d
of the California Code of Civil Procedure or otherwise, and all rights or
defenses the Guarantor may have by reason of protection afforded to the Company
with respect to the Obligations pursuant to the antideficiency laws or other
laws of the state of California limiting or discharging the Obligations. Each
Guarantor waives any benefit of, and any right to participate in, any security
or other guaranty now or hereafter held by the Lender Parties securing the
Obligations. Each Guarantor waives, to the fullest extent permitted by law, any
defenses or benefits that may be derived from or afforded by applicable law
limiting the liability of or exonerating guarantors or sureties, or which may
conflict with the terms of this Guaranty, including any and all benefits that
otherwise might be available to any Guarantor under California Civil Code
Sections 1432, 2810, 2815, 2819, 2845, 2848, 2849, 2850, 2899 and 3433 and
California Code of Civil Procedure Sections 580a, 580b, 580d and 726.
2.6 Subrogation, etc.. At any time that a payment is made by any Guarantor
with respect to the Obligations, such Guarantor shall have a right of
contribution against the Company and each other Person (other than any Lender
Party) obligated under, or otherwise a party to, any Loan Document (each, an
"Obligor") and each other Obligor shall have an obligation to indemnify such
Guarantor in the maximum amount permitted by applicable law, which right of
contribution and indemnity shall be subject to adjustment at the time of any
subsequent payment with respect to the Obligations; provided, however, that the
maximum aggregate liability of any Guarantor shall not exceed the maximum amount
of liability that such Guarantor can incur
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<PAGE> 183
without rendering such contribution and indemnity rights void or voidable under
applicable law relating to fraudulent conveyance or fraudulent transfers or
similar law, and not for any greater amount; provided, further, however, that no
Guarantor will exercise any rights which it may acquire by reason of any payment
made hereunder, whether by way of rights of subrogation, reimbursement or
otherwise, until the prior payment, in full and in cash, of all Obligations of
the Company and each other Obligor and the termination of the Commitments and
the expiry of the Letters of Credit. Any amount paid to any Guarantor on account
of any payment made hereunder prior to the payment in full of all Obligations of
the Company and each other Obligor shall be held in trust for the benefit of the
Lender Parties and shall immediately be paid to the Agent and credited and
applied against the Obligations of the Company and each other Obligor, whether
matured or unmatured, in accordance with the terms of the Credit Agreement;
provided, however, that if
(a) any Guarantor has made payment to the Lender Parties of all or
any part of the Obligations of the Company or any other Obligor, and
(b) all Obligations of the Company and each other Obligor have been
paid in full and all Commitments and Letters of Credit have expired or been
permanently terminated,
at such Guarantor's request, the Agent, on behalf of the Lender Parties, will
execute and deliver to such Guarantor appropriate documents (without recourse
and without representation or warranty) necessary to evidence the transfer by
subrogation to such Guarantor of an interest in the Obligations of the Company
and each other Obligor resulting from such payment by such Guarantor. In
furtherance of the foregoing, for so long as any Obligations, Letters of Credit
or Commitments remain outstanding, each Guarantor shall refrain from taking any
action or commencing any proceeding against the Company or any other Obligor (or
its successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in respect of payments made under this
Guaranty to any Lender Party.
2.7 Waiver of Presentments, Etc. Each Guarantor waives all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance of this Guaranty and of
the existence, creation, extension or incurring of the Obligations or any new or
additional Obligations or any other indebtedness of Company to any of the Lender
Parties, or the reliance by any Lender Party upon this Guaranty, or the exercise
of any right, power or privilege hereunder.
2.8 Information Relating to Company. Each Guarantor acknowledges and
agrees that it shall have the sole responsibility for obtaining from the Company
such information concerning the Company's financial condition or business
operations as such Guarantor may require, and that no Lender Party has any duty
at any time to disclose to any Guarantor any information relating to the
business operations or financial condition of the Company.
2.9 Right of Setoff. In addition to any rights and remedies of the Lender
Parties provided by law, if an Event of Default exists, each Lender Party is
authorized at any time and
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<PAGE> 184
from time to time, without prior notice to any Guarantor, any such notice being
waived by each Guarantor to the fullest extent permitted by law, to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
Party to or for the credit or the account of any Guarantor against any and all
obligations of such Guarantor now or hereafter existing under this Guaranty or
any other Loan Document, irrespective of whether or not the Lender Party shall
have made demand under this Guaranty or any other Loan Document and although
such obligations may be contingent or unmatured. Each Lender Party agrees
promptly to notify the applicable Guarantor and the Agent after any such set-off
and application made by such Lender Party; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender Party under this Section 2.9 are in
addition to the other rights and remedies (including without limitation, other
rights of set-off) which such Lender Party may have.
2.10 Subordination. Any obligations of the Company to any Guarantor, now
or hereafter existing, including but not limited to any obligations to any
Guarantor as subrogee of any Lender Party or resulting from any Guarantor's
performance under this Guaranty, are hereby subordinated to the Obligations and
all other indebtedness (including any interest that would accrue pursuant to the
terms of the Loan Documents or other agreements after commencement of any
Insolvency Proceeding, whether or not allowed as a claim) of the Company to the
Lender Parties. Such obligations of the Company to any Guarantor if the Majority
Banks so request shall be enforced and performance received by such Guarantor as
trustee for the Lender Parties and the proceeds thereof shall be paid over to
the Lender Parties on account of the Obligations, but without reducing or
affecting in any manner the liability of any Guarantor under the other
provisions of this Guaranty. The Lender Parties shall be entitled to enforce all
of such Guarantor's rights with respect to such obligations of the Company to
such Guarantor, including in any Insolvency Proceeding. Any amounts received by
any Guarantor in contravention of this Section 2.10 shall be held in trust for
the benefit of the Lender Parties and shall be paid over or delivered to the
Agent for application to the payment of all Obligations or held as cash
collateral to the extent necessary to give effect to this Guaranty.
2.11 Reinstatement of Guaranty. If this Guaranty is returned or canceled,
and subsequently any payment or transfer of any interest in property by the
Company to the any Lender Party in fulfillment of any Obligation is rescinded or
must be returned by the Lender Party to the Company, this Guaranty shall be
reinstated with respect to any such payment or transfer, regardless of any such
prior return or cancellation.
2.12 Powers. It is not necessary for the any Lender Party to inquire into
the powers of the Company or of the officers, directors, partners or agents
acting or purporting to act on its behalf, and any Obligations made or created
in reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
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<PAGE> 185
2.13 Taxes.
(a) Subject to subsection 2.13(g), any and all payments by any
Guarantor to each Lender Party under this Guaranty or any other Loan Documents
shall be made free and clear of, and without deduction or withholding for, any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender Party, such taxes (including income taxes or franchise taxes) as
are imposed on or measured by each Lender Party's net income by the jurisdiction
under the laws of which such Lender Party is organized or maintains a Lending
Office or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being,
hereinafter referred to as "Taxes").
(b) In addition, each Guarantor shall pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Guaranty or any other Loan Documents (hereinafter referred to as "Other Taxes").
(c) Subject to subsection 2.13(g), each Guarantor shall indemnify
and hold harmless each Lender Party for the full amount of Taxes or Other Taxes
(including without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.13) paid by the Lender
Party and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, in the amount necessary to
preserve the after-tax yield such Lender Party would have received if such Taxes
or Other Taxes had not been imposed, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Payment under this indemnification shall be
made within 30 days from the date the Lender Party makes written demand
therefor. Should such Lender Party determine in its sole discretion to seek a
refund or rebate of some or all of the amount of Taxes, Other Taxes or other
liability paid by it and for which it was indemnified by a Guarantor and should
it receive some or all of the refund or rebate which it sought, it shall return
to such Guarantor the difference between the amount of such refund or rebate and
its reasonable costs and expenses of counsel (and the allocated cost of internal
counsel) incurred by it in procuring such refund or rebate.
(d) If any Guarantor shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender Party, then, subject to subsection 2.13(g):
(i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.13) such Lender Party
receives an amount equal to the sum it would have received had no such
deductions been made;
(ii) such Guarantor shall make such deductions; and
6
<PAGE> 186
(iii) such Guarantor shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(e) Within 30 days after the date of any payment by any Guarantor of
Taxes or Other Taxes, such Guarantor shall furnish to the affected Lender Party
the original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to such Lender Party
(f) Each Lender Party which is a foreign person (i.e., a person
other than a United States person for United States Federal income tax purposes)
agrees that:
(i) it shall, no later than the Closing Date (or, in the
case of a Bank which becomes a Lender Party pursuant to Section 4.1 after
the Closing Date, the date upon which such Bank becomes a Lender Party)
deliver to the Guarantor through the Agent:
(A) if any Lending Office is located in the United States, two
accurate and complete signed originals of Internal Revenue Service
Form 4224 or any successor thereto ("Form 4224"), and
(B) if any Lending Office is located outside the United
States, two accurate and complete signed originals of Internal
Revenue Service Form 1001 or any successor thereto ("Form 1001"), in
each case indicating that such Bank is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such Lending Office or Offices under this
Guaranty free from withholding of United States Federal income tax;
(ii) if at any time any Bank changes its Lending Office
or Offices or selects an additional Lending Office as herein provided, it
shall with reasonable promptness deliver to the Guarantor through the
Agent in replacement for, or in addition to, the forms previously
delivered by it hereunder:
(A) if such changed or additional Lending Office is located in
the United States, two accurate and complete signed originals of
Form 4224; or
(B) otherwise, two accurate and complete signed originals of
Form 1001,
in each case indicating that such Bank is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the account of
such changed or additional Lending Office under this Guaranty free from
withholding of United States federal income tax;
7
<PAGE> 187
(iii) it shall, before or promptly after the occurrence
of any event (including the passing of time but excluding any event
mentioned in (ii) above) requiring a change in the most recent Form 4224
or Form 1001 previously delivered by such Bank and if the delivery of the
same be lawful, deliver to the Guarantor through the Agent two accurate
and complete original signed copies of Form 4224 or Form 1001 in
replacement for the forms previously delivered by the Bank; and
(iv) it shall, promptly upon any Guarantor's reasonable
request to that effect, deliver to such Guarantor such other forms or
similar documentation as may be required from time to time by any
applicable law, treaty, rule or regulation in order to establish such
Bank's tax status for withholding purposes.
(g) No Guarantor will be required to pay any additional amounts in
respect of United States federal income tax pursuant to subsection 2.13(d) to
any Bank for the account of any Lending Office of such Bank:
(i) if the obligation to pay such additional amounts
would not have arisen but for a failure by such Bank to comply with its
obligations under subsection 2.13(f) in respect of such Lending Office;
(ii) if such Bank shall have delivered to such Guarantor
a Form 4224 in respect of such Lending Office pursuant to subsection
2.13(f)(i)(A), and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States federal income
tax in respect of payments by such Guarantor hereunder for the account of
such Lending Office for any reason other than a change in United States
law or regulations or in the official interpretation of such law or
regulations by any governmental authority charged with the interpretation
or administration thereof (whether or not having the force of law) after
the date of delivery of such Form 4224; or
(iii) if the Bank shall have delivered to such Guarantor
a Form 1001 in respect of such Lending Office pursuant to subsection
2.13(f)(i)(B), and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income
tax in respect of payments by such Guarantor hereunder for the account of
such Lending Office for any reason other than a change in United States
law or regulations or any applicable tax treaty or regulations or in the
official interpretation of any such law, treaty or regulations by any
governmental authority charged with the interpretation or administration
thereof (whether or not having the force of law) after the date of
delivery of such Form 1001.
(h) If any Guarantor is required to pay additional amounts to any
Lender Party pursuant to subsection 2.13(d), then such Lender Party shall use
its reasonable best efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by such Guarantor which may thereafter accrue if
8
<PAGE> 188
such change in the judgment of such Lender Party is not otherwise significantly
disadvantageous to such Lender Party.
(i) The agreements and obligations of each Guarantor contained
in this Section 2.13 shall survive the payment in full of all other Obligations.
2.14 Continuing Guaranty. This Guaranty is a continuing guaranty and
agreement of subordination and shall continue in effect and be binding upon each
Guarantor until termination of the Commitments, existing of the Letters of
Credit and payment and performance in full of the Obligations which may exist or
which may arise from time to time under successive transactions, and each
Guarantor expressly acknowledges that this Guaranty shall remain in full force
and effect notwithstanding that there may be periods in which no Obligations
exist. This Guaranty supersedes all prior guaranties executed from time to time
by any of the Guarantors in connection with the Second Amended and Restated
Credit Agreement dated as of June 15, 1995, as amended from time to time, among
the Company, the financial institutions party thereto as "Banks" and Bank of
America NT & SA as the Agent for the Banks.
2.15 Substantial Benefits. The funds that have been borrowed from the
Banks by the Company and the Issuance of any Letter of Credit by the Issuing
Bank have been and are to be contemporaneously used for the benefit of the
Company and the Guarantors. The Company and the Guarantors have derived and will
derive significant and substantial benefits from the accommodations that have
been made by the Banks and the Issuing Bank under the Loan Documents. The
Guarantors have received at least "reasonably equivalent value" (as such phrase
is used in Section 548 of the Bankruptcy Code, in Section 3439.04 of the
California Uniform Fraudulent Transfer Act and in comparable provisions of other
applicable law) and more than sufficient consideration to support its
obligations hereunder in respect of the Obligations and under any of the Loan
Documents to which it is a party.
3. Representations and Warranties. Each Guarantor represents and warrants to the
Lender Parties that (a) such Guarantor and the Company are distinct and separate
entities operating independently; (b) such Guarantor has received copies of the
Credit Agreement and the other Loan Documents and is familiar with and fully
understands of all their respective terms and conditions; (c) no Lender Party
has made any representations or warranties to such Guarantor regarding the
creditworthiness of the Company or the prospects of repayment from sources other
than the Company; (d) this Guaranty is executed at the request of the Company;
(e) such Guarantor has established adequate means of obtaining from the Company
on a continuing basis financial and other information pertaining to the business
of the Company; and (f) such Guarantor is Solvent (both before and after giving
effect to this Guaranty, taking into account such Guarantor's rights of
contribution and indemnity as provided in Section 2.6).
4. Miscellaneous
4.1 Participations; Novations. Any Lender Party may from time to time,
without notice to any Guarantor and without affecting any Guarantor's
obligations hereunder, transfer its interest
9
<PAGE> 189
in the Obligations to Participants and Assignees (each as defined in the Credit
Agreement) as provided in the Credit Agreement. Each Guarantor agrees that each
such transfer will give rise to a direct obligation of such Guarantor to each
such Participant and Assignee and that each such Participant and Assignee shall
have the same rights and benefits under this Guaranty as it would have if it
were a Bank party to the Credit Agreement and this Guaranty. Each Lender Party
agrees to maintain the confidentiality of all non-public information provided to
it by any Guarantor or by the Agent on such Guarantor's behalf to the same
extent and with the same exceptions as provided in the Credit Agreement.
Notwithstanding the foregoing, each Guarantor authorizes the Agent and each
other Lender Party to disclose to any prospective Participant and Assignee and
any Participant and Assignee any and all confidential information in the Agent's
and such Lender Party's possession concerning the Guarantor, this Guaranty and
any security for this Guaranty; provided, however, that such Participant or
Assignee or such prospective Participant or Assignee agrees in writing to the
Agent or such Lender Party, as the case may be, to keep such information
confidential to the same extent required by the Lender Parties under the Credit
Agreement.
4.2 Merger. In the event that (i) one or more Guarantors is merged into
the Company or another Guarantor or (ii) one or more of the Guarantors is sold
or liquidated, subject, in each case, to the provisions of the Credit Agreement,
such Guarantor shall cease to be a Guarantor hereunder without the necessity to
amend or re-issue this Guaranty, and each Guarantor agrees that its obligations
hereunder shall continue in full force and effect hereunder and shall not be
affected by any such merger, sale or liquidation.
4.3 Waivers, Writing Required. No delay or omission by any Lender Party to
exercise any right under this Guaranty shall impair any such right, nor shall it
be construed to be a waiver thereof. No waiver of any single breach or default
under this Guaranty shall be deemed a waiver of any other breach or default. Any
amendment or waiver of any provision of this Guaranty must be in writing to be
effective.
4.4 Remedies. All rights and remedies provided in this Guaranty and any
instrument or agreement referred to herein are cumulative and are not exclusive
of any rights or remedies otherwise provided by law. Any single or partial
exercise of any right or remedy shall not preclude the further exercise thereof
or the exercise of any other right or remedy.
4.5 Costs and Expenses. Each Guarantor agrees to pay to each Lender Party
on demand all costs, expenses and attorneys' fees (including allocated costs for
in-house legal services) incurred by each such Lender Party in connection with
the enforcement of this Guaranty.
4.6 Section Headings, Interpretation. Section headings are for reference
only, and shall not affect the interpretation or meaning of any provision of
this Guaranty. Unless otherwise provided, references to Articles, Sections and
Exhibits shall be deemed references to Articles, Sections and Exhibits of this
Guaranty. All references to the word "Guarantor" or "the Guarantors" shall mean
all and any one or more of them, as the context shall require.
10
<PAGE> 190
4.7 Severability. The illegality or unenforceability of any provision of
this Guaranty or any instrument or agreement referred to herein shall not in any
way affect or impair the legality or enforceability of the remaining provisions
of this Guaranty or any instrument or agreement referred to herein.
4.8 Governing Law and Jurisdiction.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CALIFORNIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY AND
ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY
EXECUTION AND DELIVERY OF THIS GUARANTY, EACH GUARANTOR AND EACH LENDER PARTY
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF
THOSE COURTS. EACH GUARANTOR AND EACH LENDER PARTY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
GUARANTY OR ANY DOCUMENT RELATED HERETO. EACH GUARANTOR AND EACH LENDER PARTY
EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
4.9 Separate Obligations. This Guaranty creates separate obligations of
each Guarantor in favor of the Lender Parties. The fact that such obligations
are set forth in this one Guaranty rather than in a separate guaranty document
for each Guarantor is for the convenience of the Company and the Guarantors and
shall in no way impair or adversely affect the rights or benefits of any of the
Lender Parties hereunder. Each Guarantor agrees to execute and deliver a
separate agreement, immediately upon request at any time of the Majority Banks,
evidencing such Guarantor's obligations under this Guaranty.
4.10 Entire Agreement. This Guaranty and any instrument, agreement or
document attached hereto or referred to herein (a) integrate all the terms and
conditions mentioned herein or incidental hereto, (b) supersede all oral
negotiations and prior writings with respect to the subject matter hereof, and
(c) are intended by the parties as the final expression of the agreement with
respect to the terms and conditions set forth in this Guaranty and any such
instrument, agreement and document and as the complete and exclusive statement
of the terms agreed to by the parties. In the event of any conflict between the
terms, conditions and provisions of this Guaranty and any such instrument,
agreement or document, the terms, conditions and provisions of this Guaranty
shall prevail.
11
<PAGE> 191
IN WITNESS WHEREOF, each Guarantor has executed this Guaranty by its
duly authorized officers as of the day and year first above written.
GUARANTORS
GRANITE CONSTRUCTION COMPANY
By: /s/ WILLIAM E. BARTON
-------------------------------
Title: William E. Barton
----------------------------
Vice/President & CFO
By: /s/ R. C. ALLBRITTON
-------------------------------
Title: R.C. Allbritton
----------------------------
Vice President & Treasurer
Address: P.O. Box 50085
Watsonville, CA 95077-5085
Attention:
Telecopy:
GRANITE SR91 CORPORATION
By: /s/ DAVID H. WATTS
-------------------------------
Title: David H. Watts
----------------------------
President & CEO
By: /s/ WILLIAM E. BARTON
-------------------------------
Title: William E. Barton
----------------------------
Vice President & CFO
Address:__________________________
__________________________
__________________________
Attention:
Telecopy:
<PAGE> 192
WILCOTT CORPORATION
By:/s/ DAVID H. WATTS
-------------------------------
Title: David H. Watts
----------------------------
President & CEO
By: /s/ WILLIAM E. BARTON
-------------------------------
Title: William E. Barton
----------------------------
Vice President & CFO
Address:
Attention:
Telecopy:
DESERT AGGREGATES, INC.
By: /s/ DAVID J. BRUNTON
-------------------------------
Title: David J. Brunton
----------------------------
CFO, Treasurer & Assistant
Secretary
By: /s/ KATHLEEN KENAN
-------------------------------
Title: Kathleen Kenan
----------------------------
Assistant Secretary
Address:
Attention:
Telecopy:
<PAGE> 193
GG&R, INC.
By: /s/ DAVID H. WATTS
-------------------------------
Title: David H. Watts
----------------------------
President & CEO
By: /s/ WILLIAM E. BARTON
-------------------------------
Title: William Barton
----------------------------
Vice President & CFO
Address:
Attention:
Telecopy:
INTERMOUNTAIN SLURRY SEAL, INC.
By: /s/ DAVID J. BRUNTON
-------------------------------
Title: David J. Brunton
----------------------------
CFO & Assistant Secretary
By: /s/ KATHLEEN KENAN
-------------------------------
Title: Kathleen Kenan
----------------------------
Assistant Secretary
Address:
Attention:
Telecopy:
<PAGE> 194
BEAR RIVER CONTRACTORS
By: /s/ DAVID J. BRUNTON
-------------------------------
Title: David J. Brunton
CFO &Assistant Secretary
By: /s/ KATHLEEN KENAN
-------------------------------
Title: Katbleen Kenan
----------------------------
Assistant Secretary
Address:
Attention:
Telecopy:
POZZOLAN PRODUCTS COMPANY (P.P.C.)
By: /s/ DAVID J. BRUNTON
-------------------------------
Title: David J. Brunton
----------------------------
CFO & Assistant Secretary
By: /s/ KATHLEEN KENAN
-------------------------------
Title: Kathleen Kenan
----------------------------
Assistant Secretary
Address:
Attention:
Telecopy
<PAGE> 195
GILC INCORPORATED
By: /s/ WILLIAM E. BARTON
-------------------------------
Title: William Barton
----------------------------
President & CEO
By: /s/ R.C. ALLBRITTON
-------------------------------
Title: R.C. Allbriton
----------------------------
Vice President & CFO
Address:
Attention:
Telecopy:
GILC, L.P.
By: /s/ WILLIAM E. BARTON
-------------------------------
Title: William E. Barton
----------------------------
President & CEO
By: /s/ R.C. ALLBRITTON
-------------------------------
Title: R.C. Allbritton
----------------------------
Vice President & CFO
Address:
Attention:
Telecopy:
<PAGE> 196
GRANITE SR91, L.P.
By: /s/ DAVID H. WATTS
-------------------------------
Title: David H. Watts
----------------------------
President & CEO
By: /s/ WILLIAM E. BARTON
-------------------------------
Title: William E. Barton
----------------------------
Vice President & CFO
Address:
Attention:
Telecopy:
GTC, INC.
By: /s/ WILLIAM E. BARTON
-------------------------------
Title: William E. Barton
----------------------------
President & Treasurer
By: /s/ R.C. ALLBRITTON
-------------------------------
Title: R.C. Allbritton
----------------------------
Vice President, Assistant
Secretary and Assistant
Treasurer
Address:
Attention:
Telecopy:
<PAGE> 197
GRANITE CONSTRUCTION INCORPORATED
JUNE 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company") requires
financing in the ordinary course of business for working capital and other
general corporate purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement, as defined below), have
offered to make such financing available to the Company upon the terms and
provisions and subject to the conditions contained in that certain Credit
Agreement proposed between the Company, Bank of America National Trust and
Savings Association, as agent for the Banks (the "Agent"), and the Banks party
thereto, to be dated on or about June 30, 1997 (as the same may be supplemented,
modified, amended or restated from time to time in the manner provided therein,
the "Credit Agreement"), to be secured under certain circumstances as provided
therein by the pledge of certain collateral by the Company and in the other
documents contemplated therein (the "Loan Documents"), and to be jointly and
severally guaranteed by the Guarantors; and
WHEREAS, the Board of Directors of the Company has determined after
analysis and discussion that it is in the best interests of the Company to
procure such financing from the Banks pursuant to the Credit Agreement and other
Loan Documents and to secure such financing under certain circumstances as
provided therein by the pledge of certain collateral by the Company;
NOW, THEREFORE, BE IT RESOLVED, that the Company be, and hereby is,
authorized and empowered to enter into and deliver the Credit Agreement, and
other Loan Documents to which the Company will or may be a party, together with
all changes therein and supplements, modifications, amendments and restatements
thereof approved by an executive officer of the Company as hereinafter provided;
to borrow money from time to time thereunder at such rates of interest as may be
specified therein; to mortgage, pledge or otherwise encumber any of the
Company's assets and properties of any kind or nature whatsoever (including, but
not limited to, those referenced above) to secure in whole or in part its
obligations under the Credit Agreement, and other Loan Documents and to repay
money borrowed thereunder, together with interest thereon, and take any and all
other actions that may be necessary or desirable in order to perform or
otherwise satisfy, in whole or in part, any and all of the Company's obligations
under the Credit Agreement and other Loan Documents, as and when due or in
advance thereof, to otherwise carry out the intent or purposes thereof or of
these resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary,
any Assistant Secretary or the Treasurer of the Company be, and each of those
executive officers hereby is, authorized and directed in the name and on behalf
of the Company to negotiate, execute and deliver to the Agent and the Banks the
Credit Agreement and other Loan Documents, incorporating such changes therein as
the executive officer signing the same may approve, and from time to time
thereafter to negotiate, execute and deliver such supplements, extensions,
modifications, amendments or restatements thereof as the executive officer
signing the same may approve as necessary or desirable to carry out the intent
or purposes thereof or of these Resolutions, with the execution of any of the
foregoing being conclusive evidence of the signing officer's approval thereof;
RESOLVED FURTHER, that those and other appropriate officers of the Company
be, and each of them hereby is, authorized and directed in the name and on
behalf of the Company to do and perform any and all such other acts and things,
to sign or make such other agreements, certificates,
<PAGE> 198
instruments, notices, requests, statements, and other documents and
communications, and to take or omit such other actions as each of them in his
sole discretion may deem necessary or desirable in order to perform or otherwise
satisfy, in whole or in part, any and all of the terms and provisions of the
Credit Agreement and other Loan Documents, as and when due or in advance
thereof, to consummate the transactions contemplated therein or to carry out the
intent or purposes thereof or of these Resolutions;
RESOLVED FURTHER, that the Bank shall be entitled to rely upon any action
taken or omitted or any agreement, certificate, instrument, notice, request,
statement or other document or communication signed or made by any person listed
as an executive officer of the Company in the most recent Certificate of the
Company's Secretary delivered to the Agent until such time as the Agent shall
have received express written notice to the contrary from an executive officer
of the Company; and
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Credit Agreement and other Loan Documents as
so executed and delivered, and as so supplemented, modified, amended and
restated from time to time, and the actions of officers of the Company so taken
or omitted, hereby are all authorized, approved and ratified in all respects,
notwithstanding anything to the contrary contained in the Bylaws of the Company
or any other resolution of the Board of Directors of the Company.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Granite Construction
Incorporated, a Delaware corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors Executive Committee by Unanimous Consent Without a Meeting,
effective June 30, 1997 and entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
<PAGE> 199
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Granite Construction
Incorporated, a Delaware corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Articles of Incorporation and Bylaws of the Company previously
provided the Bank as Agent under the Prior Credit Agreement have not been
amended or modified in any respect.
The Company is in good standing in its jurisdiction of incorporation and
in each jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
I Roxane C. Allbritton, certify that I am the duly elected Vice President
and Assistant Secretary of the Company and that, as of the date hereof, Michael
Futch is the duly elected Vice President and Secretary of the Company and that
his signature above is his genuine signature.
Dated: June 30, 1997 /s/ ROXANE C. ALLBRITTON
-------------------------------
Roxane C. Allbritton
Vice President and Assistant Secretary
<PAGE> 200
GRANITE CONSTRUCTION COMPANY
JUNE 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company"), the owner of
Granite Construction Company (the "Guarantor"), requires financing in the
ordinary course of business for working capital and other general corporate
purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement, as defined below), have
offered to make such financing available to the Company upon the terms and
provisions and subject to the conditions contained in that certain Credit
Agreement proposed between the Company, Bank of America National Trust and
Savings Association, as agent for the Banks (the "Agent"), and the Banks party
thereto, to be dated on or about June 30, 1997 (as the same may be supplemented,
modified, amended or restated from time to time in the manner provided therein,
the "Credit Agreement"), and in the other documents contemplated therein (the
"Loan Documents"), to be secured under certain circumstances as provided therein
by the pledge of certain collateral by the Company and to be jointly and
severally guaranteed by the Guarantor and certain other guarantors; and
WHEREAS, the Board of Directors of the Guarantor have determined after
analysis and discussion that it is in the best interests of the Guarantor to
induce the Banks to make and continue such financing to the Company pursuant to
the Credit Agreement and other Loan Documents by the Guarantor's guaranty of the
obligations of the Company contained in that certain joint and several Guaranty
proposed by the Guarantor and the other subsidiaries of the company party
thereto in favor of each Lender Party (as defined therein) to be dated on or
about June 30, 1997 (as the same may be supplemented, modified, amended or
restated from time to time in the manner provided therein, the "Guaranty");
NOW, THEREFORE, BE IT RESOLVED, that the Company be, and hereby is,
authorized and empowered to enter into and deliver the Guaranty and other Loan
Documents (as such terms are defined in the Guaranty) to which the Guarantor
will or may be a party, together with all changes therein and supplements,
modifications, instruments, notices, requests, statements, and other documents
and communications, and to take or omit such other actions as each of them in
his sole discretion may deem necessary or desirable in order to perform or
otherwise satisfy, in whole or in part, any and all of the terms and provisions
of the Credit Agreement and other Loan Documents, as and when due or in advance
thereof, to consummate the transactions contemplated therein or to carry out the
intent or purposes thereof or of these resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary or
the Treasurer of the Guarantor be, and each of those executive officers hereby
is, authorized and directed in the name and on behalf of the Guarantor to
negotiate, execute and deliver to the Lender Parties the Guaranty and other Loan
Documents, incorporating such changes therein as the executive officer signing
the same may approve, and from time to time thereafter to negotiate, execute and
deliver such supplements, extensions, modifications, amendments or restatements
thereof as the executive officer signing the same may approve as necessary or
desirable to carry out the intent or purposes thereof or of these Resolutions,
with the execution of any of the foregoing being conclusive evidence of the
signing officer's approval thereof;
<PAGE> 201
RESOLVED FURTHER, that those and other appropriate officers of the
Guarantor be, and each of them hereby is, authorized and directed in the name
and on behalf of the Guarantor to do and perform any and all such other acts and
things, to sign or make such other agreements, certificates, instruments,
notices, requests, statements, and other documents and communications, and to
take or omit such other actions as each of them in his or her sole discretion
may deem necessary or desirable in order to perform or otherwise satisfy, in
whole or in part, any and all of the terms and provisions of the Guaranty and
other Loan Documents to which the Guarantor is or may become party, as and when
due or in advance thereof, to consummate the transactions contemplated therein
or to carry out the intent or purposes thereof or of these Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an executive officer of the Guarantor in the most recent
Certificate of the Guarantor's Secretary delivered to the Agent until such time
as the Agent shall have received express written notice to the contrary from an
executive officer of the Guarantor;
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, and the actions of officers of
the Guarantor so taken or omitted, hereby are all authorized, approved and
ratified in all respects, notwithstanding anything to the contrary contained in
the Bylaws of the Guarantor or any other resolution of the Board of Directors of
the Guarantor.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Granite Construction
Company, a California corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors Executive Committee by Unanimous Consent Without a Meeting,
effective June 30, 1997 and entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
<PAGE> 202
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Granite Construction
Company, a California corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Articles of Incorporation and Bylaws of the Company previously
provided the Bank as Agent under the Prior Credit Agreement have not been
amended or modified in any respect.
The Company is in good standing in its jurisdiction of incorporation and
in each jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
I Roxane C. Allbritton, certify that I am the duly elected Vice President
and Assistant Secretary of the Company and that, as of the date hereof, Michael
Futch is the duly elected Vice President and Secretary of the Company and that
his signature above is his genuine signature.
Dated: June 30, 1997 /s/ ROXANE C. ALLBRITTON
-------------------------------
Roxane C. Allbritton
Vice President and Assistant Secretary
<PAGE> 203
GRANITE SR91 CORPORATION
JUNE 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company"), the owner of
Granite SR91 Corporation (the "Guarantor"), requires financing in the ordinary
course of business for working capital and other general corporate purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement, as defined below), have
offered to make such financing available to the Company upon the terms and
provisions and subject to the conditions contained in that certain Credit
Agreement proposed between the Company, Bank of America National Trust and
Savings Association, as agent for the Banks (the "Agent"), and the Banks party
thereto, to be dated on or about June 30, 1997 (as the same may be supplemented,
modified, amended or restated from time to time in the manner provided therein,
the "Credit Agreement"), and in the other documents contemplated therein (the
"Loan Documents"), to be secured under certain circumstances as provided therein
by the pledge of certain collateral by the Company and to be jointly and
severally guaranteed by the Guarantor and certain other guarantors; and
WHEREAS, the Board of Directors of the Guarantor has determined after
analysis and discussion that it is in the best interests of the Guarantor to
induce the Banks to make and continue such financing to the Company pursuant to
the Credit Agreement and other Loan Documents by the Guarantor's guaranty of the
obligations of the Company contained in that certain joint and several Guaranty
proposed by the Guarantor and the other subsidiaries of the Company party
thereto in favor of each Lender Party (as defined therein) to be dated on or
about June 30, 1997 (as the same may be supplemented, modified, amended or
restated from time to time in the manner provided therein, the "Guaranty");
NOW, THEREFORE, BE IT RESOLVED that the Guarantor be, and hereby is,
authorized and empowered to enter into and deliver the Guaranty and other Loan
Documents (as such terms are defined in the Guaranty) to which the Guarantor
will or may be a party, together with all changes therein and supplements,
modifications, amendments and restatements thereof approved by an executive
officer of the Guarantor as hereinafter provided, and to take any and all other
actions that may be necessary or desirable in order to perform or otherwise
satisfy, in whole or in part, any and all of the Company's obligations under the
Guaranty and other Loan Documents, as and when due or in advance thereof, to
otherwise carry out the intent or purposes thereof or of these resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary,
any Assistant Secretary or the Treasurer of the Guarantor be, and each of those
executive officers hereby is, authorized and directed in the name and on behalf
of the Guarantor to negotiate, execute and deliver to the Lender Parties the
Guaranty and other Loan Documents, incorporating such changes therein as the
executive officer signing the same may approve, and from time to time thereafter
to negotiate, execute and deliver such supplements, extensions, modifications,
amendments or restatements thereof as the executive officer signing the same may
approve as necessary or desirable to carry out the intent or purposes thereof or
of these Resolutions, with the execution of any of the foregoing being
conclusive evidence of the signing officer's approval thereof,
RESOLVED FURTHER, that those and other appropriate officers of the
Guarantor be, and
<PAGE> 204
each of them hereby is, authorized and directed in the name and on behalf of the
Guarantor to do and perform any and all such other acts and things, to sign or
make such other agreements, certificates, instruments, notices, requests,
statements, and other documents and communications, and to take or omit such
other actions as each of them in his or her sole discretion may deem necessary
or desirable in order to perform or otherwise satisfy, in whole or in part, any
and all of the terms and provisions of the Guaranty and other Loan Documents to
which the Guarantor is or may become party, as and when due or in advance
thereof, to consummate the transactions contemplated therein or to carry out the
intent or purposes thereof or of these Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an executive officer of the Guarantor in the most recent
Certificate of the Guarantor's Assistant Secretary delivered to the Agent until
such time as the Agent shall have received express written notice to the
contrary from an executive officer of the Guarantor;
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, and the actions of officers of
the Guarantor so taken or omitted, hereby are all authorized, approved and
ratified in all respects, notwithstanding anything to the contrary contained in
the Bylaws of the Guarantor or any other resolution of the Board of Directors of
the Guarantor.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Granite SR91 Corporation,
a California corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors Unanimous Consent Without a Meeting, effective June 30, 1997 and
entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
<PAGE> 205
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Granite SR91 Corporation,
a California corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Articles of Incorporation and Bylaws of the Company previously
provided the Bank as Agent under the Prior Credit Agreement have not been
amended or modified in any respect
The Company is in good standing in its jurisdiction of incorporation and
in each jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
I, David H. Watts, certify that I am the duly elected President and Chief
Executive Officer of the Company and that, as of the date hereof, Michael Futch
is the duly elected Vice President and Secretary of the Company and that his
signature above is his genuine signature.
Dated: June 30, 1997 /s/ DAVID H. WATTS
-------------------------------
David H. Watts
President and Chief Executive Officer
<PAGE> 206
WILCOTT CORPORATION
JUNE 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company"), the owner of
Wilcott Corporation (the "Guarantor"), requires financing in the ordinary course
of business for working capital and other general corporate purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement as defined below), have
offered to make such financing available to the Company upon the terms and
provisions and subject to the conditions contained in that certain Credit
Agreement proposed between the Company, Bank of America National Trust and
Savings Association, as agent for the Banks (the "Agent"), and the Banks party
thereto, to be dated on or about June 30, 1997 (as the same may be supplemented,
modified, amended or restated from time to time in the manner provided therein,
"Credit Agreement"), and in the other documents contemplated therein (the "Loan
Documents"), to be secured under certain circumstances as provided therein by
the pledge of certain collateral by the Company and to be jointly and severally
guaranteed by the Guarantor and certain other guarantors; and
WHEREAS, the Board of Directors of the Guarantor have determined after
analysis and discussion that it is in the best interests of the Guarantor to
induce the Banks to make and continue such financing to the Company pursuant to
the Credit Agreement and other Loan Documents by the Guarantor's guaranty of the
obligations of the Company contained in that certain joint and several Guaranty
proposed by the Guarantor and the other subsidiaries of the Company party
thereto in favor of each Lender Party (as defined therein) to be dated on or
about June 30, 1997 (as the same may be supplemented, modified, amended or
restated from time to time in the manner provided therein, the "Guaranty");
NOW, THEREFORE, BE IT RESOLVED that the Guarantor be, and hereby is,
authorized and empowered to enter into and deliver the Guaranty and other Loan
Documents (as such terms are defined in the Guaranty) to which the Guarantor
will or may be a party, together with all changes therein and supplements,
modifications, amendments and restatements thereof approved by an executive
officer of the Guarantor as hereinafter provided, and to take any and all other
actions that may be necessary or desirable in order to perform or otherwise
satisfy, in whole or in part, any and all of the Company's obligations under the
Guaranty and other Loan Documents, as and when due or in advance thereof, to
otherwise carry out the intent or purposes thereof or of these resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary,
any Assistant Secretary or the Treasurer of the Guarantor be, and each of those
executive officers hereby is, authorized and directed in the name and on behalf
of the Guarantor to negotiate, execute and deliver to the Lender Parties the
Guaranty and other Loan Documents, incorporating such changes therein as the
executive officer signing the same may approve, and from time to time thereafter
to negotiate, execute and deliver such supplements, extensions, modifications,
amendments or restatements thereof as the executive officer signing the same may
approve as necessary or desirable to carry out the intent or purposes thereof or
of these Resolutions, with the execution of any of the foregoing being
<PAGE> 207
conclusive evidence of the signing officer's approval thereof;
RESOLVED FURTHER, that those and other appropriate officers of the
Guarantor be, and each of them hereby is, authorized and directed in the name
and on behalf of the Guarantor to do and perform any and all such other acts and
things, to sign or make such other agreements, certificates, instruments,
notices, requests, statements, and other documents and communications, and to
take or omit such other actions as each of them in his or her sole discretion
may deem necessary or desirable in order to perform or otherwise satisfy, in
whole or in part, any and all of the terms and provisions of the Guaranty and
other Loan Documents to which the Guarantor is or may become party, as and when
due or in advance thereof, to consummate the transactions contemplated therein
or to carry out the intent or purposes thereof or of these Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an executive officer of the Guarantor in the most recent
Certificate of the Guarantor's Assistant Secretary delivered to the Agent until
such time as the Agent shall have received express written notice to the
contrary from an executive officer of the Guarantor;
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, and the actions of officers of
the Guarantor so taken or omitted, hereby are all authorized, approved and
ratified in all respects, notwithstanding anything to the contrary contained in
the Bylaws of the Guarantor or any other resolution of the Board of Directors of
the Guarantor.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Wilcott Corporation, a
Colorado corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors by Unanimous Consent Without a Meeting, effective June 30, 1997 and
entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
<PAGE> 208
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Wilcott Corporation, a
Colorado corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Articles of Incorporation and Bylaws of the Company previously
provided the Bank as Agent under the Prior Credit Agreement have not been
amended or modified in any respect.
The Company is in good standing in its jurisdiction of incorporation and
in each jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
I, David H. Watts, certify that I am the duly elected President and Chief
Executive Officer of the Company and that, as of the date hereof, Michael Futch
is the duly elected Vice President and Secretary of the Company and that his
signature above is his genuine signature.
Dated: June 30, 1997 /s/ DAVID H. WATTS
-------------------------------
David H. Watts
President and Chief Executive Officer
<PAGE> 209
DESERT AGGREGATES, INC.
JUNE 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company"), the owner of
Desert Aggregates, Inc. (the "Guarantor"), requires financing in the ordinary
course of business for working capital and other general corporate purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement, as defined below), have
offered to make such financing available to the Company upon the terms and
provisions and subject to the conditions contained in that certain Credit
Agreement proposed between the Company, Bank of America National Trust and
Savings Association, as agent for the Banks (the "Agent"), and the Banks party
thereto, to be dated on or about June 30, 1997 (as the same may be supplemented,
modified, amended or restated from time to time in the manner provided therein,
the "Credit Agreement"), and in the other documents contemplated therein (the
"Loan Documents"), to be secured under certain circumstances as provided therein
by the pledge of certain collateral by the Company and to be jointly and
severally guaranteed by the Guarantor and certain other guarantors; and
WHEREAS, the Board of Directors of the Guarantor have determined after
analysis and discussion that it is in the best interests of the Guarantor to
induce the Banks to make and continue such financing to the Company pursuant to
the Credit Agreement and other Loan Documents by the Guarantor's guaranty of the
obligations of the Company contained in that certain joint and several Guaranty
proposed by the Guarantor and the other subsidiaries of the Company party
thereto in favor of each Lender Party (as defined therein) to be dated on or
about June 30, 1997 (as the same may be supplemented, modified, amended or
restated from time to time in the manner provided therein, the ("Guaranty");
NOW, THEREFORE, BE IT RESOLVED that the Guarantor be, and hereby is,
authorized and empowered to enter into and deliver the Guaranty and other Loan
Documents (as such terms are defined in the Guaranty) to which the Guarantor
will or may be a party, together with all changes; therein and supplements
modifications, amendments and restatements thereof approved by an executive
officer of the Guarantor as hereinafter provided, and to take any and all other
actions that may be necessary or desirable in order to perform or otherwise
satisfy, in whole or in part, any and all of the Company's obligations under the
Guaranty and other Loan Documents, as and when due or in advance thereof, to
otherwise carry out the intent or purposes thereof or of these resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary,
any Assistant Secretary or the Treasurer of the Guarantor be, and each of those
executive officers hereby is, authorized and directed in the name and on behalf
of the Guarantor to negotiate, execute and deliver to the Lender Parties the
Guaranty and other Loan Documents, incorporating such changes therein as the
executive officer signing the same may approve, and from time to time thereafter
to negotiate, execute and deliver such supplements, extensions, modifications,
amendments or restatements thereof as the executive officer signing the same may
approve as necessary or desirable to carry out the intent or purposes thereof or
of these Resolutions, with the execution of any of the foregoing being
conclusive evidence of the signing officer's approval thereof;
RESOLVED FURTHER, that those and other appropriate officers of the
Guarantor be, and
<PAGE> 210
each of them hereby is, authorized and directed in the name and on behalf of the
Guarantor to do and perform any and all such other acts and things, to sign or
make such other agreements, certificates, instruments, notices, requests,
statements, and other documents and communications, and to take or omit such
other actions as each of them in his or her sole discretion may deem necessary
or desirable in order to perform or otherwise satisfy, in whole or in part, any
and all of the terms and provisions of the Guaranty and other Loan Documents to
which the Guarantor is or may become party, as and when due or in advance
thereof, to consummate the transactions contemplated therein or to carry out the
intent or purposes thereof or of these Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an executive officer of the Guarantor in the most recent
Certificate of the Guarantor's Secretary delivered to the Agent until such time
as the Agent shall have received express written notice to the contrary from an
executive officer of the Guarantor;
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, and the actions of officers of
me Guarantor so taken or omitted, hereby are all authorized, approved and
ratified in all respects, notwithstanding anything to the contrary contained in
the Bylaws of the Guarantor or any other resolution of the Board of Directors of
the Guarantor.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Desert Aggregates, Inc.,
a California corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of me Board
of Directors by Unanimous Consent Without a Meeting, effective June 30, 1997 and
entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL L. THOMAS
-------------------------------
Michael L. Thomas
Secretary
<PAGE> 211
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Desert Aggregates, Inc.,
a California corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Articles of Incorporation and Bylaws of the Company previously
provided the Bank as Agent under the Prior Credit Agreement have not been
amended or modified in any respect.
The Company is in good standing in its jurisdiction of incorporation and
in each jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL L. THOMAS
-------------------------------
Michael L. Thomas
Secretary
I, Kathleen Kenan, certify that I am the duly elected Assistant Secretary
of the Company and that, as of the date hereof, Michael L. Thomas is the duly
elected Vice President and Secretary of the Company and that his signature above
is his genuine signature.
Dated: June 30, 1997 /s/ KATHLEEN KENAN
-------------------------------
Kathleen Kenan
Assistant Secretary
<PAGE> 212
G.G. & R., INC.
JUNE 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company"), the owner of
G.G. & R., INC. (the "Guarantor"), requires financing in the ordinary course of
business for working capital and other general corporate purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement, as defined below), have
offered to make such financing available to the Company upon the terms and
provisions and subject to the conditions contained in that certain Credit
Agreement proposed between the Company, Bank of America National Trust and
Savings Association, as agent for the Banks (the "Agent"), and the Banns party
thereto, to be dated on or about June 30, 1997 (as the same may be supplemented,
modified, amended or restated from time to time in the manner provided therein,
the "Credit Agreement"), and in the other documents contemplated therein (the
"Loan Documents"), to be secured under certain circumstances as provided therein
by the pledge of certain collateral by the Company and to be jointly and
severally guaranteed by the Guarantor and certain other guarantors; and
WHEREAS, the Board of Directors of the Guarantor have determined after
analysis and discussion that it is in the best interests of the Guarantor to
induce the Banks to make and continue such financing to the Company pursuant to
the Credit Agreement and other Loan Documents by the Guarantor's guaranty of the
obligations of the Company contained in that certain joint and several Guaranty
proposed by the Guarantor and the other subsidiaries of the Company party
thereto in favor of each Lender Party (as defined therein) to be dated on or
about June 30, 1997 (as the same may be supplemented, modified, amended or
restated from time to time in the manner provided therein, the "Guaranty");
NOW, THEREFORE, BE IT RESOLVED that the Guarantor be, and hereby in
authorized and empowered to enter into and deliver the Guaranty and other Loan
Documents (as such terms are defined in the Guaranty) to which the Guarantor
will or may be a party, together with all changes therein and supplements,
modifications, amendments and restatements thereof approved by an executive
officer of the Guarantor as hereinafter provided, and to take any and all other
actions that may be necessary or desirable in order to perform or otherwise
satisfy, in whole or in part, any and all of the Company's obligations under the
Guaranty and other Loan Documents, as and when due or in advance thereof, to
otherwise carry out the intent or purposes thereof or of these resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary,
any Assistant Secretary or the Treasurer of the Guarantor be, and each of those
executive officers hereby is, authorized and directed in the name and on behalf
of the Guarantor to negotiate, execute and deliver to the Lender Parties the
Guaranty and other Loan Documents, incorporating such changes therein as the
executive officer signing the same may approve, and from time to time thereafter
to negotiate, execute and deliver such supplements, extensions, modifications,
amendments or restatements thereof as the executive officer signing the same may
approve as necessary or desirable to carry out the intent or purposes thereof or
of these Resolutions, with the execution of any of the foregoing being
conclusive evidence of the signing officer's approval thereof;
RESOLVED FURTHER, that those and other appropriate officers of the
Guarantor be, and each of them hereby is authorized and directed in the name and
on behalf of the Guarantor to do and
<PAGE> 213
perform any and all such other acts and things, to sign or make such other
agreements, certificates, instruments, notices, requests, statements, and other
documents and communications, and to take or omit such other actions as each of
them in his or her sole discretion may deem necessary or desirable in order to
perform or otherwise satisfy, in whole or in part, any and all of the terms and
provisions of the Guaranty and other Loan Documents to which the Guarantor is or
may become party, as and when due or in advance thereof, to consummate the
transactions contemplated therein or to carry out the intent or purposes thereof
or of these Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an executive officer of the Guarantor in the most recent
Certificate of the Guarantor's Assistant Secretary delivered to the Agent until
such time as the Agent shall have received express written notice to the
contrary from an executive officer of the Guarantor;
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, and the actions of officers of
the Guarantor so taken or omitted, hereby are all authorized, approved and
ratified in all respects, notwithstanding anything to the contrary contained in
the Bylaws of the Guarantor or any other resolution of the Board of Directors of
the Guarantor.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of G.G. & R., Inc., a Utah
corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors by Unanimous Consent Without a Meeting, effective June 30, 1997 and
entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
<PAGE> 214
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of G. G. & R., Inc., a Utah
corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Articles of Incorporation and Bylaws of the Company previously
provided the Bank as Agent under the Prior Credit Agreement have not been
amended or modified in any respect.
The Company is in good standing in its jurisdiction of incorporation and in
each jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
I, David H. Watts, certify that I am the duly elected President and Chief
Executive Officer of the Company and that, as of the date hereof, Michael Futch
is the duly elected Vice President and Secretary of the Company and that his
signature above is his genuine signature.
Dated: June 30, 1997 /s/ DAVID H. WATTS
-------------------------------
David H. Watts
President and Chief Executive Officer
<PAGE> 215
INTERMOUNTAIN SLURRY SEAL, INC.
JUNE 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company"), the owner of
Intermountain Slurry Seal, Inc. (the "Guarantor"), requires financing in the
ordinary course of business for working capital and other general corporate
purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement, as defined below), have
offered to make such financing available to the Company upon the terms and
provisions and subject to the conditions contained in that certain Credit
Agreement proposed between the Company, Bank of America National Trust and
Savings Association, as agent for the Banks, (the "Agent"), and the Banks party
thereto, to be dated on or about June 30, 1997 (as the same may be supplemented,
modified, amended or restated from time to time in the manner provided therein,
the "Credit Agreement"), and in the other documents contemplated therein (the
"Loan Documents"), to be secured under certain circumstances as provided therein
by the pledge of certain collateral by the Company and to be jointly and
severally guaranteed by the Guarantor and certain other guarantors; and
WHEREAS, the Board of Directors of the Guarantor have determined after
analysis and discussion that it is in the best interests of the Guarantor to
induce the Banks to make and continue such financing to the Company pursuant to
the Credit Agreement and other Loan Documents by the Guarantor's guaranty of the
obligations of the Company contained in that certain joint and several Guaranty
proposed by the Guarantor and the other subsidiaries of the Company party
thereto in favor of each Lender Party (as defined therein) to be dated on or
about June 30, 1997 (as the same may be supplemented, modified, amended or
restated from time to time in the manner provided therein, the "Guaranty");
NOW, THEREFORE, BE IT RESOLVED that the Guarantor be, and hereby is,
authorized and empowered to enter into and deliver the Guaranty and other Loan
Documents (as such terms are defined in the Guaranty) to which the Guarantor
will or may be a party, together with all changes therein and supplements,
modifications, amendments and restatements thereof approved by an executive
officer or an authorized representative of the Guarantor as hereinafter
provided, and to take any and all other actions that may be necessary or
desirable in order to perform or otherwise satisfy, in whole or in part, any and
all of the Company's obligations under the Guaranty and other Loan Documents, as
and when due or in advance thereof, to otherwise carry out the intent or
purposes thereof or of these resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer be, and each of those executive officers
and authorized representatives hereby is, authorized and directed in the name
and on behalf of the Guarantor to negotiate, execute and deliver to the Lender
Parties the Guaranty and other Loan Documents, incorporating such changes
therein as the executive officer or authorized representative signing the same
may approve, and from time to time thereafter to negotiate, execute and deliver
such supplements, extensions, modifications, amendments or restatements thereof
as the executive officer or authorized representative signing the same may
approve as necessary or desirable to carry out the intent or purposes thereof or
of these Resolutions, with the execution of any of the foregoing being
conclusive evidence of the signing officer's or authorized representative's
approval thereof;
<PAGE> 216
RESOLVED FURTHER, that those and other appropriate officers and authorized
representatives of the Guarantor, be, and each of them hereby is, authorized and
directed in the name and on behalf of the Guarantor to do and perform any and
all such other acts and things, to sign or make such other agreements,
certificates, instruments, notices, requests, statements,, and other documents
and communications, and to take or omit such other actions as each of them in
his or her sole discretion may deem necessary or desirable in order to perform
or otherwise satisfy, in whole or in part, any and all of me turns and
provisions of the Guaranty and other Loan Documents to which the Guarantor is or
may become party, as and when due or in advance thereof, to consummate the
transactions contemplated therein or to carry out the intent or purposes thereof
or of these Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an executive officer of the Guarantor in the most recent
Certificate of the Guarantor's Assistant Secretary delivered to the Agent until
such time as the Agent shall have received express written notice to the
contrary from an executive officer of the Guarantor;
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, and the actions of officers of
the Guarantor so taken or omitted, hereby are all authorized, approved and
ratified in all respects, notwithstanding anything to the contrary contained in
the Bylaws of the Guarantor or any other resolution of the Board of Directors of
the Guarantor.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Intermountain Slurry
Seal, Inc., a Utah corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors by Unanimous Consent Without a Meeting, effective June 30, 1997 and
entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL L. THOMAS
-------------------------------
Michael L. Thomas
Secretary
<PAGE> 217
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Intermountain Slurry
Seal, Inc., a Utah corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Articles of Incorporation and Bylaws of the Company previously
provided the Bank as Agent under the Prior Credit Agreement have not been
amended or modified in any respect.
The Company is in good standing in its jurisdiction of incorporation and
in each jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL L. THOMAS
-------------------------------
Michael L. Thomas
Secretary
I, Kathleen Kenan, certify that I am the duly elected Assistant Secretary
of the Company and that, as of the date hereof, Michael L. Thomas is the duly
elected Vice President and Secretary of the Company and that his signature above
is his genuine signature.
Dated: June 30, 1997 /s/ KATHLEEN KENAN
-------------------------------
Kathleen Kenan
Assistant Secretary
<PAGE> 218
BEAR RIVER CONTRACTORS
JUNE 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company"), the owner of
Bear River Contractors (the "Guarantor") requires financing in the ordinary
course of business for working capital and other general corporate purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement, as defined below), have
offered to make such financing available to the Company upon the terms and
provisions and subject to the conditions contained in that certain Credit
Agreement proposed between the Company, Bank of America National Trust and
Savings Association, as agent for the Banks (the "Agent"), and the Banks party
thereto, to be dated on or about June 30, 1997 (as the same may be supplemented,
modified, amended or restated from time to time in the manner provided therein,
the "Credit Agreement"), and in the other documents contemplated therein (the
"Loan Documents"), to be secured under certain circumstances as provided therein
by the pledge of certain collateral by the Company and to be jointly and
severally guaranteed by the Guarantor and certain other guarantors; and
WHEREAS, the Board of Directors of the Guarantor has determined after
analysis and discussion that it is in the best interests of the Guarantor to
induce the Banks to make and continue such financing to the Company pursuant to
the Credit Agreement and other Loan Documents by the Guarantor's guaranty of the
obligations of the Company contained in that certain joint and several Guaranty
proposed by the Guarantor and the other subsidiaries of the Company party
thereto in favor of each Lender Party (as defined therein) to be dated on or
about June 30, 1997 (as the same may to supplemented, modified, amended or
restated from time to time in the manner provided therein, the "Guaranty");
NOW, THEREFORE, BE IT RESOLVED that the Guarantor be, and hereby is,
authorized and empowered to enter into and deliver the Guaranty and other Loan
Documents (as such terms are defined in the Guaranty) to which the Guarantor
will or may be a party, together with all changes therein and supplements,
modifications, amendments and restatements thereof approved by an executive
officer or an authorized representative of the Guarantor as hereinafter
provided, and to take any and all other actions that may be necessary or
desirable in order to perform or otherwise satisfy, in whole or in part, any and
all of the Company's obligations under the Guaranty and other Loan Documents, as
and when due or in advance thereof, to otherwise carry out the intent or
purposes thereof or of these resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer and each of those executive officers and
authorized representatives hereby is, authorized and directed in the name and on
behalf of the Guarantor to negotiate, execute and deliver to the Lender Parties
the Guaranty and other Loan Documents, incorporating such changes therein as the
executive officer or authorized representative signing the same may approve, and
from time to time thereafter to negotiate, execute and deliver such supplements,
extensions, modifications, amendments or restatements thereof as the executive
officer or authorized representative signing the same may approve as necessary
or desirable to carry out the intent or purposes thereof or of these
Resolutions, with the execution of any of the foregoing being conclusive
evidence of the signing officer's or authorized representative's approval
thereof;
<PAGE> 219
RESOLVED FURTHER, that those and other appropriate officers or authorized
representatives of the Guarantor be, and each of them hereby is, authorized and
directed in the name and on behalf of the Guarantor to do and perform any and
all such other acts and things, to sign or make such other agreements,
certificates, instruments notices, requests, statements, and other documents and
communications, and to take or omit such other actions as each. of them in his
or her sole discretion may deem necessary or desirable in order to perform or
otherwise satisfy, in whole or in part, any and all of the terms and provisions
of the Guaranty and other Loan Documents to which the Guarantor is or may become
party, as and when due or in advance thereof, to consummate the transactions
contemplated therein or to carry out the intent or purposes thereof or of these
Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an executive officer of the Guarantor in the most recent
Certificate of the Guarantor's Assistant Secretary delivered to the Agent until
such time as the Agent shall have received express written notice to the
contrary from an executive officer of the Guarantor;
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, and the actions of officers of
the Guarantor so taken or omitted, hereby are all authorized, approved and
ratified in all respects, notwithstanding anything to the contrary contained in
the Bylaws of the Guarantor or any other resolution of the Board of Directors of
the Guarantor.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Bear River Contractors, a
Wyoming corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors by Unanimous Consent Without a Meeting, effective June 30, 1997 and
entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL L. THOMAS
-------------------------------
Michael L. Thomas
Secretary
<PAGE> 220
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Bear River Contractors, a
Wyoming corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Articles of Incorporation and Bylaws of the Company previously
provided the Bank as Agent under the Prior Credit Agreement have not been
amended or modified in any respect.
The Company is in good standing in its jurisdiction of incorporation and
in each jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL L. THOMAS
-------------------------------
Michael L. Thomas
Secretary
I Kathleen Kenan, certify that I am the duly elected Assistant Secretary
of the Company and that, as of the date hereof, Michael L. Thomas is the duly
elected Vice President and Secretary of the Company and that his signature above
is his genuine signature.
Dated: June 30, 1997 /s/ KATHLEEN KENAN
-------------------------------
Kathleen Kenan
Assistant Secretary
<PAGE> 221
POZZOLAN PRODUCTS COMPANY (P.P.C.)
JUNE 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company"), the owner of
Pozzolan Products Company (P.P.C.) (the "Guarantor"), requires financing in the
ordinary course of business for working capital and other general corporate
purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned td them in the Credit Agreement, as defined below), have
offered to make such financing available to the Company upon the terms and
provisions and subject to the conditions contained in that certain in that
certain Credit Agreement proposed between the Company, Bank of America National
Trust and Savings Association, as agent for the Banks (the "Agent"), and the
Banks party thereto, to be dated on or about June 30, 1997, (as the same may be
supplemented, modified, amended or restated from time to time in the manner
provided therein, the "Credit Agreement"), and in the other documents
contemplated therein (the "Loan Documents"), to be secured under certain
circumstances as provided therein by the pledge of certain collateral by the
Company and to be jointly and severally guaranteed by the Guarantor and certain
other guarantors; and
WHEREAS, the Board of Directors of the Guarantor have determined after
analysis and discussion that it is in the best interests of the Guarantor to
induce the Banks to make and continue such financing to the Company pursuant to
the Credit Agreement and other Loan Documents by the Guarantor's guaranty of the
obligations of the Company contained in that certain joint and several Guaranty
proposed by the Guarantor and the other subsidiaries of the Company party
thereto in favor of each Lender Party (as defined therein) to be dated on or
about June 30, 1997 (as the same may to supplemented, modified, amended or
restated from time to time in the manner provided therein, the "Guaranty" );
NOW, THEREFORE, BE IT RESOLVED that the Guarantor be, and hereby is,
authorized and empowered to enter into and deliver the Guaranty and other Loan
Documents (as such terms are defined in the Guaranty) to which the Guarantor
will or may be a party, together with all changes therein and supplements,
modifications, amendments and restatements thereof approved by an executive
officer or an authorized representative of the Guarantor as hereinafter
provided, and to take any and all other actions that may be necessary or
desirable in order to perform or otherwise satisfy, in whole or in part, any and
all of the Company's obligations under the Guaranty and other Loan Documents, as
and when due or in advance thereof, to otherwise carry out the intent or
purposes thereof or of these resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer be, and each of those executive officers
and authorized representatives hereby is, authorized and directed in the name
and on behalf of the Guarantor to negotiate, execute and deliver to the Lender
Parties the Guaranty and other Loan Documents, incorporating such changes
therein as the executive officer or authorized representative signing the same
may approve, and from time to time thereafter to negotiate, execute and deliver
such supplements, extensions, modifications, amendments or restatements thereof
as the executive officer or authorized representative signing the same may
approve as necessary or desirable to carry out the intent or purposes thereof or
of these Resolutions, with the execution of any of the foregoing being
conclusive evidence of the signing officer's or authorized representative's
approval thereof,
<PAGE> 222
RESOLVED FURTHER, that those and other appropriate officers and authorized
representatives of the Guarantor be, and each of them hereby is, authorized and
directed in the name and on behalf of the Guarantor to do and perform any and
all such other acts and things, to sign or make such other agreements,
certificates, instruments, notices, requests, statements, and other documents
and communications, and to take or omit such other actions as each of them in
his or her sole discretion may deem necessary or desirable in order to perform
or otherwise satisfy, in whole or in part, any and all of the terms and
provisions of the Guaranty and other Loan Documents to which the Guarantor is or
may become party, as and when due or in advance thereof, to consummate the
transactions contemplated therein or to carry out the intent or purposes thereof
these Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an executive officer of the Guarantor in the most recent
Certificate of the Guarantor's Assistant Secretary delivered to the Agent until
such time as the Agent shall have received express written notice to the
contrary form an executive officer of the Guarantor;
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, and the actions of officers of
the Guarantor so taken or omitted, hereby are all authorized, approved and
ratified in all respects, notwithstanding anything to the contrary contained in
the Bylaws of the Guarantor or any other resolution of the Board of Directors of
the Guarantor.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Pozzolan Products
Company, a Utah corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors by Unanimous Consent Without a Meeting, effective June 30, 1997 and
entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL L. THOMAS
-------------------------------
Michael L. Thomas
Secretary
<PAGE> 223
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Pozzolan Products Company
(PPC), a Utah corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Articles of Incorporation and Bylaws of the Company previously
provided the Bank as Agent under the Prior Credit Agreement have not been
amended or modified in any respect
The Company is in good standing in its jurisdiction of incorporation and
in each jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL L. THOMAS
-------------------------------
Michael L. Thomas
Secretary
I, Kathleen Kenan, certify that I am the duly elected Assistant Secretary
of the Company and that, as of the date hereof, Michael L. Thomas is the duly
elected Vice President and Secretary of the Company and that his signature above
is his genuine signature.
Dated: June 30, 1997 /s/ KATHLEEN KENAN
-------------------------------
Kathleen Kenan
Assistant Secretary
<PAGE> 224
GILC INCORPORATED
JUNE 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company"), the owner of
GILC Incorporated (the "Guarantor"), requires financing in the ordinary course
of business for working capital and other general corporate, purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement as defined below), have
offered to make such financing available to the Company upon the terms and
provisions and subject to the conditions contained in that certain Credit
Agreement proposed between the Company, Bank of America National Trust and
Savings Association, as agent for the Banks (the "Agent"), and the Banks party
thereto, to be dated on or about June 30, 1997 (as the same may be supplemented,
modified, amended or restated from time to time in the manner provided therein,
the "Credit Agreement"), and in the other documents contemplated therein (the
"Loan Documents"), to be secured under certain circumstances as provided therein
by the pledge of certain collateral by the Company and to be jointly and
severally guaranteed by the Guarantor and certain other guarantors; and
WHEREAS, the Board of Directors of the Guarantor has determined after
analysis and discussion that it is in the best interests of the Guarantor to
induce the Banks to make and continue such financing to the Company pursuant to
the Credit Agreement and other Loan Documents by the Guarantor's guaranty of the
obligations of the Company contained in that certain joint and several Guaranty
proposed by the Guarantor and the other subsidiaries of the Company party
thereto in favor of each Lender Party (as defined therein) to be dated on or
about June 30, 1997 (as the same may be supplemented, modified, amended or
restated from time to time in the manner provided therein, the "Guaranty");
NOW, THEREFORE, BE IT RESOLVED that the Guarantor be, and hereby is,
authorized and empowered to enter into and deliver the Guaranty and other Loan
Documents (as such terms are defined in the Guaranty) to which the Guarantor
will or may be a party, together with all changes therein and supplements,
modifications, amendments and restatements thereof approved by an executive
officer of the Guarantor as hereinafter provided, and to take any and all other
actions that may be necessary or desirable in order to perform or otherwise
satisfy, in whole or in part, any and all of the Company's obligations under the
Guaranty and other Loan Documents, as and when due or in advance thereof, to
otherwise carry out the intent or purposes thereof or of these resolutions;
RESOLVED FURTHER, that the President, any Vice President the Secretary,
any Assistant Secretary or the Treasurer of the Guarantor be, and each of those
executive officers hereby is, authorized and directed in the name and on behalf
of the Guarantor to negotiate, execute and deliver to the Lender Parties the
Guaranty and other Loan Documents, incorporating such changes therein as the
executive officer signing the same may approve, and from time to time thereafter
to negotiate, execute and deliver such supplements, extensions, modifications,
amendments or restatements thereof as the executive officer signing the same may
approve as necessary or desirable to carry out the intent or purposes thereof or
of these Resolutions, with the execution of any of the foregoing being
conclusive evidence of the signing officer's approval thereof,
RESOLVED FURTHER, that those and other appropriate officers of the
Guarantor be, and
<PAGE> 225
each of them hereby is, authorized and directed in the name and on behalf of the
Guarantor to do and perform any and all such other acts and things, to sign or
make such other agreements, certificates, instruments, notices, requests,
statements, and other documents and communications, and to take or omit such
other actions as each of them in his or her sole discretion may deem necessary
or desirable in order to perform or otherwise satisfy, in whole or in part, any
and all of the terms and provisions of the Guaranty and other Loan Documents to
which the Guarantor is or may become party, as and when due or in advance
thereof, to consummate the transactions contemplated therein or to carry out the
intent or purposes thereof or of these Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an executive officer of the Guarantor in the most recent
Certificate of the Guarantor's Assistant Secretary delivered to the Agent until
such time as the Agent shall have received express written notice to the
contrary from an executive officer of the Guarantor;
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, and the actions of offices of
the Guarantor so taken or omitted, hereby are all authorized, approved and
ratified in all respects, notwithstanding anything to the contrary contained in
the Bylaws of the Guarantor or any other resolution of the Board of Directors of
the Guarantor.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of GILC Incorporated, a
California corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors by Unanimous Consent Without a Meeting, effective June 30, 1997 and
entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
<PAGE> 226
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of GILC Incorporated, a
California corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Articles of Incorporation and Bylaws of the Company previously
provided the Bank as Agent under the Prior Credit Agreement have not been
amended or modified in any respect.
The Company is in good standing in its jurisdiction of incorporation and
in each jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
I, David R. Grazian, certify that I am the duly elected Vice President and
Assistant Secretary of the Company and that, as of the date hereof, Michael
Futch is the duly elected Vice President and Secretary of the Company and that
his signature above is his genuine signature.
Dated: June 30, 1997 /s/ DAVID R. GRAZIAN
-------------------------------
David R. Grazian
Vice President and Assistant Secretary
<PAGE> 227
GILC INCORPORATED
JULY 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company") is the sole
owner of GILC Incorporated (the "General Partner"), General Partner is the sole
general partner of GILC, L.P. (the "Guarantor"), and the Company requires
financing in the ordinary course of business for working capital and other
general corporate purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement, as defined below), have made
such financing available to the Company upon the terms and provisions and
subject to the conditions contained in that certain Credit Agreement between the
Company, Bank of America National Trust and Savings Association, as agent for
the Banks (the "Agent"), and the Banks party thereto, dated as of June 30, 1997
(as the same may be supplemented, modified, amended or restated from time to
time in the manner provided therein, the "Credit Agreement"), and in the other
documents contemplated therein (the "Loan Documents"), to be secured under
certain circumstances as provided therein by the pledge of certain collateral by
the Company and to be jointly and severally guaranteed by the Guarantor and
certain other guarantors; and
WHEREAS, the Board of Directors of the General Partner has determined
after analysis and discussion that it is in the best interests of the Guarantor
to require the Banks to continue such financing to the Company pursuant to the
Credit Agreement and other Loan Documents by the Guarantor's guaranty of the
obligations of the Company contained in that certain joint and several guaranty
in favor of each Lender Party (as defined therein) dated as of July 30, 1997 (as
the same may be supplemented, modified, amended or restated from time to lime in
the manner provided therein, the "Guaranty");
NOW, THEREFORE, BE IT RESOLVED that any officer of the General Partner be,
and hereby is, authorized and empowered to enter into and deliver the Guaranty
and other Loan Documents (as such terms are defined in the Guaranty) to which
the Guarantor will or may be a party, together with all changes therein and
supplements, modifications, amendments and restatements thereof approved by any
officer of the Guarantor as hereinafter provided, and to take any and all other
actions that may be necessary or desirable in order to perform or otherwise
satisfy, in whole or in part, any and all of the Company's obligations under the
Guaranty and other Loan Documents, as and when due or in advance thereof, to
otherwise carry out the intent or purposes thereof or of these resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary,
any Assistant Secretary or the Treasurer of the General Partner be, and each of
those executive officers hereby is, authorized and directed in the name and on
behalf of the General Partner as the sole general partner of the Guarantor to
negotiate, execute and deliver to the Lender Parties the Guaranty and other Loan
Documents, incorporating such changes therein as the executive officer signing
the same may approve, and from time to time thereafter to negotiate, execute and
deliver such supplements, extensions, modifications, amendments or restatements
thereof as the executive officer signing the same may approve as necessary or
desirable to carry out the intent or purposes thereof or of these Resolutions,
with the execution of any of the foregoing being conclusive evidence of the
signing officer's approval thereof;
<PAGE> 228
RESOLVED FURTHER, that those and other appropriate officers of the General
Partner be, and each of them hereby is, authorized and directed in the name and
on behalf of the General Partner as the sole general partner of the Guarantor to
do and perform any and all such other acts and things, to sign or make such
other agreements, certificates, instruments, notices, requests, statements, and
other documents and communications, and to take or omit such other actions as
each of them in his or her sole discretion may deem necessary or desirable in
order to perform or otherwise satisfy, in whole or in part, any and all of the
terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is or may become party, as and when due or in advance thereof, to
consummate the transactions contemplated therein or to carry out the intent or
purposes thereof or of these Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an officer of the General Partner in the most recent Incumbency
Certificate delivered to the Agent until such time as the Agent shall have
received, express written notice to the contrary from any officer of the General
Partner; and
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, and the actions of the sole
general partner of the Guarantor so taken or omitted, hereby are all authorized,
approved and ratified in all respects, notwithstanding anything to the contrary
contained in the Agreement of Limited Partnership of the Guarantor or any other
resolution of the Board of Directors of the General Partner.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of GILC Incorporated, a
California corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors by Unanimous Consent Without a Meeting, effective June 30, 1997 and
entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
<PAGE> 229
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of GILC Incorporated, a
California corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Agreement of Limited Partnership of GILC, L.P. previously provided the
Bank as Agent under the Prior Credit Agreement has not been amended or modified
in any respect.
The Company and GILC, L.P. are in good standing in their jurisdictions of
incorporation and formation and in each jurisdiction where the failure to so
qualify would have a Material Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
I, David R. Grazian, certify that I am the duly elected Vice President and
Assistant Secretary of the Company and that, as of the date hereof, Michael
Futch is the duly elected Vice President and Secretary of the Company and that
his signature above is his genuine signature.
Dated: June 30, 1997 /s/ DAVID R. GRAZIAN
-------------------------------
David R. Grazian
Vice President and Assistant Secretary
<PAGE> 230
GRANITE SR91 CORPORATION
JULY 30, 1997
WHEREAS, Granite Construction Incorporated (the "Company") is the sole
owner of Granite SR91 Corporation (the "General Partner"), General Partner is
the sole general partner of Granite SR91 L.P. (the "Guarantor"), and the Company
requires financing in the ordinary course of business for working capital and
other general corporate purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement, as defined below), have made
such financing available to the Company upon the terms and provisions and
subject to the conditions contained in that certain Credit Agreement between the
Company, Bank of America National Trust and Savings for the Banks (the "Agent"),
and the Banks party thereto, dated as of June 30, 1997 (as the same may be
supplemented, modified, amended or restated from time to time in the manner
provided therein, the "Credit Agreement"), and in the other documents
contemplated therein (the "Loan Documents"), to be secured under certain
circumstances as provided therein by the pledge of certain collateral by the
Company and to be jointly and severally guaranteed by the Guarantor and certain
other guarantors;
WHEREAS, the Board of Directors of the General Partner has determined
after analysis and discussion that it is in the best interests of the Guarantor
to require the Banks to continue such financing to the Company pursuant to the
Credit Agreement and other Loan Documents by the Guarantor's guaranty of the
obligations of the Company contained in that certain joint and several guaranty
in favor of each Lender Party (as defined therein) dated as of July 30, 1997 (as
the same may be supplemented, modified, amended or restated from time to time in
the manner provided therein, the "Guaranty");
NOW, THEREFORE, BE IT RESOLVED that any officer of the General Partner be,
and hereby is, authorized and empowered to enter into and deliver the Guaranty
and other Loan Documents (as such terms are defined in the Guaranty) to which
the Guarantor will or may be a party, together with all changes therein and
supplements, modifications, amendments and restatements thereof approved by any
officer of the Guarantor as hereinafter provided, and to take any and all other
actions that may be necessary or desirable in order to perform or otherwise
satisfy, in whole or in part, any and all of the Company's obligations under the
Guaranty and other Loan Documents, as and when due or in advance thereof, to
otherwise carry out the intent or purposes thereof or of these resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary,
any Assistant Secretary or the Treasurer of the General Partner be, and each of
those executive officers hereby is, authorized and directed in the name and on
behalf of the General Partner as the sole general partner of the Guarantor to
negotiate, execute and deliver to the Lender Parties the Guaranty and other Loan
Documents, incorporating such changes therein as the executive officer signing
the same may approve, and from time to time thereafter to negotiate, execute and
deliver such supplements, extensions, modifications, amendments or restatements
thereof as the executive officer signing the same may approve as necessary or
desirable to carry out the intent or purposes thereof or of these Resolutions,
with the execution of any of the foregoing being conclusive evidence of the
signing officer's approval thereof;
<PAGE> 231
RESOLVED FURTHER, that those and other appropriate officers of the General
Partner be, and each of them hereby is, authorized and directed in the name and
on behalf of the General Partner as the sole general partner of the Guarantor to
do and perform any and all such other acts and things, to sign or make such
other agreements, certificates, instruments, notices, requests, statements, and
other documents and communications, and to take or omit such other actions as
each of them in his or her sole discretion may deem necessary or desirable in
order to perform or otherwise satisfy, in whole or in part, any and all of the
terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is or may become party, as and when due or in advance thereof, to
consummate the transactions contemplated therein or to carry out the intent or
purposes thereof or of these Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an officer of the General Partner in the most recent Incumbency
Certificate delivered to the Agent until such time as the Agent shall have
received. express written notice to the contrary from any officer of the General
Partner;
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Guarantor is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, and the actions of the sole
general partner of the Guarantor so taken or omitted, hereby are all authorized,
approved and ratified in all respects, notwithstanding anything to the contrary
contained in the Agreement of Limited Partnership of the Guarantor or any other
resolution of the Board of Directors of the General Partner.
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Granite SR91 Corporation,
a California corporation (the "Company").
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors by Unanimous Consent Without a Meeting, effective June 30, 1997 and
entered into the Minute Book of the Company.
The action and resolutions are in conformity with the Articles of
Incorporation and Bylaws of the Company, have not been modified or repealed and
are now in full force and effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
<PAGE> 232
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of Granite SR91 Corporation,
a California corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Limited Partnership Agreement of Granite SR91, L.P. previously
provided the Bank as Agent under the Prior Credit Agreement has not been amended
or modified in any respect.
The Company and Granite SR91, L.P., are in good standing in their
jurisdictions of incorporation and formation and in each jurisdiction where the
failure to so qualify would have a Material Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
I, David H. Watts, certify that I am the duly elected President and Chief
Executive Officer of the Company and that, as of the date hereof, Michael Futch
is the duly elected Vice President and Secretary of the Company and that his
signature above is his genuine signature.
Dated: June 30, 1997 /s/ DAVID H. WATTS
-------------------------------
David H. Watts
President and Chief Executive Officer
<PAGE> 233
GTC, INC.
JUNE 30, 1997
WHEREAS, Granite Construction Incorporated, (the "Company") is the sole
owner of GTC, Inc. and the Company requires financing in the ordinary course of
business for working capital and other general corporate purposes;
WHEREAS, certain Banks (capitalized terms not defined herein having the
meanings assigned to them in the Credit Agreement as defined below), have made
such financing available to the Company upon the terms and provisions and
subject to the conditions contained in that certain Credit Agreement between the
Company, Bank of America National Trust and Savings Association, as agent for
the Banks (the "Agent"), and the Banks party thereto, dated as of June 30, 1997
(as the same may be supplemented, modified, amended or restated from time to
time in the manner provided therein, the "Credit Agreement"), and in the other
documents contemplated therein (the "Loan Documents"), to be secured under
certain circumstances as provided therein by the pledge of certain collateral by
the Company and to be jointly and severally guaranteed by the Guarantor and
certain other guarantors;
WHEREAS, the Board of Directors of the Corporation has determined after
analysis and discussion that it is in the best interests of the Corporation to
require the Banks to continue such financing to the Company pursuant to the
Credit Agreement and other Loan Documents by the Corporation's guaranty of the
obligations of the Company contained in that certain joint and several guaranty
in favor of each Lender Party (as defined therein) dated as of June 30, 1997 (as
the same may be supplemented, modified, amended or restated from time to time in
the manner provided therein, the "Guaranty");
NOW, THEREFORE, BE IT RESOLVED that any officer of the Corporation be, and
hereby is, authorized and empowered to enter into and deliver the Guaranty and
other Loan Documents (as such terms are defined in the Guaranty) to which the
Corporation will or may be a party, together with all changes therein and
supplements, modifications, amendments and restatements thereof approved by any
officer of the Corporation as hereinafter provided, and to take any and all
other actions that may be necessary or desirable in order to perform or
otherwise satisfy, in whole or in part, any and all of the Company's obligations
under the Guaranty and other Loan Documents, as and when due or in advance
thereof, to otherwise carry out the intent or purposes thereof or of these
resolutions;
RESOLVED FURTHER, that the President, any Vice President, the Secretary,
any Assistant Secretary or the Treasurer of the Corporation be, and each of
those executive officers hereby is, authorized and directed in the name and on
behalf of the Corporation to negotiate, execute and deliver to the Lender
Parties the Guaranty and other Loan Documents, incorporating such changes
therein as the executive officer signing the same may approve, and from time to
time thereafter to negotiate, execute and deliver such supplements, extensions,
modifications, amendments or restatements thereof as the executive officer
signing the same may approve as necessary or desirable to carry out the intent
or purposes thereof or of these Resolutions, with the execution of any of the
foregoing being conclusive evidence of the signing officer's approval thereof;
RESOLVED FURTHER, that those and other appropriate officers of the
Corporation, and
<PAGE> 234
each of them hereby is, authorized and directed in the name and on behalf of the
Corporation to do and perform any and all such other acts and things, to sign or
make such other agreements, certificates, instruments, notices, requests,
statements, and other documents and communications, and to take or omit such
other actions as each of them in his or her sole discretion may deem necessary
or desirable in order to perform or otherwise satisfy, in whole or in part, any
and all of the terms and provisions of the Guaranty and other Loan Documents to
which the Corporation is or may become party, as and when due or in advance
thereof, to consummate the transactions contemplated therein or to carry out the
intent or purposes thereof or of these Resolutions;
RESOLVED FURTHER, that the Lender Parties shall be entitled to rely upon
any action taken or omitted or any agreement, certificate, instrument, notice,
request, statement or other document or communication signed or made by any
person listed as an officer of the Corporation in the most recent Incumbency
Certificate delivered to the Agent until such time as the Agent shall have
received express written notice to the contrary from any officer of the
Corporation;
RESOLVED FURTHER, that the representations, warranties, covenants and
other terms and provisions of the Guaranty and other Loan Documents to which the
Corporation is a party as so executed and delivered, and as so supplemented,
modified, amended and restated from time to time, hereby are all authorized,
approved and ratified in all respects, notwithstanding anything to the contrary
contained in any other resolution of the Board of Directors of the Corporation.
CERTIFICATE OF THE SECRETARY
I certify that:
I am the duly elected and qualified Secretary of GTC, Inc., a Texas
corporation.
The foregoing is a true copy of resolutions adopted by action of the Board
of Directors by Unanimous Written Consent effective December 30, 1997 and
entered in the Minute Book of the Corporation.
The action is in conformity with the Articles of Incorporation and Bylaws
of the Corporation, has not been modified or repealed, and is now in full force
and effect.
Dated: June 30, 1997 /s/ Michael Futch
-------------------------------
Michael Futch
Secretary
<PAGE> 235
CERTIFICATE OF SECRETARY
I certify that:
I am the duly elected and qualified Secretary of GTC, INC., a Texas
corporation (the "Company").
The officers set forth in the incumbency certificate previously provided
to the Agent and the Banks are unchanged.
The Articles of Incorporation and Bylaws of the Company previously
provided the Bank as Agent under the Prior Credit Agreement have not been
amended or modified in any respect.
The Company is in good standing in its jurisdiction of incorporation and
in each jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
Dated: June 30, 1997 /s/ MICHAEL FUTCH
-------------------------------
Michael Futch
Secretary
I, Roxane C. Allbritton, certify that I am the duly elected Vice President
and Assistant Secretary of the Company and that, as of the date hereof, Michael
Futch is the duly elected Vice President and Secretary of the Company and that
his signature above is his genuine signature.
Dated: June 30, 1997 /s/ ROXANE C. ALLBRITTON
-------------------------------
Roxane C. Allbritton
Vice President and Assistant Secretary
<PAGE> 236
Granite Construction Incorporated
Officer's Certificate
The undersigned, William E. Barton, hereby certifies that he is the Chief
Financial Officer of Granite Construction Incorporated, a Delaware corporation
("the Company"), and that, as of the date hereof:
1. This Certificate is being delivered pursuant to subsection 5.01 (d)
of the Credit Agreement dated as of June 30, 1997 (the "Credit
Agreement"), entered into by and among the Company, Bank of America
National Trust and Savings Association, as agent for itself and the
Banks (the "Agent"), and the several financial institutions from
time to time party thereto (collectively, the "Banks"). The terms
used in this Certificate and not otherwise defined herein have the
respective meanings ascribed to them in the Credit Agreement;
2. The representations and warranties of the Company contained in
Article VI of the Credit Agreement are true and correct in all
material respects on and as of the date hereof with the same effect
as though made on and as of the date hereof, except to the extent
such representations and warranties expressly refer to an earlier
date, in which case they are true and correct as of such earlier
date;
3. No Default or Event of Default exists or would result from the
Borrowing made on the Closing Date; and
4. There has occurred since December 31, 1996 no Material Adverse
Effect.
IN WITNESS WHEREOF, the undersigned has executed this Certificate in the
name and on behalf of the Company as of June 30, 1997.
GRANITE CONSTRUCTION INCORPORATED
/s/ WILLIAM E. BARTON
-------------------------------
William E. Barton
Chief Financial Officer
<PAGE> 237
GRANITE
CONSTRUCTION
COMPANY SINCE 1922
June 30, 1997
1070405-901700
Bank of America National Trust and Savings Association,
for itself and as Agent
for the Banks from time to time
party to the Credit Agreement referred to below
555 California Street, 41st Floor
Credit Products 3838
San Francisco, CA 94104
Ladies and Gentlemen:
I have acted as counsel for Granite Construction Incorporated, a Delaware
corporation ("Borrower"), in connection with that certain Credit Agreement dated
as of June 30, 1997 including Exhibits and Schedules (the "Credit Agreement"),
by and among Borrower, the several financial institutions parties to the Credit
Agreement (the "Banks") and Bank of America National Trust and Savings
Association, as agent for the Banks (the "Agent") and as issuing bank. I have
also represented each of Granite Construction Company, a California corporation
("GCC"), Granite SR91 Corporation, a California corporation ("SR91 "), Wilcott
Corporation, a Colorado corporation ("Wilcott"), Desert Aggregates, Inc., a
California corporation ("Desert"), G.G. & R., Inc., a Utah corporation ("G.G. &
R."), Intermountain Slurry Seal, Inc., a Utah corporation ("Intermountain"),
Bear River Contractors, a Wyoming corporation ("Bear River"), Pozzolan Products
Company ("P.P.C."), a Utah corporation ("Pozzolan"), GTC, Inc., a Texas
corporation ("GTC"), GILC, L.P., a California limited partnership ("GILC,
L.P."), SR91, L.P., a California limited partnership ("SR91, L.P.") and GILC
Incorporated, a California corporation ("GILC", and together with GCC, SR91,
Desert, Wilcott, G.G. & R., Intermountain, Bear River, GILC, L.P., SR91, L.P.,
Pozzolan and GTC, the "Subsidiaries"), each of which is a direct or indirect
wholly owned subsidiary of Borrower, in connection with the Guaranty given by
each of the Subsidiaries in favor of the Agent for the benefit of Banks
guaranteeing the obligations of Borrower under the Credit
Box 50085
Watsonville, CA 95077-5085
Phone 408/724-1011
FAX 408/722-9657
<PAGE> 238
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 2
Agreement. I am rendering this opinion pursuant to subsection 5.01 (c) of the
Credit Agreement. Except as otherwise defined herein, capitalized terms used but
not defined herein shall have the meanings given to them in the Credit
Agreement.
As used herein, the term "Loan Documents" shall mean the Credit Agreement
and the Guaranty.
I am admitted to practice law only in the State of California, and I
express no opinion concerning any law other than the law of the State of
California, the Delaware General Corporation law, the law of the United States
of America, and, to the extent necessary to render my opinion in paragraphs
l(b), l(d), l(e), l(f), the second sentence of paragraph 3 and paragraphs 5(d),
6 and 8, the Colorado Corporations Code, the Utah Revised Business Corporations
Act, the Wyoming Business Corporations Act and the Texas Business Corporation
Act. In so far as the opinions contained herein purport to relate to the
Delaware General Corporation Law, the Colorado Corporations Code, the Utah
Revised Business Corporations Act, the Wyoming Business Corporations Act and the
Texas Business Corporation Act (collectively, the "Laws"), I have relied on such
Laws as reported in standard compilations.
In rendering this Opinion, I have assumed the genuineness and authenticity
of all signatures (other than that of Borrower and each Subsidiary) on original
documents; the authenticity of all documents submitted to me as originals; the
conformity of originals to all documents submitted to me as copies; the
accuracy, completeness and authenticity of certificates of public officials; the
due authorization, execution and delivery of all documents (except the due
authorization, execution and delivery by Borrower of the Credit Agreement and by
each Subsidiary of the Guaranty) where authorization, execution and delivery are
prerequisites to the effectiveness of such documents; the power and authority of
the Banks to enter into and perform their obligations under the Loan Documents;
that the Banks are duly qualified in the State of California to do business of
the type contemplated by the Loan Documents; that each of the Banks qualifies
for the exemption from the otherwise applicable interest rate limitations of
California law for loans or forbearances by, as the case may be, (i) national
banks provided by Article XV, Section 1 of the California Constitution or (ii)
certain "foreign (other nation) banks" provided by California Financial Code
Section 1716 or (iii) state banks provided by Article XV, Section 1 of the
California Constitution; that all loans under the Credit Agreement will be made
by the Banks for their own accounts or for the account of another person or
entity that qualifies for an exemption from the interest rate limitations of
California law, and there is no present agreement or plan, express or implied,
on the part of the Banks to sell participations or any other interest in the
loans to be made under the Credit Agreement to any person or entity other than a
person or entity that also qualifies for an exemption from the interest rate
limitations of California law; and with
<PAGE> 239
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 3
respect to matters of fact (as distinguished from matters of law), I also have
relied upon and assumed that the representations of the Borrower and each
Subsidiary and the other parties set forth in the Loan Documents and any other
certificates, instruments or agreements executed in connection therewith or
delivered to me are true, correct, complete and not misleading, although to my
knowledge the representations of the Borrower and each Subsidiary set forth in
the Loan Documents and any such other certificates, instruments and agreements
are true, correct, complete and not misleading. I have also assumed that all
individuals executing and delivering documents on behalf of the Banks and Agent
had the legal capacity to so execute and deliver and that the Loan Documents are
obligations binding upon Banks and Agent.
With respect to my opinions in paragraph 4(c) and 5(c) below, I have
relied solely upon copies, supplied to me by the Borrower or a Subsidiary, of
each undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement listed in Exhibit A, (i) of the Borrower
listed on the Index to Form 10K Exhibits to the Borrower's Annual Report on Form
10K for the fiscal year ending December 31, 1996 and (ii) of the Borrower
involving amounts in excess of $50,000,000 to which Borrower or any Subsidiary
is a party or by which Borrower or any Subsidiary is bound.
In rendering my opinion in paragraph 6, I have relied solely on a
certificate of good standing from each of the Secretary of State's office of
each of the states listed below the Borrower's and each Subsidiary's name on
Exhibit B.
Where I render an opinion "to the best of my knowledge" or concerning an
item "known to me" or my opinion otherwise refers to my "knowledge," it is
intended to indicate that during the course of my representation of Borrower and
the Subsidiaries, no information that would give me current actual knowledge of
the inaccuracy of such statement has come to my attention in rendering legal
services to Borrower or the Subsidiaries.
On the basis of the foregoing, in reliance thereon, and with the foregoing
qualifications, I am of the opinion that:
1. (a) Borrower is a corporation, duly incorporated and validly existing
under the laws of Delaware and has the requisite corporate power and authority
to own its property and to conduct the business in which it is currently
engaged. (b) Wilcott is a corporation duly incorporated and validly existing
under the laws of Colorado and has the requisite corporate power and authority
to own its property and to conduct the business in which it is currently
engaged. (c) Each of GCC, SR91, GILC and Desert is a corporation duly
incorporated and
<PAGE> 240
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 4
validly existing under the laws of California and has the requisite corporate
power and authority to own its property and to conduct the business in which it
is currently engaged. (d) Each of G.G. & R., Intermountain, and Pozzolan is a
corporation duly incorporated and validly existing under the laws of Utah and
has the requisite corporate power and authority to own its property and to
conduct the business in which it is currently engaged. (e) Bear River is a
corporation duly incorporated and validly existing under the laws of Wyoming and
has the requisite corporate power and authority to own its property and to
conduct the business in which it is currently engaged. (f) GTC is a corporation
duly incorporated and validly existing under the laws of Texas and has the
requisite corporate power and authority to own its property and to conduct the
business in which it is currently engaged. (g) GILC, L.P. and SR91, L.P. are
California limited partnerships validly existing under the laws of California
and each has the requisite partnership power and authority to own its property
and to conduct the business in which it is currently engaged.
2. Borrower (a) has taken all necessary and appropriate corporate action
to authorize the execution, delivery and performance of the Credit Agreement,
and (b) has the corporate power and authority to execute, deliver and perform
the Credit Agreement. Each Subsidiary (a) has taken all necessary and
appropriate corporate action or partnership action, as applicable, to authorize
the execution, delivery and performance of the Guaranty, and (b) has the
corporate power or partnership power, as applicable, and authority to execute,
deliver and perform the Guaranty.
3. The Credit Agreement has been duly executed and delivered by the
Borrower. The Guaranty has been duly executed and delivered by each of the
Subsidiaries. The Credit Agreement constitutes a legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms. The Guaranty constitutes a legal, valid and binding obligation of each
Subsidiary, enforceable against each Subsidiary in accordance with its terms.
4. The execution, delivery and performance by Borrower of the Credit
Agreement do not (a) violate or contravene any injunction, order, writ,
judgment, decree, determination or award of any United States or California
Governmental Authority as presently in effect applicable to Borrower; (b)
conflict with or result in a breach of or constitute a default under the
certificate of incorporation and bylaws of Borrower; (c) violate or result in a
breach of or constitute any default under any agreements of Borrower set forth
in Exhibit A, and, do not result in or require the creation or imposition of any
lien on any of Borrower's properties or revenues pursuant to any injunction,
order, decree or undertaking as presently in effect or any such agreements of
Borrower set forth in Exhibit A; or (d) result in or require the creation or
imposition of any lien on any of its properties or revenues pursuant to any
provision of any law, rule or regulation as presently in effect.
<PAGE> 241
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 5
5. The execution, delivery and performance by each Subsidiary of the
Guaranty do not (a) violate or contravene any injunction, order, writ judgment,
decree, determination or award of any United States or California Governmental
Authority as presently in effect applicable to each Subsidiary; (b) conflict
with or result in a breach of or constitute a default under the
articles/certificates of incorporation and bylaws or partnership agreement, as
applicable, of each Subsidiary: (c) violate or result in a breach of or
constitute any default under any agreements of each Subsidiary set forth in
Exhibit A, and do not result in or require the creation or imposition of any
lien on any Subsidiary's its properties or revenues pursuant to any injunction,
order, decree or undertaking as presently in effect or any such agreements of
each Subsidiary; or (d) result in or require the creation or imposition of any
lien on any of its properties or revenues pursuant to any provision of any law,
rule or regulation as presently in effect.
6. Each of Borrower, and the Subsidiaries is duly qualified to do business
and is in good standing in the states listed below its name on Exhibit B hereto.
7. No authorization, consent, approval, license, qualification or formal
exemption from, nor notice to, nor any filing, recordation, declaration or
registration with, any United States or California Governmental Authority, or to
my knowledge any other Governmental Authority, is necessary or required on the
part of Borrower in connection with the execution, delivery, or performance by
Borrower of the Credit Agreement.
8. No authorization, consent, approval, license, qualification or formal
exemption from, nor notice to, nor any filing, recordation, declaration or
registration with any United States or California Governmental Authority, or to
my knowledge any other Governmental Authority, is necessary or required on the
part of each Subsidiary in connection with the execution, delivery, or
performance by each Subsidiary of the Guaranty.
9. To the best of my knowledge, there is no claim, dispute, injunction,
temporary restraining order, action, litigation, investigation or proceeding
pending or threatened against Borrower before any court, arbitrator,
administrative agency or Governmental Authority of any kind (a) with respect to
the Credit Agreement or (b) which, if adversely determined, would have a
Material Adverse Effect.
10. To the best of my knowledge, there is no claim, dispute, injunction,
temporary restraining order, action, litigation, investigation or proceeding
pending or threatened against any Subsidiary before any court, arbitrator,
administrative agency or Governmental Authority of any kind (a) with respect to
the Guaranty or (b) which, if adversely determined, would have a Material
Adverse Effect.
<PAGE> 242
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 6
11. Neither the Borrower nor any Subsidiary is an "investment company" or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended. Neither the Borrower nor any
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Interstate Commerce Act (49 U.S.C Sections 10101 et seq. (Supp.
1992) or the Federal Power Act which would limit its ability to incur
Indebtedness.
12. Neither the Borrower nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock. The aggregate value of all
Margin Stock directly or indirectly owned by the Borrower and its Subsidiaries
is less than 25% of the aggregate value of the consolidated assets of the
Borrower and its Subsidiaries.
13. The only subsidiaries of Borrower are the Subsidiaries and Granite
SR91 L.P., a limited partnership, of which Granite SR91 Corporation is the
general partner and the Borrower is the sole limited partner.
The opinions expressed in this letter are qualified to the extent that the
validity, binding nature or enforceability of any provisions of the Loan
Documents may be limited or otherwise affected by:
a. The effects of bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, or other similar laws now or hereafter in effect
limiting the validity or enforceability of creditor's rights and remedies
generally;
b. General principles of equity, regardless of whether considered in
proceedings in equity or at law;
c. The covenant of good faith and fair dealing implied in every agreement
under common law (and to similar provisions of federal law, where applicable);
and
d. The effect of any law or legal principle which provides that a court
may refuse to enforce, or may limit the application of; a contract or any clause
thereof which the court finds as a matter of law to have been unconscionable at
the time it was made.
e. The opinions expressed in this letter are further qualified to the
extent that the validity, binding nature or enforceability of any provisions of
the Loan Documents may be limited or otherwise affected by:
i. The unenforceability under certain circumstances under California
or
<PAGE> 243
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 7
federal law or court decisions of provisions (i) releasing a party against
liability for wrongful or negligent acts, (ii) indemnifying a party to the
extent that the events giving rise to the indemnity arise in whole or in part
from the wrongful or negligent acts of the indemnitee, or (iii) where such
release or indemnification is contrary to public policy, including but not
limited to indemnification and/or releases relating to any issues of securities
laws;
ii. The effect of California Civil Code Section 1717 and other
applicable statutes and judicial decisions which provide, among other things,
that a court may limit the granting of attorneys' fees to those attorneys' fees
which are determined by the court to be reasonable and that attorneys' fees may
be granted only to a prevailing party and that a contractual provision for
attorneys' fees is deemed to extend to both parties (notwithstanding that such
provision by its express terms benefits only one party);
iii. The assumption that if the Agent or the Banks enforce their
remedies, they will do so in a commercially reasonable manner;
iv. The effect of California court decisions invoking statutes or
principles of equity which have held that certain covenants and provisions of
agreements are unenforceable where (i) the breach of such covenants or
provisions imposes restrictions or burdens upon the debtor, including the
acceleration of indebtedness due under debt instruments, and it cannot be
demonstrated that the enforceability of such restrictions or burdens is
reasonably necessary for the protection of the creditors, or (ii) the creditor's
enforcement of such covenants or provisions under the circumstances would
violate the creditor's implied covenants of good faith and fair dealing;
v. The unenforceability under certain circumstances of contractual
provisions self-help or summary remedies; and
vi. Decisions by California courts admitting evidence extrinsic to a
written agreement between the parties thereto that the parties intended a
meaning contrary to that expressed by the parties in writing.
The foregoing opinions are also subject to the following additional
assumptions, limitations, qualifications and exceptions:
a. Provisions in the Loan Documents requiring Borrower or any Subsidiary
to execute, in the future, additional instruments and documents may be
unenforceable.
b. Any provision contained in the Loan Documents that purports to require
that any action or decision of Agent or Banks is conclusively binding upon
Borrower or any
<PAGE> 244
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 8
Subsidiary may be unenforceable.
c. You are advised that any provision in the Loan Documents purporting to
waive, limit or restrict the right of Borrower or Subsidiary to offset against
obligations owing under the Loan Documents may not be enforceable.
d. Those provisions in the Loan Documents imposing late charges (interest
or otherwise) and/or additional interest in the event of default are governed by
the rules relating to "liquidated damages" as set forth in California Civil Code
Sections 1671 et seq., and relevant case law (see, e.g., Garrett v. Coast and
Southern Federal Savings & Loan, 9 Cal.3d 731 (1973)). I express no opinion as
to the effect of judicial decisions and statutes limiting the enforceability of
provisions imposing penalties, forfeitures, late payment charges, an increase in
interest rate, or payment of other additional consideration, (i) upon
prepayment, late payment, maturity, default or a lender's election to accelerate
a loan, particularly in cases where the occurrence of a default or waiving the
benefit of a statutory right bears no reasonable relation to the damage suffered
by the lender or is otherwise held to be a penalty; or (ii) as a consequence of
costs incurred by the lender or imposition of governmental charges, taxes,
levies or requirements upon a lender.
e. Those provisions in the Loan Documents requiring the consent of Agent
and Banks or allowing Agent or Banks to take certain actions may be interpreted
by a court to contain an implied covenant of reasonableness and/or fair dealing
(see, e.g., Kendall v. Pestana, 40 Cal.3d 488 (1985); Cohen v. Ratinoff, 147
Cal.App.3d 321 (1983)).
f. You should be aware of the unenforceability, under certain
circumstances, of provisions waiving broadly or vaguely stated rights or unknown
future rights, or rights which may not be waived on statutory or public policy
grounds, or provisions stating that rights or remedies are not exclusive, that
every right or remedy is cumulative and may be exercised in addition to or with
any other right or remedy or that the election of some particular remedy or
remedies does not preclude recourse to one or more others.
g. You should be aware of limitations based on public policy on provisions
stating that a borrower's obligations are unaffected by reason of any default or
failure on the part of a lender to perform or comply with the terms of the
subject loan documents.
h. I express no opinion as to the enforceability of the consent to
service, jurisdiction or forum of any claim, demand, action or cause of action
arising under or related to the Loan Documents or the transactions contemplated
therein.
i. I express no opinion as to the enforceability of any right of any
creditor to
<PAGE> 245
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 9
collect any payment due under the Loan Documents to the extent that such payment
constitutes a penalty or forfeiture.
j. I express no opinion as to the enforceability of provisions in the Loan
Documents creating presumptions or creating rights of set-off.
k. I express no opinion on the accuracy of any representations or
warranties of Borrower or any Subsidiary. Furthermore I express no opinion as to
the survivability of any warranties, indemnities or other obligations.
l. I express no opinion as to the enforceability of those provisions in
the Loan Documents purporting to appoint the Agent or Banks as attorney-in-fact
for Borrower or to grant an irrevocable power of attorney to Agent or Banks.
m. I express no opinion as to the enforceability of provisions in the Loan
Documents purporting to provide that any approval, consent, authorization or
satisfaction required of Agent or Banks or any notice given by or other action
taken by Agent or Banks under the Loan Documents shall be presumed to be
reasonable.
n. I express no opinion as to the effect of laws and judicial decisions
that provide that in certain circumstances a surety may be exonerated if the
creditor materially alters the original obligation of the principal without the
surety's consent, or otherwise takes any action without notifying the surety
that materially prejudices the surety.
o. I express no opinion as to any securities, anti-trust, tax, land use,
safety, environmental, hazardous materials, insurance company or banking laws,
rules or regulations, or laws, rules or regulations applicable to Agent or
Banks.
p. I express no opinion as to any provision providing for the exclusive
jurisdiction of a particular court or purporting to waive rights to trial by
jury, service of process or objections to the laying of venue or to forum on the
basis of forum non conveniens in connection with any litigation arising out of
or pertaining to the Loan Documents.
q. I express no opinion as to the effect of California Civil Code Section
1698 and similar statutes and federal laws and judicial decisions (a) providing
that oral modifications to a contract or waivers of contractual provisions may
be enforceable, if the modification was performed, notwithstanding any express
provision in the agreement that the agreement may only be modified or an
obligation thereunder waived in writing, or (b) creating an implied agreement
from trade practices or course of conduct.
<PAGE> 246
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 10
r. I express no opinion as to the effect of certain rights, remedies and
waivers contained in the Loan Documents being limited or rendered ineffective by
applicable statutory law or judicial decisions governing such provisions, but
such laws and judicial decisions do not render the Loan Documents unenforceable
as a whole, and there exists, in the Loan Documents and pursuant to applicable
law, legally adequate remedies for realization of the principal benefits
purported to be afforded by the Loan Documents.
s. With respect to my opinions expressed in paragraphs 4(d), 5(d), 7 and
8, I have not conducted any special investigation of statutes laws, rules or
regulations and my opinion with respect thereto are limited to such Laws that to
my knowledge and as in my experience are of general application to transactions
of the sort contemplated by the Loan Documents.
I further advise you that:
a. The enforceability of the Guaranty against a Subsidiary may be subject
to California statutory provisions and case law to the effect that a guarantor
may be exonerated if the beneficiary of the guaranty alters the original
obligation of the principal, fails to inform the guarantor of material
information pertinent to the principal or any collateral, elects remedies that
may impair the subrogation rights of the guarantor against the principal or that
may impair the value of the collateral, fails to accord the guarantor the
protections afforded a debtor under the Uniform Commercial Code or otherwise
takes any action that materially prejudices the guarantor unless, in any such
case, the guarantor validly waives such rights or the consequences of any such
action. See e.g., California Civil Code Section 2799 through Section 2855;
Sumitomo Bank of California v. Iwasaki, 70 Cal. 2d 81, 73 Cal. Rptr. 564 (1968);
Union Bank v. Gradsky, 265 Cal. App. 2d 40, 71 Cal. Rptr 64 (1968); Connolly v.
Bank of Sonoma County, 184 Cal. App. 3d 1119, 229 Cal Rptr. 396 (1986); C.I.T.
Corp. v. Anwright Corp., 191 Cal. App. 3d 1420, 237 Cal. Rptr. 108 (1987);
American National Bank v. Perma-Tile Roof Co., 200 Cal. App. 3d 889, 246 Cal
Rptr. 381 (1988); In re Kirkland, 915 F.2d 1236 (9th Cir. 1990); and Cathay Bank
v. Lee, 18 Cal. Rptr. 2d 420 (1993). While express and specific waivers of a
guarantor's right to be exonerated, such as those contained in the Guaranty, are
generally enforceable under California law, we express no opinion as to whether
the Guaranty contains an express and specific waiver of each exoneration defense
a guarantor might assert or as to whether each of the waivers contained in the
Guaranty is fully enforceable.
b. It could be contended that the Guaranty has not been given for a fair or
reasonably equivalent consideration, that a Subsidiary is, or, by entering into
the Guaranty may become, insolvent, and that the Guaranty may be voidable by
creditors of a Subsidiary or by a trustee or receiver of a Subsidiary in
bankruptcy or similar proceedings pursuant to
<PAGE> 247
Bank of America National Trust and Savings Association,
for itself and as Agent
June 30, 1997
Page 11
applicable bankruptcy, fraudulent conveyance or similar laws. Because of these
possible contentions, my opinions are further limited by and subject to the
effect of such laws.
This opinion is intended solely for the benefit of the Agent, and the
Banks and their Assignees and Participants, as defined in Section 11.07 of the
Credit Agreement, and is not to be made available to or relied upon by any other
person, firm, or entity, other than regulatory authorities in connection with
bank examinations, without our prior written consent.
Very truly yours,
/s/ MICHAEL FUTCH
Michael Futch
Vice President and General Counsel
MF:pc
Encls.
<PAGE> 248
EXHIBIT A
INDEX TO FORM 10-K EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
- ------- ----------- ----
<S> <C> <C>
3.1 Certificate of Incorporation of Granite Construction Incorporated [a]
3.2 Bylaws of Granite Construction Incorporated (as amended and restated
effective February 27,1991) [b]
10.1 Granite Construction Incorporated Employee Stock Ownership Plan,
through amendments and Trust Agreement (**as to Trust
Agreements only) [b]
10.1.a Amendment 3 to the Granite Construction Incorporated Employee
Stock Ownership Plan, through amendments and Trust Agreement
(**as to Trust Agreements only) [c]
10.1.b Amendment 4 to the Granite Construction Incorporated Employee
Stock Ownership Plan as of May 21, 1993 [d]
10.1.c Amendment 5 to the Granite Construction Incorporated Employee Stock
Ownership Plan adopted December 16, 1993 and effective January 1,
1994 [d]
10.1.d Amendment 6 to the Granite Construction Incorporated Employee Stock
Ownership Plan adopted December 15, 1994 and effective January 1,
1995 [e]
10.1.e Amendment 7 to Granite Construction Incorporated Employee Stock
Ownership Plan and Amendment 1 to the Trust Agreement adopted
December 19, 1995, effective January 1, 1996 [g]
10.2 Amendment to and Restatement of the Granite Construction
Company Profit Sharing and 401K Plan adopted December 15, 1994
and effective January 1, 1995 [e]
10.2.a Amendment to and Restatement of Granite Construction Incorporated
Profit Sharing and 401K Plan and Trust Agreement adopted and
effective as of December 15, 1994 [e]
10.2.b Amendment 2 to the Granite Construction Incorporated Profit Sharing
and 401K Plan and Amendment 2 to the Trust Agreement adopted March
20, 1995 and effective January 1, 1996 [g]
10.2.c Amendment 3 to the Granite Construction Incorporated Profit
Sharing and 401K Plan adopted August 23, 1996 and effective
January 1, 1997 25
10.3 1995 Granite Construction Company Incentive Compensation Plan [g]
10.4 Restated and Amended Granite Construction Incorporated
1990 Omnibus Stock and Incentive Plan effective December 31, 1994 [g]
10.5 Second Amended and Restated Credit Agreement dated and
effective June 15, 1995 [g]
10.5.a First Amendment to the Second Amended and Restated Credit
Agreement adopted May 31, 1996 and effective June 30, 1996 28
10.5.b Second Amendment to the Second Amended and Restated Credit
Agreement adopted and effective December 31, 1996 38
10.6 Form of Director and Officer Indemnification Agreement [a]
</TABLE>
23
<PAGE> 249
Granite Construction Incorporated
Exhibit A (continued)
Material Agreements in excess of $50,000,000
<TABLE>
<CAPTION>
Job# Description Amount
- ---- ----------- ------
<S> <C> <C>
216465 NV DOT - Hwy 395 Extension (GCC) 56,623,398.00
300082 TX DOT - Central Expressway US 75 S2 (GCC) 107,446,700.00
300093 TX DOT - Central Expressway US 75 Dallas Co.(GCC) 110,568,500.00
300101 FL DOT - West Forbes Road I-4 (GCC) 51,637,088.00
300805 Tollway - TCA Joint Venture (GCC) 239,194,779.00
300809 East Dam Embankment - Joint Venture (GCC) 68,877,750.00
300819 UT DOT - I-15 Rebuild - Wasatch Contractors JV (GCC) 303,147,377.00
</TABLE>
<PAGE> 250
EXHIBIT B
GRANITE CONSTRUCTION INCORPORATED
<TABLE>
<S> <C>
Granite Construction Incorporated G.G. & R., Inc.
California Utah
Delaware
Nevada
Utah
Wyoming
Granite Construction Company Intermountain Slurry Seal, Inc.
Alabama Arizona
Arizona California
Arkansas Colorado
California Idaho
Colorado Montana
Delaware Nevada
Florida Utah
Georgia
Hawaii
Idaho
Illinois Bear River Contractors
Kentucky Arizona
Louisiana California
Maryland Colorado
Minnesota Idaho
Mississippi Montana
Missouri Nevada
Montana New Mexico
Nebraska Oregon
Nevada Utah
New Jersey Washington
New Mexico Wyoming
New York
North Carolina
North Dakota
Ohio GTC, Inc.
Oklahoma Texas
Oregon
South Carolina
Tennessee
Texas Desert Aggregates, Inc.
Utah Arizona
Virginia California
Washington
Washington D.C.
West Virginia
Wyoming
</TABLE>
<PAGE> 251
EXHIBIT B (continued)
<TABLE>
<S> <C>
Granite SR91 Corporation Granite SR91 LP
California California
Wilcott Corporation Pozzolan Products Company (P.P.C.)
California Arizona
Colorado Nevada
Utah
GILC LP GILC Incorporated
Arizona California
California Florida
Colorado Utah
Florida Wyoming
Georgia
Idaho
Nevada
New Mexico
Texas
Utah
Wyoming
</TABLE>
<PAGE> 252
GRANITE CONSTRUCTION INCORPORATED
PRIMARY BANK
<TABLE>
<S> <C>
Bank of America, N.T. & S.A.
Credit Products Group #3838
555 California Street, 41st Floor
San Francisco, CA 94104
Account Officer Patricia Ward-Vice President
Phone: (415) 622-5720
Credit Manager Kevin Leader-Vice President Matt Gabel
Phone: (415) 622-8168 Phone: (415) 622-7271
FAX: (415) 622-4585
Syndicated Loan Agreement
Term Loan
Original Note Balance $50,000,000
Terms: Reference Rate
IBOR +.60%
CD +.725%
Current Locked-in Rates: 20MM @ 6.5375 through 09/30/97
10MM @ 6.4750 through 12/31/97
Outstanding 06/30/97 $30,000,000
Original Participation Amount $18,750,000
Participation Percent 37.5%
Outstanding 06/30/97 $11,250,000
Revolving Loan
$75 Million Line of Credit
Terms: Reference Rate
IBOR +.500%
CD +.625%
Current Locked-in Rates: 5MM @ 6.4375 through 09/30/97
10MM @ 6.3125 through 09/30/97
5MM @ 6.3750 through 12/31/97
25MM @ 6.3750 through 12/31/97
Commitment Fee .1875% of unused line (billed qtrly)
Agency Fee $15,000 yr in advance (billed qrtly)
Outstanding 06/30/97
Working Capital $25,000,000
W/C - Letter of Credit $ 3,585,430
TIC Investment $20,000,00
Total $48,585,430
Participation Percentage 37.5%
Outstanding Participation 06/30/97 $18,219,536
Unused Revolving Balance $26,414,570
Unused Participation $ 9,905,464
Expiration 6/30/99
</TABLE>
July 23, 1997
<PAGE> 253
PARTICIPATING BANK
<TABLE>
<S> <C>
ABN - AMRO Bank, N.V.
San Francisco International Branch
101 California Street, Suite 4550
San Francisco, CA 94111
Senior Officer Lawrence T. Osborne
Vice President
Phone: (415) 984-3722
Account Officer Brad Lehay
Vice President
Phone: (415) 984-3729
FAX: (415) 362-3524
Syndicated Loan Agreement
Term Loan
Original Note Balance $50,000,000
Terms: Reference Rate
IBOR +.600%
CD +.725%
Current Locked-in Rates: 20MM @ 6.5375 through 09/30/97
10MM @ 6.4750 through 12/31/97
Outstanding 06/30/97 $30,000.00
Original Participation Amount $10,937,500
Participation Percent 21.875%
Outstanding 06/30/97 $ 6,562,500
Revolving Loan
$75 Million Line of Credit
Terms: Reference Rate
IBOR +.550%
CD +.625%
Current Locked-in Rates: 5MM @ 6.4375 through 09/30/97
10MM @ 6.3125 through 09/30/97
5MM @ 6.3750 through 12/31/97
25MM @ 6.3750 through 12/31/97
Outstanding 06/30/97
Working Capital $25,000,000
W/C - Letter of Credit $ 3,585,430
TIC Investment $20,000,000
TOTAL $48,585,430
Participation Percentage 21.875%
Outstanding Participation 06/30/97 $10,628,063
Unused Revolving Balance $26,414,570
Unused Participation $ 5,778,187
Expiration 6/30/99
</TABLE>
July 23, 1997
<PAGE> 254
PARTICIPATING BANK
<TABLE>
<S> <C>
Banque National de Paris (BNP)
180 Montgomery Street, 4th Floor
San Francisco, CA 94104
Account Manager Guy Gibbs
Vice President
Phone: (415) 956-0707 Ext. 206
FAX: (415) 296-8954
Associates Debra M. Wright
Vice President
Phone: (415) 956-0707 Ext. 253
FAX: (415) 296-8954
Syndicated Loan Agreement
Term Loan
Original Note Balance $50,000,000
Terms: Reference Rate
IBOR + .600%
CD +.725%
Current Locked-in Rates: 20MM @ 6.5375 through 09/30/97
1OMM @ 6.4750 through 12/31/97
Outstanding 06/30/97 $30,000,000
Original Participation Amount $10,937,500
Participation Percent 21.875%
Outstanding 06/30/97 $ 6,562,500
Revolving Loan
$75 Million Line of Credit
Terms: Reference Rate
IBOR +.500%
CD + .625%
Current Locked-in Rates: 5MM @ 6.4375 through 09/30/97
1OMM @ 6.3125 through 09/30/97
5MM @ 6.3750 through 12/31/97
25MM @ 6.3750 through 12/31/97
Outstanding 06/30/97
Working Capital $25,000,000
W/C - Letter of Credit $ 3,585,430
TIC Investment $20,000,000
TOTAL $48,585,430
Participation Percentage 21.875%
Outstanding Participation 06/30/97 $10,628,063
Unused Revolving Balance $26,414,570
Unused Participation $ 5,778,187
Expiration 6/30/99
</TABLE>
July 23, 1997
<PAGE> 255
PARTICIPATING BANK
<TABLE>
<CAPTION>
<S> <C>
Union Bank (of California)
The Bank of Tokyo Group
350 California Street
P.O. Box 7104
San Francisco, CA 94120-7104
Senior Officer Bill Wiley
Senior Vice President
Phone: (415) 765-3939
Corporate Account Wade Schlueter Alison Amonette
Officers Vice President Vice President
Phone: (415) 705-7022 Phone: (415) 765-3696
FAX: (415) 705-7127 FAX: (415) 765-0146
Syndicated Loan Agreement
Term Loan
Original Note Balance $50,000,000
Terms: Reference Rate
IBOR +.600%
CD +.725%
Current Locked-in Rates: 20MM @ 6.5375 through 09/30/97
10MM @ 6.4750 through 12/31/97
Outstanding 06/30/97 $30,000,000
Original Participation Amount $ 9,375,000
Participation Percent 18.75%
Outstanding 06/30/97 $5,625,000
Revolving Loan
$75 Million Line of Credit
Terms: Reference Rate
IBOR +.500%
CD +.625%
Current Locked-in Rates: 5MM @ 6.4375 through 09/30/97
10MM @ 6.3125 through 09/30/97
5MM @ 6.3750 through 12/31/97
25MM @ 6.3750 through 12/31/97
Outstanding 06/30/97
Working Capital $25,000,000
W/C - Letter of Credit $ 3,585,430
TIC Investment $20,000,000
TOTAL $48,585,430
Participation Percentage 18.75%
Outstanding Participation 06/30/97 $ 9,109,768
Unused Revolving Balance $26,414,570
Unused Participation $ 4,529,732
Expiration 6/30/99
</TABLE>
July 23, 1997
<PAGE> 256
PARTICIPATING BANK
<TABLE>
<S> <C>
Granite SR91 L.P.
Bank of America, N.T. & S.A.
Credit Products Group #3838
555 California Street, 41st Floor
San Francisco, CA 94104
SR91 Letter of Credit
Commitment Fee .50% of unused line quarterly
Outstanding 06/30/97 $ 2,711,116
Expiration 7/14/98
</TABLE>
July 23, 1997
<PAGE> 257
BANK CONTACTS
<TABLE>
<S> <C> <C>
BANK OF AMERICA - CALIFORNIA
1850 Gateway Blvd.
Concord, CA 94520
Account Administrator Cynthia Weinthaler
Phone: (510) 675-7771 FAX: (510) 603-7241
U.S. BANK - UTAH
200 Main Street
Salt Lake City, UT 84101
Branch Manager Craig Murdock
Phone:(801) 534-6192
WELLS FARGO BANK, N.A.
Pajaro Valley Business Center
P.O. Box 1291
Salinas, CA 93902
Associate Anna Salinas
Phone:(408) 754-5027
(800) 682-5880
WELLS FARGO BANK - UTAH
Cash Management
180 South Main Street
Salt Lake City, UT
84101
Account Officers Dean Luikart Todd Parker
Relationship Manager Phone: (801) 350-7173
Phone:(801) 350-7002
Account Administrator Laura Santamaria
Phone:(800) 374-3742
</TABLE>
July 23, 1997
<PAGE> 258
ESCROW CONTACTS
<TABLE>
<S> <C> <C>
BANK ONE - ARIZONA, NA
Trust Department
P.O. Box 71
241 North Central Avenue
Phoenix, AZ 85004
Trust Specialist Debbie Arndt
Phone: (602) 221-1333 FAX (602)221-1711
FIRST TRUST OF CALIFORNIA, N.A.
550 S. Hope, Suite 500
Los Angeles, CA 90071
Account Administrator Brad Scarbrough
Phone: (213) 533-8741 FAX: (213) 533-8736
MERRILL LYNCH TRUST COMPANY
EBT Operations
300 Davidson Avenue, 2nd Floor West
Somerset, NJ 08873
Trust Officer Michele Blandino
Phone: (908) 627-7714 FAX: (908) 627-7699
NATIONSBANK - TEXAS
501 Congress Avenue
Austin, TX 78701
Trust Officer Alyce Anne Baggett
Vice President
Phone: (512) 397-2664 FAX: (512)397-2052
PIONEER CITIZENS BANK OF NEVADA
P.O. Box 2351
Reno, NV 89505
Account Administrator Tracy Christenson
Phone: (702) 688-7950 FAX: (702) 688-7963
</TABLE>
July 23, 1997
<PAGE> 259
ESCROW CONTACTS
<TABLE>
<S> <C>
SUNTRUST BANK - GEORGIA
P.O. Box 4625
Atlanta, GA 30302
Account Administrator Ronald C. Painter
Vice President
Phone: (404) 588-7191
NV DOT
1263 S. Stewart Street
Carson City, NV 89712
Account Administrator Carol English
Phone: (702) 888-7451
</TABLE>
<PAGE> 1
EXHIBIT 10.5.a
FIRST AMENDMENT TO THE CREDIT AGREEMENT
THIS FIRST AMENDMENT TO THE CREDIT AGREEMENT (this "Amendment"), is
entered into as of January 16,1998, by and among GRANITE CONSTRUCTION
INCORPORATED, a Delaware corporation, (the "Company"), the Banks signatory
hereto and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Issuing
Bank and as agent for itself and the Banks (in such capacity, the "Agent").
RECITALS
A. The Company, the several financial institutions named as "Banks"
therein, the Issuing Bank and the Agent are parties to a Credit Agreement dated
as of June 30, 1997 (the "Prior Credit Agreement"). The Prior Credit Agreement,
as amended by this Amendment, is herein referred to as the "Credit Agreement."
Unless otherwise defined herein, all capitalized terms used in this Amendment
shall have the respective meanings assigned to them in the Credit Agreement.
B. Pursuant to the Prior Credit Agreement, the Banks have extended
and are continuing to extend certain credit facilities to the Company.
C. The Company has informed the Agent and the Banks that the Company
and certain of its Subsidiaries propose to issue in one or more private
placements unsecured notes (collectively, the "Private Placement Notes"). Any
Private Placement Notes issued by the Company may be unconditionally guaranteed
by Subsidiaries of the Company. The proceeds of the Private Placement Notes are
to be used for general corporate purposes.
D. The Company has requested that the Majority Banks and the Agent
agree to amend the Prior Credit Agreement to permit the Company and its
Subsidiaries to incur up to $100,000,000 in additional Indebtedness and to
permit the Subsidiaries of the Company to guaranty up to $100,000,000 of such
Indebtedness incurred by the Company. The Majority Banks and the Agent are
willing to agree to such request, but only on the terms, conditions and
understandings as set forth herein.
AGREEMENT
THEREFORE, for valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
1. Amendments to Prior Credit Agreement. The Prior Credit Agreement
is hereby amended as follows:
(a) Section 8.06 of the Prior Credit Agreement is hereby
amended by deleting "or" where it appears at the end of subsection (h) thereof,
by deleting "." where it appears at the end of subsection (I) thereof and
substituting in its place "; or" and by inserting immediately after subsection
(I) thereof the following:
(i) guaranties by one or more Subsidiaries of the
Company of obligations of the Company in an aggregate amount
outstanding not to exceed $100,000,000.
<PAGE> 2
(b) Section 8.18 of the Prior Credit Agreement is hereby
amended by deleting "and" where it appears at the end of subsection (g) thereof,
by deleting "." where it appears at the end of subsection (h) thereof and
substituting in its place "; and" and by inserting immediately after subsection
(h) thereof the following:
(i) Indebtedness (including Guaranty Obligations
permitted pursuant to subsection 8.06(j)) in an aggregate amount
outstanding not to exceed $100,000,000.
2. Representations and Warranties. The Company hereby represents
and warrants to the Agent and the Banks as follows:
(a) Both before and after giving effect to this Amendment, no
Default or Event of Default exists.
(b) The execution, delivery and performance by the Company of
this Amendment and by the Guarantors of their acknowledgment and consent to this
Amendment have been duly authorized by all necessary corporate and other action
and do not and will not require any registration with, consent or approval of
notice to or action by, any Person (including any Governmental Approvals) in
order to be effective and enforceable. Each of the Prior Credit Agreement as
amended by this Amendment, the Guaranty and the other Loan Documents to which
the Company or any of its Subsidiaries is a party constitutes and continues to
constitute the legal, valid and binding obligations of the Company and such
Subsidiary party thereto, enforceable against the Company and such Subsidiaries
in accordance with their respective terms, without defense, counterclaim or
offset.
(C) All representations and warranties of the Company contained
in the Prior Credit Agreement are true and correct and will be true and correct
on the Effective Date.
(d) The Company is entering into this Amendment on the basis of
its own business judgment, without reliance upon the Agent, any Bank or any
other Person.
3. Effective Date. This Amendment will become effective as of the
date first written above (the "Effective Date"), provided that each of the
following conditions precedent has been and remains satisfied on such date:
(a) The Agent has received in sufficient number for each Bank,
duly executed originals (or an executed facsimile copy, to be followed promptly
by delivery of executed originals):
(i) of this Amendment, executed by the Company and each
of Banks; and
(ii) of each Guarantors' Acknowledgment and Consent in
the form attached hereto, executed by each Guarantor; and
(b) all representations and warranties contained (or
incorporated by reference) herein are true and correct as of the
Effective Date.
2
<PAGE> 3
4. Miscellaneous.
(a) Except as herein expressly amended. all terms, covenants
and provisions of the Prior Credit Agreement are and shall remain in full force
and effect and all references therein to the Credit Agreement shall henceforth
refer to the Prior Credit Agreement as amended by this Amendment. This Amendment
shall be deemed incorporated into, and a part of the Credit Agreement. This
Amendment is one of the Loan Documents.
(b) This Amendment shall be binding upon and inure to the
benefit of the parties hereto and thereto and their respective successors and
assigns. No third party beneficiaries are intended in connection with this
Amendment.
(c) This Amendment shall be governed by and construed in
accordance with the law of the State of California.
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each of
the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by delivery of a hard copy original, and
that receipt by the Agent of a facsimile transmitted document purportedly
bearing the signature of a Bank or the Company or any Guarantor shall bind such
Bank, the Company or such Guarantor, respectively, with the same force and
effect as the delivery of a hard copy original. Any failure by the Agent to
receive the hard copy executed original of such document shall not diminish the
binding effect of receipt of the facsimile transmitted executed original of such
document of the party whose hard copy page was not received by the Agent.
(e) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment or the
Prior Credit Agreement, respectively.
(f) The execution and delivery by the Agent and the Banks of
this Amendment shall not be deemed to create a course of dealing or otherwise
obligate the Agent or the Banks to execute similar amendments under the same or
similar circumstances in the future.
(g) Each of the provisions set forth in Article XI of the Prior
Credit Agreement is incorporated herein by this reference and made applicable to
this Amendment.
(h) This Amendment, together with the Credit Agreement,
contains the entire and exclusive agreement of the parties hereto with reference
to the matters discussed herein and therein. This Amendment supersedes all prior
drafts and communications with respect thereto. This Amendment may not be
amended except in accordance with the provisions of Section 11.01 of the Credit
Agreement.
(i) The Company covenants to pay to or reimburse the Agent,
upon demand, for all costs and expenses (including allocated costs of in-house
counsel) incurred in connection with the development, preparation, negotiation,
execution and delivery of this Amendment.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered in the State of California by their proper and
duly authorized officers as of the day and year first above written.
GRANITE CONSTRUCTION INCORPORATED BANQUE NATIONALE DE PARIS
By: /s/ WILLIAM E. BARTON By:
-------------------------------------- -------------------------------
William E. Barton
Title: Vice President & Chief Title:
Financial Officer ----------------------------
By: /s/ R.C. ALLBRITTON By:
-------------------------------------- -------------------------------
R.C. Allbritton Title:
----------------------------------- ----------------------------
Title: Vice President & Treasurer
BANK OF AMERICA NATIONAL TRUST AND ABN-AMRO BANK N.V., San Francisco
SAVINGS ASSOCIATION, as Agent International Branch
By: [SIG] By:
-------------------------------------- -------------------------------
Title: Vice President Title:
----------------------------------- ----------------------------
BANK OF AMERICA NATIONAL TRUST AND By:
SAVINGS ASSOCIATION, as a Bank and as -------------------------------
Issuing Bank Title:
----------------------------
By: [SIG]
--------------------------------------
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By:
--------------------------------------
Title:
-----------------------------------
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered in the State of California by their proper and
duly authorized officers as of the day and year first above written.
GRANITE CONSTRUCTION INCORPORATED BANQUE NATIONALE DE PARIS
By: By:
-------------------------------------- -------------------------------
Title: Title:
----------------------------------- ----------------------------
By: By:
-------------------------------------- -------------------------------
Title: Title:
----------------------------------- ----------------------------
BANK OF AMERICA NATIONAL TRUST AND ABN-AMRO BANK N.V., San Francisco
SAVINGS ASSOCIATION, as Agent International Branch
By: By:
-------------------------------------- -------------------------------
Title: Vice President Title:
----------------------------------- ----------------------------
BANK OF AMERICA NATIONAL TRUST AND By:
SAVINGS ASSOCIATION, as a Bank and as -------------------------------
Issuing Bank Title:
----------------------------
By:
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ DAVID E. TAYLOR
--------------------------------------
David E. Taylor
Title: Vice President
-----------------------------------
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered in the State of California by their proper and duly
authorized officers as of the day and year first above written.
GRANITE CONSTRUCTION INCORPORATED BANQUE NATIONALE DE PARIS
By: By: /s/ DEBRA WRIGHT
-------------------------------------- -------------------------------
Debra Wright
Title: Title: Vice President
----------------------------------- ----------------------------
By: By: /s/ COLLEEN S. BREIT
-------------------------------------- -------------------------------
Colleen S. Breit
Title: Title: Assistant Vice President
----------------------------------- ----------------------------
BANK OF AMERICA NATIONAL TRUST AND ABN-AMRO BANK N.V., San Francisco
SAVINGS ASSOCIATION, as Agent International Branch
By: By:
-------------------------------------- -------------------------------
Title: Vice President Title:
----------------------------------- ----------------------------
BANK OF AMERICA NATIONAL TRUST AND By:
SAVINGS ASSOCIATION, as a Bank and as --------------------------------
Issuing Bank Title:
----------------------------
By:
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By:
--------------------------------------
Title:
-----------------------------------
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered in the State of California by their proper and duly
authorized officers as of the day and year first above written.
GRANITE CONSTRUCTION INCORPORATED BANQUE NATIONALE DE PARIS
By: By:
------------------------------ ----------------------------------
Title: Title:
----------------------------- -------------------------------
By: By: /s/ JEFFREY A. FRENCH
----------------------------- ----------------------------------
Jeffrey A. French
Title: Title: Group Vice President & Director
---------------------------- --------------------------------
BANK OF AMERICA NATIONAL TRUST AND ABN-AMRO BANK N.V., San Francisco
SAVINGS ASSOCIATION, as Agent International Branch
By: By: BRADFORD H. LESBY
------------------------------- -----------------------------------
Bradford H. Lesby
Title: Vice President Title: Assistant Vice President
---------------------------- --------------------------------
BANK OF AMERICA NATIONAL TRUST AND By: JEFFREY A. FRENCH
SAVINGS ASSOCIATION, as a Bank ----------------------------------
and as Issuing Bank Jeffrey A. French
By: Title: Group Vice President & Director
------------------------------- -------------------------------
Title: Vice President
----------------------------
UNION BANK OF CALIFORNIA, N.A.
By:
-------------------------------
Title:
----------------------------
<PAGE> 8
GUARANTOR'S ACKNOWLEDGMENT AND CONSENT
Each of the undersigned hereby acknowledges the foregoing Amendment (the
"Amendment"), consents (without implying the need for any such consent) to its
terms, and represents and warrants to the Agent and the Banks that, both before
and after giving effect to the Amendment, its Guaranty remains in full force and
effect as an enforceable obligation of the Guarantor, except as limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforceability of creditor rights. Each Guarantor
remakes as of the Effective Date (as defined in the Amendment) all of the
representations and warranties made by it pursuant to the Guaranty. Capitalized
terms used herein and not otherwise defined have the respective meanings
assigned to them in the Credit Agreement (as defined in the Amendment).
IN WITNESS WHEREOF, each Guarantor has executed this Guaranty by its
duly authorized officers as of this 16th day of January, 1998.
GRANITE CONSTRUCTION COMPANY DESERT AGGREGATES, INC.
By: /s/ WILLIAM E. BARTON By: /s/ DAVID J. BRUNTON
-------------------------------------- -------------------------------
William E. Barton David J. Brunton
Title: Vice President & Chief Title: Chief Financial Officer &
Financial Officer Asst. Secretary
By: /s/ R.C. ALLBRITTON By: /s/ KATHLEEN KENAN
-------------------------------------- -------------------------------
R.C. Allbritton Kathleen Kenan
Title: Vice President & Treasurer Title: Assistant Secretary
GRANITE SR 91 CORPORATION G.G. & R., INC.
By: /s/ DAVID H. WATTS By: /s/ DAVID H. WATTS
-------------------------------------- -------------------------------
David H. Watts David H. Watts
Title: President & CEO Title: President & CEO
By : /s/ WILLIAM E. BARTON By: /s/ WILLIAM E. BARTON
-------------------------------------- -------------------------------
William E. Barton William E. Barton
Title: Vice President & Title: Vice President &
Chief Financial Officer Chief Financial Officer
WILCOTT CORPORATION INTERMOUNTAIN SLURRY SEAL, INC.
By: /s/ DAVID H. WATTS By: /s/ DAVID J. BRUNTON
-------------------------------------- -------------------------------
David H. Watts David J. Brunton
Title: President & CEO Title: Chief Financial Officer &
Asst. Secretary
By: /s/ WILLIAM E. BARTON By: /s/ KATHLEEN KENAN
-------------------------------------- -------------------------------
William E. Barton Kathleen Kenan
Title: Vice President & Title: Assistant Secretary
Chief Financial Officer
<PAGE> 9
BEAR RIVER CONTRACTORS GILC, L.P.
By: /s/ DAVID J. BRUNTON By: /s/ WILLIAM E. BARTON
-------------------------------------- -------------------------------
David J. Brunton William E. Barton
Title: Chief Financial Officer Title: President & CEO
By: /s/ KATHLEEN KENAN By: /s/ R.C. ALLBRITTON
-------------------------------------- -------------------------------
Kathleen Kenan R.C. Allbritton
Title: Assistant Secretary Title: Vice President &
Chief Financial Officer
POZZOLAN PRODUCTS COMPANY (P.P.C.) GRANITE SR91, L.P.
By: /s/ DAVID J. BRUNTON By: /s/ DAVID H. WATTS
-------------------------------------- -------------------------------
David J. Brunton David H. Watts
Title: Chief Financial Officer & Title: President & CEO
Asst Secretary
By: /s/ KATHLEEN KENAN By: WILLIAM E. BARTON
-------------------------------------- -------------------------------
Title: Kathleen Kenan Title: William E. Barton
Assistant Secretary Vice President &
Chief Financial Officer
GILC INCORPORATED GTC, INC.
By: /s/ WILLIAM E. BARTON By: /s/ WILLIAM E. BARTON
-------------------------------------- -------------------------------
William E. Barton William E. Barton
Title: President & CEO Title: President & Treasurer
By: /s/ R.C. ALLBRITTON By: /s/ R.C. ALLBRITTON
-------------------------------------- -------------------------------
R.C. Allbritton R.C. Allbritton
Title: Vice President & Title: Vice President &
Chief Financial Officer Asst. Treasurer
<PAGE> 1
EXHIBIT 10.9.F
SIXTH AMENDMENT TO
THE
GIBBONS COMPANY PROFIT SHARING
AND RETIREMENT PLAN
This Sixth Amendment to the Gibbons Company Profit Sharing and
Retirement Plan (the "Plan") is made and entered into this 30th day of May ,
1997, by G. G. & R., Inc. ("GG&R"), the Sponsoring Employer of the Plan.
WITNESSETH:
WHEREAS, GG&R has heretofore established the Plan (which Plan has
been amended and restated in its entirety effective for all Plan Years
commencing on or after January 1, 1989);
WHEREAS, GG&R has reserved the right to amend the Plan in whole or in
part; and
WHEREAS, the Internal Revenue Service has requested that certain
technical amendments be made to the Plan as a condition for the issuance of a
favorable determination letter relating to the qualified status of the Plan
under the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.
NOW, THEREFORE, in consideration of the foregoing premises, GG&R
amends the following Sections of the Plan (or portions thereof) generally
effective as of January 1, 1989, unless otherwise noted therein:
2.30 "K-TEST AVERAGE CONTRIBUTION PERCENTAGE" shall mean
the average (expressed as a percentage) of the K-Test Contribution
Percentages of the Participants in a group.
1
<PAGE> 2
2.31 "K-TEST CONTRIBUTION PERCENTAGE" shall mean the ratio
(expressed as a percentage) of a Participant's K-Test Contributions
for a Plan Year to the Participant's Compensation for the Plan Year.
The K-Test Contribution Percentage for a Participant who is a Highly
Compensated Employee shall be determined by combining all cash or
deferred arrangements under which the Highly Compensated Employee is
eligible to participate (other than those which may not be
permissively aggregated) with this Plan as though they were a single
arrangement. If a Highly Compensated Employee is eligible to
participate in this Plan and the family aggregation rules in Section
2.22 apply, then the K-Test Contribution shall be determined by
combining the K-Test Contributions and compensation of all eligible
Family Members. For this purpose, Compensation is defined as in
Section 7.01(b) of the Plan. The K-Test Contribution Percentage for a
Participant who has made no Elective Deferral contributions and who
is not credited with any K-Test Contributions for the Plan Year shall
be zero (0).
2.32 "K-TEST CONTRIBUTIONS" shall mean, for any Plan Year,
a Participant's Elective Deferrals, plus, if so elected by the
Employer, part or all of the Qualified Non-Elective Contributions and
Qualified Matching Contributions allocated to the Participant for
such year, provided that, any Qualified Non-Elective Contributions
included as K-Test Contributions shall not increase the difference
between the K-Test Average Contribution Percentage for Highly
Compensated Employees and the K-Test Average Contribution Percentage
for Non-Highly Compensated Employees; and, further provided that, no
Qualified Non-Elective Contributions or Qualified Matching
Contributions included as K-Test Contributions shall be included as
M-Test Contributions. In determining the amount of a Participant's
Elective Deferrals under this Section, the Plan Administrator shall
take into account elective deferrals made by the Participant under
any other plan which is aggregated with this Plan for purposes of
Code Section 401(a)(4) or Code Section 410(b) (other than Code
Section 410(b)(2)(A)(ii)) and any other plan satisfying Code
Section 401(k)(3) and Reg. Section 1.401(k)-1(b)(3) which the
Employer elects to permissively aggregate with this Plan, by
treating all such plans and this Plan as a single plan.
2.35 "M-TEST AVERAGE CONTRIBUTION PERCENTAGE" shall mean
the average (expressed as a percentage) of the M-Test Contribution
Percentages of the Participants in a group.
2.36 "M-TEST CONTRIBUTION PERCENTAGE" shall mean the ratio
(expressed as a percentage) of a Participant's M-Test Contributions
for a Plan Year to the Participant's Compensation for the Plan Year.
The M-Test Contribution Percentage for a Participant who is a Highly
Compensated Employee shall be determined by combining all plans
subject to Code Section 401(m) under which the Highly Compensated
Employee is eligible to participate (other than those which may not
be permissively aggregated) with this Plan as though they were a
single plan. If a Highly Compensated Employee is eligible to
2
<PAGE> 3
participate in this Plan and the family aggregation rules in Section
2.22 apply, then the M-Test Contribution Percentage shall be
determined by combining the M-Test Contributions and compensation of
all eligible Family Members. For this purpose, Compensation is
defined as in Section 7.01(b) of the Plan. The M-Test Contribution
Percentage for a Participant who has made no Elective Deferral
contributions and who is not credited with any M-Test Contributions
for the Plan Year shall be zero (0).
2.37 "M-TEST CONTRIBUTIONS" shall mean for any Plan Year
Matching Contributions made pursuant to Section 5.06 less any of the
Participant's Qualified Matching Contributions included as K-Test
Contributions, plus, if so elected by the Employer, part or all of
the Qualified Non-Elective Contributions allocated to the Participant
for such year, provided that, any Qualified Non-Elective
Contributions included as M-Test Contributions shall not increase the
difference between the M-Test Average Contribution Percentage for
Highly Compensated Employees and the M-Test Average Contribution
Percentage for Non-Highly Compensated Employees; and, farther
provided that, no Qualified Non-Elective Contributions included as
M-Test Contributions shall be included as K-Test Contributions. In
determining the amount of M-Test Contributions under this Section,
the Plan Administrator shall take into account all employee
contributions made by the Participant and all matching contributions
made by the Employer under any other plan which is aggregated with
this Plan for purposes of Code Section 401(a)(4) or Code Section
410(b) (other than Code Section 410(b)(2)(A)(ii) and any other plan
satisfying Code Section 401(k)(3) and Reg. Section 1.401(k)-1(b)(3)
which the Employer elects to permissively aggregate with this Plan,
by treating all such plans and this Plan as a single plan.
2.44 "PARTICIPANT" shall mean any Employee who is not an
Excluded Employee and who has satisfied all of the applicable Age and
service requirements of Section 4.01. Such an Employee shall be
deemed to be a Participant in the Plan for purposes of any applicable
non-discrimination test, including the K-Test and M-Test defined in
this Plan, without regard to whether he has executed a Salary
Reduction Agreement and agreed to have contributions made to this
Plan through Elective Deferrals. Effective July 1, 1993, a
Participant who is not also a Davis-Bacon Employee or a Salaried
Employee may nevertheless be considered "active or inactive"
depending on whether he has signed a Salary Reduction Agreement.
2.49 "QUALIFIED MATCHING CONTRIBUTION" shall mean a
Matching Contribution with respect to which the requirements of Reg.
Section 1.40l(k)-1(b)(5) and Code Section 401(k)(2)(B) and (c)
are met.
2.50 "QUALIFIED NON-ELECTIVE CONTRIBUTION" shall mean any
Employer contribution to the Plan other than a Matching Contribution
with respect to which the Employee may not elect to have the
contribution paid to the Employee in cash instead of being
contributed to the Plan and (if treated as K-Test Contributions) the
requirements of
3
<PAGE> 4
Reg. Section 1.401(k)-1(b)(5) and Code Sections 401(k)(2)(B) and
(c) are met or (if treated as M-Test Contributions) the requirements
of Reg. Section 1.401(m)-1(b)(5) are met.
4.01 AGE AND SERVICE REQUIREMENTS:
(a) Effective July 1, 1993, an Employee who is not an
Excluded Employee shall become a Participant in this Plan on the
first Entry Date coincident with or next following the date on which
he satisfies all of the following requirements:
(i) attains the Age of twenty-one (21) years; and
(ii) completes a Year of Eligibility Service; and
(iii) is employed on the Entry Date.
(b) Effective July 1, 1993, an Eligible Employee who is
also a Davis-Bacon Employee shall participate in this Plan for the
purpose of receiving allocations of Employer Davis-Bacon
Contributions only, on his Employment Commencement Date or his
Re-employment Commencement Date.
(c) Prior to July 1, 1993, but after the Effective Date,
only an Eligible Employee who is a Salaried Employee and who on the
first Entry Date coincident with or next following the date on which
he satisfies all of the following requirements, shall participate in
this Plan:
(i) attains the Age of twenty-one (21) years; and
(ii) completes a Year of Eligibility Service; and
(iii) is employed on the Entry Date.
(d) Prior to the Effective Date, an Eligible Employee shall
participate as provided in the Prior Plan.
(e) An Employee who becomes a Participant and who also
executes a written Salary Reduction Agreement in the manner set forth
in procedures issued by the Plan Administrator shall be considered to
be an active Participant. Notwithstanding the foregoing, an Eligible
Employee who is also a Salaried Employee shall become an active
Participant for purposes of allocations of Employer Profit Sharing
Contributions only, on the Plan Entry Date coincident with or
immediately preceding the date the Salaried Employee satisfies the
requirements of Section 4.01(a) or (c), as applicable. An Eligible
Employee who is also a Davis-Bacon Employee shall become an active
Participant for purposes of allocations of Employer Davis-Bacon
Contributions only, upon satisfaction
4
<PAGE> 5
of the requirements of Section 4.01(b). An Employee who was a
Participant in the Prior Plan on the day before the Effective date
shall continue as a Participant in this Plan on that date.
5.12 LIMITATIONS ON CONTRIBUTIONS: Notwithstanding any
other provisions of this Plan, all contributions for the Plan Years
commencing after December 31, 1986, shall be subject to the following
limitations:
(a) The total amount of a Participant's Elective
Deferrals during any calendar year shall not
exceed seven thousand dollars ($7,000), which
amount shall be indexed at the same time and in
the same manner as the dollar limitation for
defined benefit plans in Code Section 415(b)(1)
(A). For this purpose, a Participant's Elective
Deferrals to this Plan plus the Participant's
elective deferrals pursuant to any other
Code Section 401(k) arrangement, elective
deferrals under a simplified employee pension
plan and salary reduction contributions to a
tax-sheltered annuity, irrespective of whether
the Employer or any member of a Controlled
Group or Affiliated Service Group to which the
Employer belongs maintains the arrangement,
plan or annuity, shall be aggregated.
- - -
5.13 EXCESS CONTRIBUTIONS: In accordance with the
limitations on contributions described in Section 5.12, the following
amounts shall be treated as excess contributions under this Plan:
- - -
(d) EXCESS COMBINED-TEST CONTRIBUTIONS (K-TEST):
With respect to any Plan Year, the excess of
the aggregate amount of the K-Test
Contributions actually made on behalf of Highly
Compensated Employees for such Plan Year over
the maximum amount of such contributions
permitted under Section 5.12(d), provided that
M-Test Contributions are not reduced. The
Excess Combined-Test Contributions of an
individual Highly Compensated Employee shall be
determined in the same manner as Excess K-Test
Contributions under (b) above, except
disregarding the provision for taking into
account distributions of Excess Deferrals.
(e) EXCESS COMBINED-TEST CONTRIBUTIONS (K-TEST):
With respect to any Plan Year, the excess of
the aggregate amount of the M-Test
Contributions actually made on behalf of Highly
Compensated Employees for such Plan Year over
the maximum amount of such contributions
permitted under Section 5.12(d), provided that
K-Test Contributions are not reduced. The
5
<PAGE> 6
Excess Combined-Test Contributions of an
individual Highly Compensated Employee shall be
determined in the same manner as Excess M-Test
Contributions under (c) above.
5.14 CORRECTION OF EXCESS CONTRIBUTIONS: For Plan Years
commencing after December 31, 1986, the Plan provides the following
methods for correcting excess contributions as described in Section
5.09:
- - -
(b) EXCESS K-TEST CONTRIBUTIONS: The Plan
Administrator shall direct the Trustee to
distribute to a Participant his Excess K-Test
Contribution plus income, if any, allocable
thereto. Such distribution shall be designated
by the Plan Administrator as a distribution of
an excess contribution and shall be made after
the end of the Plan Year in which the excess
contribution arose and within twelve (12)
months after the end of such Plan Year.
If the Employer has made a Matching
Contribution attributable to any portion of the
Participant's Excess K-Test Contribution
distributed to the Participant pursuant to the
above, the Plan Administrator shall treat such
Matching Contribution in the same manner as an
Excess M-Test Contribution in accordance with
(C) below. For the Plan Year commencing on
January 1, 1994, if the Employer has made a
Matching Contribution attributable to any
portion of the Participant's Excess K-Test
Contribution distributed to the Participant
pursuant to the above, the Plan Administrator
shall treat such Matching Contribution as a
forfeiture. The forfeited amount shall be used
to reduce the Employer's Matching Contribution
otherwise required for the Plan Year.
(c) EXCESS M-TEST CONTRIBUTIONS: The Plan
Administrator shall direct the Trustee to
distribute to a Participant any portion of the
Participant's Excess M-Test Contribution, plus
income, if any, allocable thereto. Such
distribution shall be designated by the Plan
Administrator as a distribution of excess
contributions and shall be made after the end
of the Plan Year in which the excess
contribution arose and within twelve (12)
months after the end of such Plan Year.
(d) EXCESS COMBINED-TEST CONTRIBUTIONS: The Plan
Administrator shall correct the Excess
Combined-Test Contributions (K-Test or M-Test)
in the same manner as for Excess K-Test and
M-Test Contributions in (b) and (c) above. In
order to satisfy the Combined Test Limitations
the Plan Administrator shall reduce K-Test
Contributions, M-Test Contributions or both for
all affected Highly Compensated Employees. The
Plan
6
<PAGE> 7
Administrator shall make reductions which
result in the least amount of contributions
returned.
For purposes of the above, income shall include realized and
unrealized gains and losses and shall be allocated to excess
contributions in accordance with Regulations issued by the Secretary.
Distributions pursuant to the above shall be made without regard to
any consent by the Participant or Spouse otherwise required under
this Plan.
19.03 TOP-HEAVY MINIMUM REQUIRED ALLOCATION: For any
Plan Year in which the Plan is Top-Heavy, but not Super Top-Heavy:
- - -
(2) In the case where the Employer has no defined
benefit plan which designates this Plan to
satisfy Code Section401 and 416(c), the largest
percentage of Employer contributions and
forfeitures, as a percentage of the first two
hundred thousand dollars ($200,000), (or such
large amount as may be prescribed by the
Secretary of Treasury or his delegate) of the
Key Employee's top-Heavy Compensation,
allocated on behalf of any Key Employee for
that year. In calculating this percentage all
amounts contributed by the Employer to the Key
Employee's Elective Deferral Account pursuant
to a Salary Reduction Agreement shall be
treated as Employer contributions. For Plan
Years beginning after December 31, 1993, the
Plan shall substitute the amount "one hundred
fifty thousand dollars ($150,000)" for the
amount "two hundred thousand dollars
($200,000)" wherever it appears in this
Section. The one hundred fifty thousand dollar
amount shall be adjusted each Plan Year as
provided in Code Section40l(a)(17(B).
19.04 SUPER TOP-HEAVY MINIMUM REQUIRED ALLOCATION:
For any Plan Year in which the Plan is Super Top-Heavy:
- - -
(2) In the case where the Employer has
no defined benefit plan which
designates this Plan to satisfy Code
Section401 and 416(c), the largest
percentage of Employer contributions
and forfeitures, as a percentage of
the first two hundred thousand
dollars ($200,000), (or such larger
amount as may be prescribed by the
Secretary of the Treasury or his
delegate) of the Key Employee's
Top-Heavy Compensation, allocated on
behalf of any Key Employee for that
year. In calculating this percentage
all amounts contributed by the
Employer to the Key Employee's
Elective Deferral Account
7
<PAGE> 8
pursuant to a Salary Reduction
Agreement shall be treated as
Employer contributions. For Plan
Years beginning after December 31,
1993, the Plan shall substitute the
amount "one hundred fifty thousand
dollars ($150,000)" for the amount
"two hundred thousand dollars
($200,000)" wherever it appears in
this Section. The one hundred fifty
thousand dollar amount shall be
adjusted each Plan Year as provided
in Code Section 401(a)(17)(B).
19.06 COMPENSATION LIMITATION: For any Plan Year in which
the Plan is Top-Heavy, only the first two hundred thousand dollars
($200,000), (or such larger amount as may be prescribed by the
Secretary of the Treasury or his delegate), of a Participant's Annual
Compensation or Top-Heavy Compensation shall be taken into account
for purposes of this Plan. For Plan Years beginning after December
31,1993, the Plan shall substitute the amount "one hundred fifty
thousand dollars ($150,000)" for the amount "two hundred thousand
dollars ($200,000)" wherever it appears in this Section. The one
hundred fifty thousand dollar amount shall be adjusted each Plan Year
as provided in Code Section 401(a)(17)(B).
19.09 PARTICIPANT ELECTIVE DEFERRALS: For Plan Years
beginning and before January 1, 1989, Elective Deferrals may be taken
into account in determining under Sections 19.03(b) and 19.04(b) the
amount of Employer contributions to be allocated to a Participant who
is a Non-key Employee. For Plan Years beginning after December 31,
1988, Elective Deferrals shall not be taken into account in
determining under Sections 19.03(b) and 19.04(b) the amount of
Employer contributions to be allocated to a Participant who is a
Non-key Employee.
IN WITNESS WHEREOF, GG&R has caused this Amendment to the Plan to be
duly executed as of the date and year first above written.
"EMPLOYER"
G.G. &R.,Inc.
By:________________________
Its:_______________________
8
<PAGE> 1
Exhibit 10.12
GRANITE CONSTRUCTION INCORPORATED
PURCHASE OF 102,850 SHARES OF CLASS A COMMON STOCK
OF TIC HOLDINGS, INC.
----------------------------------
DECEMBER 30, 1996
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Granite Construction Incorporated
Purchase of 102,850 Shares of Class A Common Stock of TIC Holdings, Inc.
Document Index
Stock Purchase Agreement between 1
Granite Construction Incorporated (the
"Company") and TIC Holdings, Inc.
("TIC") dated December 23, 1996
Cooperation and Rights Agreement 2
between the Company, TIC, and various
shareholders of TIC dated December 23,
1996
Officer's Certificate from TIC dated 3
December 30, 1996
Legal Opinion from Gray, Cary, Ware & 4
Freidenrich to TIC dated
December 30, 1996
Compliance Certificate from the 5
Company dated December 30, 1996
Legal Opinion from Gray, Cary, Ware & 6
Freidenrich to the Company dated
December 30, 1996
Press release from the Company dated 7
December 30, 1996
Closing Certificate from TIC dated 8
December 30, 1996
Stock Certificate from TIC to the 9
Company representing 102,850 shares of
TIC
Opinion from TIC in-house counsel to 10
the Company dated December 30, 1996
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Opinion from Otten, Johnson, Robinson, 11
Neff & Ragonetti, P.C. to the Company
dated December 30, 1996
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STOCK PURCHASE AGREEMENT
between
GRANITE CONSTRUCTION INCORPORATED,
a Delaware corporation
("Buyer")
and
TIC HOLDINGS, INC.,
a Colorado corporation
(the "Company")
Dated December 23, 1996
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TABLE OF CONTENTS
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1. Definitions ............................................................. 1
"Associated Companies" .................................................. 1
"Applicable Contract" ................................................... 1
"Balance Sheet" ......................................................... 1
"Best Efforts" .......................................................... 1
"Breach" ................................................................ 1
"Buyer" ................................................................. 2
"Closings" .............................................................. 2
"Closing Dates" ......................................................... 2
"Code" .................................................................. 2
"Common Stock" .......................................................... 2
"Company" ............................................................... 2
"Consent" ............................................................... 2
"Contemplated Transactions" ............................................. 2
"Contract" .............................................................. 2
"Disclosure Letter" ..................................................... 2
"Encumbrance" ........................................................... 2
"Environment" ........................................................... 2
"Environmental, Health, and Safety Liabilities" ......................... 3
"Environmental Law" ..................................................... 3
"ERISA" ................................................................. 4
"Escrow Agent" .......................................................... 4
"Escrow Agreement" ...................................................... 4
"Exchange Act" .......................................................... 4
"Facilities" ............................................................ 4
"Financial Statements" .................................................. 4
"GAAP" .................................................................. 4
"Governmental Authorization" ............................................ 4
"Governmental Body" ..................................................... 5
"Hazardous Act" ......................................................... 5
"Hazardous Materials" ................................................... 5
"HSR Act" ............................................................... 5
"IRS" ................................................................... 5
"Knowledge" ............................................................. 5
"Knowledge of the Company" .............................................. 6
"Legal Requirement" ..................................................... 6
"Occupational Safety and Health Law" .................................... 6
"Order" ................................................................. 6
"Ordinary Course of Business" ........................................... 6
"Organizational Documents" .............................................. 6
"Person" ................................................................ 6
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"Plan" .................................................................. 6
"Proceeding" ............................................................ 6
"Release" ............................................................... 7
"Representative" ........................................................ 7
"Securities Act" ........................................................ 7
"Shares" ................................................................ 7
"Shareholders" .......................................................... 7
"Subsidiaries" .......................................................... 7
"Tax" ................................................................... 7
"Tendered Shares" ....................................................... 7
"Termination Date" ...................................................... 7
2. Sale and Issuance of Shares and Tendered Shares; Closing ................ 7
2.1 Shares ......................................................... 7
2.2 Tendered Shares ................................................ 8
2.3 Purchase Price ................................................. 8
2.4 Closings ....................................................... 8
2.5 Closing Obligations ............................................ 8
2.6 Post-First Closing Obligations ................................. 9
3. Representations and Warranties of the Company ........................... 10
3.1 Organization and Good Standing; Subsidiaries ................... 10
3.2 Authority; No Conflict ......................................... 10
3.3 Capitalization ................................................. 12
3.4 Shares, Options and Warrants of the Company .................... 12
3.5 Financial Statements and Other Information ..................... 12
3.6 Books and Records .............................................. 13
3.7 Title to Properties; Encumbrances .............................. 13
3.8 Condition and Sufficiency of Assets ............................ 14
3.9 Accounts Receivable ............................................ 15
3.10 No Undisclosed Liabilities ..................................... 15
3.11 Taxes .......................................................... 15
3.12 No Material Adverse Change ..................................... 16
3.13 Employee Benefits .............................................. 16
3.14 Compliance with Legal Requirements; Governmental
Authorizations ................................................. 21
3.15 Legal Proceedings; Orders ...................................... 22
3.16 Absence of Certain Changes and Events .......................... 23
3.17 Contracts; No Defaults ......................................... 23
3.18 Insurance ...................................................... 24
3.19 Environmental and Occupational Safety and Health Matters ....... 26
3.20 Employees ...................................................... 27
3.21 Labor Disputes; Compliance ..................................... 27
3.22 Certain Payments ............................................... 28
3.23 Disclosure ..................................................... 28
3.24 Brokers or Finders ............................................. 28
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4. Representations and Warranties of Buyer ................................. 28
4.1 Organization and Good Standing ................................. 28
4.2 Authority; No Conflict ......................................... 29
4.3 Investment Intent .............................................. 29
4.4 Certain Proceedings ............................................ 31
4.5 Brokers or Finders ............................................. 31
4.6 Consent ........................................................ 31
5. Covenants of the Company Prior and Subsequent to First Closing Date ..... 31
5.1 Access and Investigation ....................................... 31
5.2 Operation of the Business of the Company ....................... 31
5.3 Negative Covenant .............................................. 32
5.4 Required Approvals ............................................. 32
5.5 Notification ................................................... 32
5.6 No Negotiation ................................................. 32
5.7 Best Efforts ................................................... 33
5.8 Supplements to Disclosure Letter ............................... 33
5.9 Solicitation of Shareholders ................................... 33
6. Covenants of Buyer Prior to Second Closing Date ......................... 33
6.1 Access to Information .......................................... 33
6.2 Approvals of Governmental Bodies ............................... 33
6.3 Best Efforts ................................................... 33
6.4 Notification ................................................... 34
7. Conditions Precedent to Buyer's Obligation to Close ..................... 34
7.1 Accuracy of Representations .................................... 34
7.2 Completion of Investigations, Inspections and Studies .......... 34
7.3 The Company's Performance ...................................... 35
7.4 Consents ....................................................... 35
7.5 Additional Documents ........................................... 35
7.6 No Proceedings ................................................. 35
7.7 Disclosure Letter .............................................. 35
7.8 Election of Additional Directors ............................... 35
8. Conditions Precedent to the Company's Obligation to Close ............... 36
8.1 Accuracy of Representations .................................... 36
8.2 Buyer's Performance ............................................ 36
8.3 Consents ....................................................... 36
8.4 Additional Documents ........................................... 36
8.5 No Injunction .................................................. 37
9. Additional Conditions Precedent to Buyer's and the Company's
Obligation to Close at Second Closing ................................... 37
9.1 Consents ....................................................... 37
9.2 No Material Adverse Change ..................................... 37
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9.3 Completion of Tender Offer ..................................... 37
9.4 Opinion of Otten, Johnson, Robinson, Neff & Ragonetti, P.C.
("Company Counsel") ............................................ 37
10. Termination ............................................................. 37
10.1 Termination Events ................................................. 37
10.2 Effect of Termination .............................................. 38
11. General Provisions ...................................................... 38
11.1 Expenses ....................................................... 38
11.2 Public Announcements ........................................... 39
11.3 Confidentiality ................................................ 39
11.4 Notices ........................................................ 39
11.5 Binding Arbitration; Service of Process ........................ 40
11.6 Further Assurances ............................................. 41
11.7 Waiver ......................................................... 41
11.8 Indemnification ................................................ 42
11.9 Entire Agreement and Modification, Survival of Representations
and Warranties ................................................. 42
11.10 No Personal Liability .......................................... 42
11.11 Assignments, Successors and No Third Party Rights .............. 42
11.12 Severability ................................................... 43
11.13 Section Headings, Construction ................................. 43
11.14 Time of Essence ................................................ 43
11.15 Governing Law .................................................. 43
11.16 Counterparts ................................................... 43
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made as of December
23, 1996 between Granite Construction Incorporated, a Delaware corporation
("Buyer") and TIC Holdings, Inc., a Colorado corporation (the "Company").
RECITALS
A. For the consideration and on the terms set forth in this Agreement,
Buyer desires to purchase from the Company and the Company desires to issue and
sell to the Purchaser 102,850 shares (the "Shares") of the Company's Class A
Common Stock, par value $.10 per share (the "Common Stock"), at a price per
share as described in Section 2 hereto.
B. In addition, Buyer desires to purchase directly from the
shareholders of the Company, an aggregate of 154,276 Shares of the Company's
Class A Common Stock, par value $.10 per share (the "Tendered Shares"), also at
the price per share as described in Section 2 hereto.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
have the meanings specified or referred to in this Section 1:
"Associated Companies" -- the Company and its Subsidiaries,
collectively.
"Applicable Contract" -- any Contract (a) under which any Associated
Company has any Material rights, (b) under which any Associated Company has any
Material obligation or liability or (c) by which any Associated Company or any
of the Material assets owned, leased or used by any Associated Company is bound.
"Balance Sheet" -- as defined in Section 3.5.
"Best Efforts" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to maximize to the extent
reasonably practicable the prospects that a result will occur.
"Breach" -- a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any Material inaccuracy in or Material breach of, or any Material
failure to perform or comply with, such representation, warranty, covenant,
obligation, or other provision or (b) any Material claim (by any Person) or
other occurrence or circumstance that is or was
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inconsistent with such representation, warranty, covenant, obligation, or other
provision and causes Material damage to such person, and the term "Breach" means
any such Material inaccuracy, breach, failure, claim, occurrence, or
circumstance.
"Buyer" -- as defined in the first paragraph of this Agreement.
"Closings" -- as defined in Section 2.4.
"Closing Dates" -- the date and time as of which the Closings actually
take place.
"Code" -- the Internal Revenue Code of 1986, as amended, or any
successor law, and regulations issued by the IRS pursuant to the Internal
Revenue Code or any successor law.
"Common Stock" -- as defined in the Recitals to this Agreement.
"Company" -- as defined in the first paragraph of this Agreement.
"Consent" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" -- all of the transactions contemplated by
this Agreement, including:
(a) the issuance and sale of the Shares by the Company to
Buyer; and
(b) the performance by Buyer and the Company of their
respective covenants and obligations under this Agreement.
"Contract" -- any Material agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Disclosure Letter" --the disclosure letter delivered by the Company to
Buyer prior to the Closing, as the same may be supplemented from time to time,
containing the information required by Section 3.
"Encumbrance" -- any Material charge, claim, community property
interest, condition, equitable interest, lien, pledge, security interest, right
of first refusal, option or restriction of any kind, including any Material
restriction on use, voting (in the case of any security), transfer, receipt of
income, or exercise of any other attribute of ownership.
"Environment" -- soil, land surface or subsurface strata, surface
waters (including navigable waters and ocean waters), groundwaters, drinking
water
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supply, stream sediments, ambient air (including indoor air), plant and animal
life, and any other natural resource.
"Environmental, Health, and Safety Liabilities" -- any Material cost,
damages, expense, liability, obligation, or other responsibility arising from or
under the Breach of any Environmental Law, Occupational Safety and Health Law,
or any Order, and relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
remedial, or inspection costs and expenses arising under Environmental Law or
Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action" will include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA").
"Environmental Law" -- any Legal Requirement designed:
(a) to advise appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous substances or
materials, violations or discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(b) to prevent or acceptably minimize the release of
pollutants or hazardous substances or materials into the Environment;
(c) to reduce the quantities, prevent the release, and
minimize the hazardous characteristics of wastes that are generated;
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(d) to assure that products are designed, formulated,
packaged, or used so that they do not present unreasonable risks to human health
or the Environment when used or disposed of;
(e) to protect resources or species;
(f) to acceptably minimize the risks inherent in
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g) to clean up pollutants that have been released, prevent
the threat of release, or pay the costs of such clean up or prevention; or
(h) to make responsible parties pay private parties, or groups
of them, for damages done to their health or the Environment, or to permit
self-appointed representatives of the public interest to recover for injuries
done to public assets or the Environment.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Escrow Agent" -- LaSalle National Trust.
"Escrow Agreement" -- that certain escrow agreement to be entered into
by and among Buyer, the Company and the Escrow Agent, in the form to be
acceptable to the parties thereto upon commencement of the tender offer for the
Tendered Shares.
"Exchange Act" -- the Securities Exchange Act of 1934, as amended, or
any successor law, and the regulations or rules issued pursuant to such Act or
any successor law.
"Facilities" -- any real property or leaseholds currently owned or
operated by the Company and any buildings, plants, structures, or equipment
currently owned, leased, or operated by the Company.
"Financial Statements" -- shall mean all of the consolidated financial
statements of the Company described in Section 3.5.
"GAAP" -- generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and the
other financial statements referred to in Section 3.5 were prepared.
"Governmental Authorization" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal
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Requirement which if not obtained by an Associated Company, such failure would
have a Material adverse effect on the Company.
"Governmental Body" -- any:
(a) nation, state, county, city, town, village, district, or
other governmental jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"Hazardous Act" -- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or the Company.
"Hazardous Materials" any substance that is now listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos containing materials.
"HSR Act" -- the Hart-Scott-Rodino Antitrust Improvements Act of 1976
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
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(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could reasonably be expected to
discover or otherwise become aware of such fact in carrying out such
individual's ordinary duties for the Company.
"Knowledge of the Company" -- shall mean Knowledge of the following
officers about the affairs of the Company: Peggy F. Barry, Gary B. McKenzie,
Ronald W. McKenzie, James F. Kissane, Michael A. Ross and Edward J. Vanderwall.
"Legal Requirement" -- any applicable federal, state, local, municipal,
foreign, international, multinational, or other constitution, law, ordinance,
principle of common law, regulation, statute or treaty pursuant to which the
failure to comply would have a Material adverse effect on the Company.
"Material" -- Involving potential claims, expenses, payments or other
liability in excess of $200,000.
"Occupational Safety and Health Law" -- any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards.
"Order" -- any Material award, decision, injunction, judgment, order,
directive, ruling, subpoena, or verdict entered, issued, made, or rendered by
any court, administrative agency, or other Governmental Body or by any
arbitrator.
"Ordinary Course of Business" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course Of Business" only if such
action is consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person.
"Organizational Documents" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"Person" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or other entity or
Governmental Body.
"Plan" -- as defined in Section 3.13.
"Proceeding" -- any Material action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal)
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commenced, brought, conducted, or heard by or before, or otherwise involving,
any Governmental Body, arbitrator, mediator or other third party.
"Release" -- any Material spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment.
"Representative" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act" -- the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Shares" -- as defined in the Recitals to this Agreement.
"Shareholders" -- the holders of record on September 30, 1996 of the
Common Stock.
"Subsidiaries" -- with respect to any Person (the "Owner"), any
corporations or other Persons of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company. Subsidiaries excludes those entities expressly
excluded on Part 3.1(a) of the Disclosure Letter.
"Tax" -- any Material tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body.
"Tendered Shares" -- as defined in the Recitals to this Agreement.
"Termination Date" -- as defined in Section 2.4.
2. Sale and Issuance of Shares and Tendered Shares; Closings; Escrow.
2.1 Shares. Subject to the terms and conditions of this Agreement,
at the First Closing, the Company will issue and sell to Buyer, and Buyer will
purchase from the Company, the Shares.
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2.2 Tendered Shares. Subject to the terms and conditions of this
Agreement and the Escrow Agreement, Buyer will purchase the Tendered Shares from
the Shareholders.
(a) The Tendered Shares to be purchased from the Shareholders shall
be allocated as follows:
(i) The Shareholders shall be entitled, at their sole
election, to sell to Granite up to 20% of the shares held by such Shareholder on
September 30, 1996.
(ii) To the extent there are Shareholders who elect to sell
less than all of the Tendered Shares which they are entitled to sell, such
excess Tendered Shares shall be allocated in accordance with the Company's
Stock Repurchase Policy adopted by the board of directors of the Company on
July 29, 1994.
(b) If the Shareholders fail to tender shares equal to all of the
Tendered Shares, the Company will issue and sell to the Buyer, and the Buyer
will purchase that number of shares of Common Stock such that immediately
subsequent to such purchase and sale, Granite shall own 30% of the issued and
outstanding Common Stock.
2.3 Purchase Price. The purchase price per share (the "Purchase
Price") for the Shares and the Tendered Shares shall be established according
to Article VI A. of the Company's Third Restated Articles of Incorporation
utilizing audited financial statements for the year ended December 31, 1996 and
an appraisal of the Associated Companies' equipment prepared by an independent
appraiser (the "Appraisal") but in no case shall the Purchase Price be less
than $78.00 per share (the "Minimum Purchase Price"). The Purchase Price shall
be calculated excluding the purchase of the Shares.
2.4 Closings. The purchase and sale (the "Closings") provided for in
this Agreement will take place at the offices of Otten, Johnson, Robinson,
Neff, Ragonetti, P.C., 950 17th Street, Suite 1600, Denver, Colorado 80202 at
10:00 a.m. MST. At the First Closing on or around December 30, 1996, upon
satisfaction of all conditions of Closing in Sections 7 and 8, Granite shall
purchase the Shares. At the Second Closing, upon satisfaction of all conditions
of Closing in Section 9, on or around April 15, 1997 but no later than May 15,
1997 (the "Termination Date"), Granite shall purchase the Tendered Shares.
2.5 Closing Obligations. At the First Closing:
(a) The Company will deliver to Buyer:
(i) a certificate representing the Shares;
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(ii) a Co-operation and Rights Agreement executed by the
Company and certain shareholders of the Company whereby Buyer, the Company and
such shareholders agree to various forms of Strategic co-operation and certain
rights and limitations regarding ownership of the Shares and the Tendered Shares
by Buyer (the "Rights Agreement");
(iii) a certificate executed by the Company representing and
warranting to Buyer that each of the representations and warranties by the
Company in this Agreement was accurate in all Material respects as of the date
of this Agreement and is accurate in all Material respects as of the First
Closing Date as if made on the First Closing Date (giving full effect to any
supplements to the Disclosure Letter that were delivered by the Company to Buyer
prior to the First Closing Date in accordance with Section 5.8); and
(iv) such other documents as are required to be provided
pursuant to Section 7; and
(b) Buyer will deliver to the Company:
(i) the Minimum Purchase Price for the Shares, by wire transfer
to accounts specified by the Company;
(ii) a certificate executed by Buyer representing and
warranting to the Company to the effect that, except as otherwise stated in such
certificate, each of Buyer's representations and warranties in this Agreement
was accurate in all respects as of the date of this Agreement and is accurate in
all respects as of the First Closing Date as if made on the First Closing Date;
(iii) the Rights Agreement executed by Buyer;
(iv) such other documents as are required to be provided
pursuant to Section 8.
2.6 Post-First Closing Obligations.
(a) As soon as reasonably possible after receipt of the Company's
audited financial statements for the year ended December 31, 1996 and the
Appraisal, the Company and Granite shall mutually determine the Purchase Price.
If the Purchase Price exceeds $78.00 per share, Granite shall, within five (5)
business days of such determination, deliver by wire transfer to the Company, an
amount equal to the difference between the Purchase Price and the Minimum
Purchase Price for the Shares.
(b) Immediately upon final calculation of the Purchase Price, the
parties shall enter into the Escrow Agreement and commence the tender offer for
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the Tendered Shares and Granite shall deposit with the Escrow Agent by wire
transfer an amount equal to the Purchase Price for the Tendered Shares.
3. Representations and Warranties of the Company. The Company
represents and warrants to Buyer that to the knowledge of the Company:
3.1 Organization and Good Standing; Subsidiaries.
(a) Part 3.1(a) of the Disclosure Letter contains or will
contain a complete and accurate list for each Associated Company of its name,
its jurisdiction of organization, other jurisdictions in which it is authorized
to do business, and its capitalization (including the identity of each equity
owner and the ownership interests held by each). Each Associated Company is an
entity duly organized, validly existing, and in good standing under the laws of
its jurisdiction of organization, with full power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets
that it purports to own or use, and to perform all its obligations under
Applicable Contracts. Each Associated Company is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned,
leased or used by it, or the nature of the activities conducted by it, requires
such qualification, except where the failure to so qualify would not have a
Material adverse effect on such Associated Company or its operations.
(b) The Company has delivered or made available to Buyer copies
of the Organizational Documents of each Associated Company, as currently in
effect on or prior to the Closing.
(c) Other than as listed on Part 3.1(c) of the Disclosure
Letter, the Associated Companies (i) have no Subsidiaries, (ii) do not own or
control (directly or indirectly) any capital stock, bonds or other securities
of, and do not have any proprietary interest in, any other corporation, general
or limited partnership, firm, association or business organization, entity or
enterprise and (iii) do not control (directly or indirectly) the management or
policies of any other corporation, partnership, firm, association or business
organization, entity or enterprise.
3.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other laws
affecting creditor's rights generally. Upon the execution and delivery of this
Agreement (including the Disclosure Letter) and the Rights Agreement
(collectively the "Company's Closing Documents"), the Company's Closing
Documents will constitute the legal, valid, and binding obligations of the
Company, enforceable against the Company in accordance
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with their respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other laws affecting creditor's rights generally.
(b) Except as set forth in Part 3.2(b) of the Disclosure Letter,
neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with, or result in a violation of
(A) any provision of the Organizational Documents of
the Associated Companies; or
(B) any resolution adopted by the board of directors
or the shareholders of any Associated Company;
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the right to challenge any of
the Contemplated Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which any Associated Company, or
any of the assets owned, leased or used by, any Associated Company, may be
subject which would have a Material adverse affect on any Associated Company;
(iii) contravene, conflict with, or result in a violation of
any of the Material terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any Material
Governmental Authorization that is held by any Associated Company or that
otherwise relates to the business of, or any of the assets owned, leased or used
by, any Associated Company;
(iv) cause Buyer or any Associated Company to become
subject to, or to become liable for the payment of, any Tax;
(v) cause any of the assets owned by any Associated
Company to be reassessed or revalued by any taxing authority or other
Governmental Body;
(vi) contravene, conflict with, or result in a violation or
breach of any Material provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract with
outstanding obligations of the Company in excess of $5,000,000; or
(vii) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned, leased or used by
any Associated Company.
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Except as set forth in Part 3.2(b) of the Disclosure Letter, no Associated
Company is or will be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of the Closing
Documents or the consummation or performance of any of the Contemplated
Transactions.
3.3 Capitalization. As of September 30, 1996 the authorized equity
securities of the Company consisted of 2,000,000 shares of preferred stock, par
value $1.00 per share, none of which are issued and outstanding, 2,500,000
shares of Class A Common Stock, par value of $.10 per share, of which 771,379
shares were issued and outstanding as of September 30, 1996, and 500,000 Shares
of Class B Common Stock, par value $.10 per share, none of which are issued and
outstanding. With the exception of the securities referred to in Section 3.4
below, all of the outstanding equity securities of each Associated Company other
than the Company are owned of record and beneficially by one or more of the
Associated Companies, free and clear of all Encumbrances, except for the
Encumbrances set forth as Part 3.3(a) of the Disclosure Letter. Other than as
set forth on Part 3.3(b) of the Disclosure Letter, no legend or other reference
to any purported Encumbrance appears upon any certificate representing equity
securities of any Associated Company. All of the outstanding equity securities
of any Associated Company have been duly authorized and validly issued and are
fully paid and nonassessable. Except for the securities referred to in Section
3.4 below and as set forth on Part 3.3(c) of the Disclosure Letter, there are no
Applicable Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of any Associated Company. None of the
outstanding securities of any Associated Company was issued in violation of the
Securities Act or any other Legal Requirement. Other than as set forth on Part
3.3(d) of the Disclosure Letter, no Associated Company owns, or has any Contract
to acquire, any securities of any Person (other than Associated Companies) or
any direct or indirect equity or ownership interest in any other business (other
than those businesses disclosed in Part 3.1 of the Disclosure Letter), excluding
contractual joint ventures, consortiums or similar arrangements.
3.4 Shares, Options and Warrants of the Company. Part 3.4 of the
Disclosure Letter contains a list of all outstanding options and warrants and
other securities that may be exercised to purchase or are convertible into
securities of the Associated Companies (the "Securities").
3.5 Financial Statements and Other Information. The Company has
delivered to Buyer:
(a) Audited, consolidated balance sheets of the Company as of
December 31 in each of the years 1990 through 1995 (with the December 31, 1995
balance sheet being referred hereafter as the "Balance Sheet"), and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the fiscal years then ended, together with the report thereon of KPMG
Peat Marwick LLP, independent certified public accountants. Such audited
financial statements and notes thereto fairly present in all Material respects,
the financial
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condition and the consolidated results of operations, stockholders' equity, and
cash flows of the Company as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP, except as
disclosed to the contrary therein; the financial statements referred to in this
Section 3.5 reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such
financial statements. No financial statements of any Person other than the
Associated Companies are required by GAAP to be included in the financial
statements of the Company. Part 3.5(a) of the Disclosure Letter sets forth the
accounting treatment of certain items that may be an exception to this
representation and warranty.
(b) The unaudited consolidated balance sheet of the Company as
of September 30, 1996 (the "1996 Balance Sheet") and the related consolidated
statements of operations, stockholders' equity, and cash flows for the nine
months then ended (collectively, the "1996 Financial Statements"). The 1996
Financial Statements and notes thereto shall fairly present in all Material
respects the consolidated financial condition and results of operations, changes
in stockholders' equity and cash flow of the Company as at September 30, 1996
and for the periods referred to in such financial statements, all in accordance
with GAAP (except insofar as the unaudited 1996 Financial Statements are
concerned for the absence of notes thereto and subject to certain year-end
adjustments and inter-company adjustments among the Associated Companies),
subject to all of the matters described on Part 3.5(a) of the Disclosure Letter;
the financial statements referred to in this Section 3.5(b) shall reflect the
consistent application of such accounting principles throughout the period
involved as well as with prior periods except as set forth on Part 3.5(a) of the
Disclosure Letter, and subject to all of the matters described on Part 3.5(a) of
the Disclosure Letter. No financial statements of any Person other than the
Associated Companies are required by GAAP to be included in the 1996 Financial
Statements of the Company.
3.6 Books and Records. The minute books, stock record books, and
other Material records of the Associated Companies, all of which have been made
available to Buyer, are complete and correct in all Material respects and have
been maintained in accordance with reasonable business practices. The minute
books of the Associated Companies contain accurate and complete records of all
Material corporate action taken by, the stockholders, the Boards of Directors,
and committees of the Boards of Directors of the Associated Companies, and no
meeting of any such stockholders, Board of Directors, or committee of the Board
of Directors has been held for which any Material action has been taken for
which minutes have not been prepared and are not contained in such minute books.
3.7 Title to Properties; Encumbrances. Part 3.7 of the Disclosure
Letter contains a complete and accurate list of all real property, leaseholds,
or other interests therein owned by any Associated Company. Sellers have
delivered or made available to Buyer copies of the deeds and other instruments
(as recorded) by which the Associated Companies acquired such real property and
interests, and copies of all
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title insurance policies, opinions, abstracts, and surveys in the possession of
the Company or the Associated Companies and relating to such property or
interests. The Associated Companies own (with good and marketable title in the
case of real property, subject only to the matters permitted by the following
sentence) all the properties and assets (whether real, personal, or mixed and
whether tangible or intangible) which the Company purports to own on Part 3.7 of
the Disclosure Schedule and reflected as owned in the books and records of the
Associated Companies, including all of the properties and assets reflected in
the 1996 Balance Sheet (except for assets held under Material capitalized leases
disclosed or not required to be disclosed in Part 3.7 of the Disclosure Letter
and personal property sold since the date of the 1996 Balance Sheet, as the case
may be, in the Ordinary Course of Business), and all of the properties and
assets purchased or otherwise acquired by the Associated Companies since the
date of the 1996 Balance Sheet (except for personal property acquired and sold
since the date of the 1996 Balance Sheet in the Ordinary Course of Business),
which subsequently purchased or acquired properties and assets having an
individual value in excess of $100,000 (other than inventory and short-term
investments) are listed in Part 3.7 of the Disclosure Letter. Except as set
forth on Part 3.7 of the Disclosure Letter, all Material properties and assets
reflected in the 1996 Balance Sheet are free and clear of all Encumbrances and
are not, in the case of real property, subject to any rights of way, building
use restrictions, variances, reservations or limitations of any nature except,
with respect to all such properties and assets, (a) mortgages or security
interests shown on the Balance Sheet (and/or described in the notes thereto) as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, (b) mortgages or security interests incurred in connection with
the purchase of property or assets after the date of the Balance Sheet (such
mortgages and security interests being limited to the property or assets so
acquired), with respect to which no default (or event that, with notice or lapse
of time or both, would constitute a default) exists, (c) liens for current taxes
not yet due, and (d) with respect to real property, (i) minor imperfections of
title, if any, none of which is Material or impairs the use of the property
subject thereto, or impairs the operations of any Associated Company and (ii)
zoning laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto. All buildings, plants and
structures owned by the Associated Companies lie wholly within the boundaries of
the real property owned by the Associated Companies and do not encroach upon the
property of, or otherwise conflict with the property rights of, any other
Person.
3.8 Condition and Sufficiency of Assets. In all Material respects,
the buildings, plants, structures, and equipment of the Associated Companies,
including all Material items of equipment not shown on the 1996 Balance Sheet of
the Company which is held by the Company pursuant to the terms of operating
leases, are structurally sound, are in reasonable operating condition and
repair, subject to ordinary wear and tear, and are adequate for the uses to
which they are being put. All buildings, plants, structures and equipment of the
Associated Companies that are capitalized financial statement purposes and are
owned by the Associated
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Companies as of the date set forth in Part 3.8 of the Disclosure Letter and all
equipment held under operating leases as of such dates are described in Part 3.8
of the Disclosure Letter. The building, plants, structures and equipment of the
Associated Companies are sufficient for the continued conduct of the Associated
Companies' businesses after the Closing in substantially the same manner and
volume as conducted prior to the Closing.
3.9 Accounts Receivable. All accounts receivable of the Associated
Companies that are reflected on the 1996 Balance Sheet or on the accounting
records of the Associated Companies as of the Closing Date (collectively, the
"Accounts Receivable") represent or will represent valid obligations arising
from sales actually made or services actually performed in the Ordinary Course
of Business. Unless paid prior to the Closing Date, the Accounts Receivable are
or will be as of the Closing Date current and collectible net of the respective
reserves shown on the 1996 Balance Sheet or on the accounting records of the
Acquired Companies as of the Closing Date (which reserves are adequate and
calculated consistent with past practice and, in the case of the reserve as of
the Closing Date, will not represent a greater percentage of the Accounts
Receivable as of the Closing Date than the reserve reflected in the 1996 Balance
Sheet represented of the Accounts Receivable reflected therein and will not
represent a Material adverse change in the composition of such Accounts
Receivable in terms of aging). Except as noted in Part 3.9 of the Disclosure
Letter, subject to such reserves, each of the Accounts Receivable either has
been or will be collected in full, without any set-off, within ninety days after
the day on which it first becomes due and payable. Except as set forth in Part
3.9 of the Disclosure Schedule, there is no Material contest or claim other than
returns in the Ordinary Course of Business, under any Applicable Contract with
any maker of an Accounts Receivable relating to the amount or validity of, such
Accounts Receivable. Part 3.9 of the Disclosure Letter contains a complete and
accurate list of all Accounts Receivable posted on the Company's books as of
November 30, 1996 which list sets forth the aging of such Accounts Receivable.
Pursuant to Section 5.8, the Company shall deliver to Buyer a supplement to the
Disclosure Letter which includes a list of all receipts as well as billings for
the period commencing on December 1, 1996 and ending on December 20, 1996.
3.10 No Undisclosed Liabilities. Except as set forth in Part 3.10 of
the Disclosure Letter or as set forth in Section 3.15, the Company has no
Material liabilities or obligations of any nature (whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the 1996 Balance Sheet and current liabilities incurred in
the Ordinary Course of Business since the respective dates thereof.
3.11 Taxes.
(a) The Associated Companies filed or caused to be filed on a
timely basis all Material tax returns that are or were required to be filed by
or with respect to any of them, either separately or as a member of a group of
corporations,
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pursuant to applicable Legal Requirements. The Company has made available to
Buyer copies of, and Part 3.11 of the Disclosure Letter contains a complete and
accurate list of, all such tax returns relating to income or franchise taxes
filed since January 1, 1993. The Associated Companies have paid, or made
reasonable provision for the payment of, all Taxes that have or may have become
due pursuant to those tax returns or otherwise, or pursuant to any Material
assessment received by any Associated Company, except such Taxes, if any, as are
listed in Part 3.11(a) of the Disclosure Letter and are being contested in good
faith.
(b) Except as set forth in Part 3.11(a) of the Disclosure
Letter, since January 1, 1993, the United States federal and state income tax
returns of each Associated Company described in Section 3.11(a) have not been
audited by the IRS or relevant state tax authorities. Part 3.11 of the
Disclosure Letter contains a reasonably detailed description of the nature and
outcome of each audit. All deficiencies proposed as a result of such audits have
been paid, reserved against, settled, or, as described in Part 3.11 of the
Disclosure Letter, are being contested in good faith by appropriate proceedings.
Except as described in Part 3.11 of the Disclosure Letter, no Associated Company
has given or been requested to give waivers or extensions (or is or would be
subject to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of Taxes of any Associated Company or for
which any Associated Company may be liable.
(c) All tax returns filed by (or that include on a consolidated
basis) any Associated Company are true, correct, and complete. There is no tax
sharing agreement that will require any payment by any Associated Company after
the date of this Agreement. The Company is not, and within the five-year period
preceding the Closing Date has not been, an "S" corporation.
3.12 No Material Adverse Change. Since the date of the 1996 Balance
Sheet other than for general economic conditions or as disclosed in Part 3.12 of
the Disclosure Letter, there has not been any Material adverse change in the
business, operations, properties, assets, or condition of the Associated
Companies, taken as a whole, and no event has occurred or circumstance exists
that may result in such a Material adverse change. In addition, since the date
of the Balance Sheet, there has been no Material adverse change in the
composition of the assets.
3.13 Employee Benefits.
(a) As used in this Section 3.13, the following terms have the
meanings set forth below.
"Company Other Benefit Obligation" means an Other Benefit Obligation owed,
adopted, or followed by the Company or an ERISA Affiliate of the Company.
"Company Plan" means all Plans currently in effect or pursuant to which
the Company has ongoing Material obligations of which the Company or an ERISA
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Affiliate of the Company is or was a Plan Sponsor, or to which the Company or an
ERISA Affiliate of the Company otherwise contributes or has contributed, or in
which the Company or an ERISA Affiliate of the Company otherwise participates or
has participated. All references to Plans are to Company Plans unless the
context requires otherwise.
"Company VEBA" means a VEBA whose members include employees of the Company
or any ERISA Affiliate of the Company.
"ERISA Affiliate" means, with respect to the Company, any other person
that, together with the Company, would be treated as a single employer under
Code Section 414.
"Multi-Employer Plan" has the meaning given in ERISA Section 3(37)(A).
"Other Benefit Obligations" means all Material obligations, arrangements,
or customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, or agents, other than obligations, arrangements, and
practices that are Plans. Other Benefit Obligations include consulting
agreements under which the compensation paid does not depend upon the amount of
service rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning of Code Section 132.
"Pension Plan" has the meaning given in ERISA Section 3(2)(A).
"Plan" has the meaning given in ERISA Section 3(3).
"Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements or Code Section 401(a).
"Title IV Plans" means ail Pension Plans that are subject to Title IV of
ERISA, 29 U.S.C. Section 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under Code
5.01(c)(9).
"Welfare Plan" has the meaning given in ERISA Section 3(1).
(b) Part 3.13(b) of the Disclosure Letter contains a complete
and accurate list of all Company Plans, Company Other Benefit Obligations, and
Company VEBAs, and identifies as such all Company Plans that are Qualified
Plans.
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(i) Part 3.13(b)(i) of the Disclosure Letter contains a
complete and accurate list of (A) all existing ERISA Affiliates of each
Associated Company, and (B) all Plans of which any such ERISA Affiliate is or
since January 1, 1993 was a Plan Sponsor, in which any such ERISA Affiliate
participates or since January 1, 1993 has participated, or to which any such
ERISA Affiliate contributes or has contributed since January 1, 1993.
(ii) The Associated Companies do not have any Material
liability for post-retirement benefits, other than those payable through a
Pension Plan or Other Benefit Obligation, as calculated in accordance with
Financial Accounting Statement 106 of the Financial Accounting Standards Board,
regardless of whether any Associated Company is required by this Statement to
disclose such information.
(iii) Section 3.13(b)(iii) of the Disclosure letter sets
forth the financial cost of all obligations currently owed under the Company
Plan or Company Other Benefit Obligation that is not subject to the disclosure
and reporting requirements of ERISA.
(c) The Company has made available to Buyer:
(i) all documents that set forth the terms of each
Company Plan, Company Other Benefit Obligation, or Company VEBA and of any
related trust, including (A) all plan descriptions and summary plan descriptions
of Company Plans for which the Associated Companies are required to prepare,
file, and distribute plan descriptions and summary plan descriptions, and (B)
all summaries and descriptions furnished to participants and beneficiaries
regarding Company Plans, Company Other Benefit Obligations, and Company VEBAs
for which a plan description or summary plan description is not required;
(ii) all personnel, payroll, and employment manuals and
policies;
(iii) a written description of any Company Plan or Company
Other Benefit Obligation that is not otherwise in writing;
(iv) all insurance policies purchased by or to provide
benefits under any Company Plan;
(v) all Material contracts with third party
administrators, actuaries, investment managers, consultants, and other persons
providing services that relate to any Company Plan, Company Other Benefit
Obligation, or Company VEBA;
(vi) all Material reports submitted within the four years
preceding the date of this Agreement by third party administrators, actuaries,
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investment managers, consultants, or other persons provided services with
respect to the Company Plan, Company Other Benefit Obligation, or Company VEBA;
(vii) all notifications to employees of their rights under
ERISA Section 601 et seq. and Code Section 4980B to the extent still available
in Company files;
(viii) the Form 5500 filed for the plan years ended
December 31, 1995, 1994 and 1993 with respect to each Company Plan, including
all schedules thereto and the opinions of independent accountants;
(ix) all notices that have been retained by the Company
that were given by any Associated Company or any ERISA Affiliate of an
Associated Company or any Company Plan to the IRS, or any participant or
beneficiary, pursuant to statute, within the four years preceding the date of
this Agreement, including notices that are expressly mentioned elsewhere in this
Section 3.13;
(x) all notices related to a Company Plan that were
given by the IRS or the Department of Labor that were addressed specifically to
any Associated Company, any ERISA Affiliate of an Associated Company, or any
Company Plan within the four years preceding the date of this Agreement; and
(xi) with respect to Qualified Plans and VEBAs, the most
recent determination letter for each Plan of the Associated Companies that is a
Qualified Plan.
(d) Except as set forth in Part 3.13(d) of the Disclosure
Letter:
(i) The Associated Companies have performed in all
Material respects all of their respective obligations to be performed as of the
date hereof under all Company Plans, Company Other Benefit Obligations, and
Company VEBAs. The Associated Companies have made appropriate entries in its
financial records and statements for all obligations and liabilities under such
Plans, VEBAs, and Obligations that have accrued but are not due.
(ii) No written statement has been made by the Company to
any Person with regard to any Plan or Other Benefit Obligation that was not in
accordance with the Plan or Other Benefit Obligation and that could have a
Material adverse economic consequence to any Associated Company or to Buyer.
(iii) The Company is unaware of any reason why the
Associated Companies, with respect to all Company Plans, Company Other Benefits
Obligations, and Company VEBAs, and each Company Plan, Company Other Benefit
Obligation, and Company VEBA are not in full compliance with ERISA, the Code,
and other applicable Laws in all Material respects including the provisions of
such Laws expressly mentioned in this Section 3.13.
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(iv) No transaction prohibited by ERISA Section 406 and
no "prohibited transaction" under Code Section 4975(c) have occurred with
respect to any Company Plan.
(v) No Associated Company has any Material liability to
the IRS with respect to any Plan, including any liability imposed by Chapter 43
of the Code.
(vi) All filings required by ERISA and the Code as to
each Plan have been timely filed, and all notices and disclosures to
participants required by either ERISA or the Code have been timely provided to
the extent that a failure to so timely file or provide could have a Material
adverse effect on the Company.
(vii) Each Company Plan can be terminated within thirty
days, without payment of any additional contribution or amount over the normal
amount due under the terms of the Plan and without the vesting or acceleration
of any benefits promised by such Plan.
(viii) Other than as set forth in Part 3.13(d) of the
Disclosure Letter, since December 31, 1995, there has been no establishment or
amendment of the Company Plan, Company VEBA, or Company Other Benefit
Obligation.
(ix) Since the 1996 Balance Sheet Date, no event has
occurred or circumstance exists that could result in a Material increase in
premium costs of Company Plans and Company Other Benefit Obligations that are
insured, or a Material increase in benefit costs of such Plans and Obligations
that are self-insured.
(x) Other than claims for benefits submitted by
participants or beneficiaries, no claim against, or legal proceeding involving,
the Company Plan, Company Other Benefit Obligation, or Company VEBA is pending
or threatened.
(xi) No Company Plan is a Stock bonus, pension, or
profit-sharing plan within the meaning of Code Section 401(a).
(xii) Each Qualified Plan of each Associated Company is
intended to be qualified in form and there is no reason why the Plans would not
be qualified in operation under Code Section 401(a); each trust for each such
Plan is exempt from federal income tax under Code Section 501(a). Each Company
VEBA is exempt from federal income tax. No event has occurred or circumstance
exists that will or is reasonably likely to give rise to disqualification or
loss of tax-exempt status of any such Plan or trust.
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(xiii) No Company Plan is subject to Title IV of ERISA.
(xiv) The accountants report for each Pension Plan of
each Associated Company and each ERISA Affiliate of each Associated Company
fairly presents the financial condition and the results of operations of each
such Plan in accordance with GAAP.
(xv) No Associated Company or any ERISA Affiliate of an
Associated Company has ever established, maintained, or contributed to or
otherwise participated in, or had an obligation to maintain, contribute to, or
otherwise participate in, any Multi-Employer Plan.
(xvi) Except to the extent required under ERISA Section
601 et seq. and Code Section 4980B, no Associated Company provides health or
welfare benefits for any retired or former employee or is obligated to provide
health or welfare benefits to any active employee following such employee's
retirement or other termination of service.
(xvii) The Associated Companies have complied in all
Material respects with the provisions of ERISA Section 601 et seq. and Code
Section 4980B.
(xviii) No payment that is owed or may become due to any
director, officer, employee, or agent of any Associated Company will be
nondeductible to the Associated Companies or subject to tax under Code Section
280G or Section 4999; nor will any Associated Company be required to "gross up"
or otherwise compensate any such person because of the imposition of any excise
tax on a payment to such person.
(xix) The consummation of the Contemplated Transactions
will not result in the payment, vesting, or acceleration of any benefit.
3.14 Compliance with Legal Requirements; Governmental
Authorizations. Except as set forth in Part 3.14 of the Disclosure Letter:
(a) each Associated Company is in Material compliance with each
Legal Requirement that is or was applicable to it or to the conduct or operation
of its business or the ownership or use of any of its assets;
(b) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) is reasonably likely to constitute or
result in a Material violation by any Associated Company of, or a Material
failure on the part of any Associated Company to comply with, any Legal
Requirement, or (B) to give rise to any Material obligation on the part of any
Associated Company to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature; and
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(c) no Associated Company has received any written notice from
any Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential Material violation of, or Material failure to comply
with, any Legal Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of any Associated Company to undertake, or to bear all or
any portion of the cost of, any Material remedial action of any nature.
3.15 Legal Proceedings; Orders.
(a) Except as set forth in Part 3.15(a) of the Disclosure
Letter, there is no pending Material Proceeding that has been commenced by or
against any Associated Company. In addition, no such Material Proceeding has
been threatened and (2) no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Material Proceeding. The Company has made available to Buyer copies of
all pleadings, correspondence, and other documents relating to each Material
Proceeding listed in Part 3.15(a) of the Disclosure Letter;
(b) Except as set forth in Part 3.15(b) of the Disclosure
Letter:
(i) there is no Material Order to which any of the
Associated Companies, or any of the assets owned, leased or used by any of the
Associated Companies is subject; and
(ii) no officer, director, agent, or employee of any
Associated Company is subject to any Order that prohibits such officer,
director, agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of any Associated Company.
(c) Except as set forth in Part 3.15(c) of the Disclosure
Letter:
(i) each Associated Company is, and at all times has
been, in Material compliance with all of the terms and requirements of each
Material Order to which it, or any of the assets owned, leased or used by it, is
or has been subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Material Order to which
the Company, or any of the assets owned, leased or used by any Associated
Company, is subject; and
(iii) no Associated Company has received at any time any
written notice from any Governmental. Body or any other Person regarding any
actual, alleged , possible or potential Material violation of, or failure to
comply with, any Material term or requirement of any Material Order to which any
Associated
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Company, or any of the assets owned, leased or used by any Associated Company,
is or has been subject.
3.16 Absence of Certain Changes and Events. Except as set forth in
Part 3.16 of the Disclosure Letter, since September 30, 1996, the Associated
Companies have conducted their businesses only in the Ordinary Course of
Business, and there has not been any:
(a) change in any Associated Company's authorized capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Associated
Company;
(c) Material increase by any Associated Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
employee (except in the Ordinary Course of Business) or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) except in the Ordinary Course of Business, adoption of, or
Material increase in the payments to or benefits under, any profit sharing,
bonus, deferred compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any employees of any Associated Company;
(e) damage to or destruction or loss of any asset or property
of the Company, whether or not covered by insurance, Materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Associated Companies, taken as a whole;
(f) entry into (i) any Material license, credit, or similar
agreement, or (ii) any Material Applicable Contract other than in the Ordinary
Course of Business;
(g) Material change in the accounting methods used by any
Associated Company; or
(h) agreement, whether oral or written, by any Associated
Company to do any of the foregoing.
3.17 Contracts; No Defaults.
(a) Part 3.17(a) of the Disclosure Letter contains a complete
and accurate list, and the Company has made available to Buyer true and complete
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copies of all Applicable Contracts providing for payment by or to the Associated
Companies in excess of $5 million, which have not been fully performed and for
which obligations are still outstanding excluding ongoing warranty obligations.
Part 3.17(a) of the Disclosure Letter sets forth information regarding such
Applicable Contracts, including the parties to the Applicable Contracts, the
date of such Applicable Contracts, the estimated backlog of such Applicable
Contracts as of the last date for which a backlog was estimated, and the
Associated Company's office where details relating to the Applicable Contracts
are located.
(b) Except as set forth in Part 3.17(b) of the Disclosure
Letter no officer, director or employee, of any Associated Company is bound by
any Contract that purports to limit the ability of such officer, director, or
employee, to (A) engage in or continue any conduct, activity, or practice
relating to the business of the Company, or (B) assign to any Associated Company
or to any other Person any rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure
Letter, each Applicable Contract identified or required to be identified in Part
3.17(a) of the Disclosure Letter is in full force and effect and is valid and
enforceable in all Material respects in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other laws affecting creditor's rights
generally.
(d) Except as set forth in Part 3.17(d) of the Disclosure
Letter:
(i) each Associated Company is and has been in Material
compliance with all applicable terms and requirements of each Applicable
Contract;
(ii) each other Person that has any Material obligation or
liability under any Applicable Contract under which an Associated Company has or
had any rights is and at all times since December 31, 1995 has been, in Material
compliance with Material terms and requirements of such Applicable Contract.
3.18 Insurance.
(a) The Company has made available to Buyer:
(i) true and complete copies of all policies of insurance
purchased by the Company, to which any Associated Company is a party or under
which any Associated Company, or any director of any Associated Company, is or
has been covered at any time within the 10 years preceding the date of this
Agreement.
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(ii) any statement by the auditor of any Associated
Company's financial statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any Material self-insurance written arrangement by or
affecting any Associated Company, including any reserves established thereunder;
(ii) all Material obligations of the Associated Companies
out of the Ordinary Course of Business to provide coverage to third parties (for
example, under leases or service agreements) and identifies the policy under
which such coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year,
for the current policy year and each of the 10 preceding policy years in which
there are open claims:
(i) a summary of the loss experience under each policy;
(ii) a statement describing the loss experience for all
Material claims that were self-insured as described in Section (b)(i), including
the number and aggregate cost of such claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure
Letter;
(i) All current policies purchased by the Company to
which any Associated Company is a party or that provide coverage to any
Associated Company or director or officer thereof:
(A) are valid, outstanding and enforceable in all
Material respects;
(B) will not be terminated as a result of the
consummation of the Contemplated Transactions.
(ii) No Associated Company has received (A) any refusal of
coverage, or (B) any notice of cancellation or any other indication that any
current insurance policy provided or obtained by the Company or any Associated
Company is no longer in full force or effect or that the issuer of any such
policy is not willing or able to perform its obligations thereunder.
(iii) The Associated Companies have paid all premiums due,
and have otherwise performed all of their respective Material obligations, under
each current policy provided or obtained by the Company or any Associated
Company.
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(iv) The Associated Companies have given notice to the
insurer of all Material claims that may be insured thereby.
3.19 Environmental and Occupational Safety and Health Matters.
Except as set forth in Part 3.19 of the Disclosure Letter:
(a) Each Associated Company is, and at all times since January
1, 1990 has been, in Material compliance with, and has not been and is not in
Material violation of any Environmental Law or any Occupational Safety and
Health Law. No Associated Company has any basis to expect, nor has any of them
received, any actual or threatened order, notice, or other written communication
from (i) any Governmental Body or private citizen acting in the public interest,
or (ii) the current or prior owner or operator of any Facilities, of any actual
or potential violation or failure to comply with any Environmental Law or any
Occupational Safety and Health Law, or of any actual or threatened Material
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities in which any Associated
Company has had an interest, or with respect to any property or Facility at or
to which Hazardous Materials were generated, manufactured, refined, transferred,
imported, used, or processed by any Associated Company, or from which Hazardous
Materials have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(b) Other than materials used by the Associated Companies in
the Ordinary Course of Business, there are no Hazardous Materials present on or
in the Environment at the Facilities or at any geologically or hydrological
adjoining property, including any Hazardous Materials contained in barrels,
above or underground storage tanks, landfills (authorized or unauthorized), land
deposits, dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, and deposited or located in land, water, pumps,
or any other part of the Facilities or such adjoining property, or incorporated
into any structure therein or thereon that could reasonably be expected to
result in Material liability to the Company. No Associated Company, has
permitted or conducted, and, is not aware of, any activity conducted with
Hazardous Materials with respect to the Facilities in which the Associated
Companies have or had an interest except in Material compliance with all
applicable Environmental Laws and Occupational Safety and Health Laws. There are
no landfills, dumps or deposits to land containing Hazardous Materials on any of
the Facilities or any other real properties or assets in which any Associated
Company has or had an interest.
(c) There has been no Release or reasonable threat of Release,
of any Hazardous Materials at or from the Facilities or at any other locations
where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by the Facilities,
or from or by any other properties and assets (whether real, personal, or mixed)
in which any Associated Company has or had an interest, any geologically or
hydrological
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adjoining property, by any Associated Company, or any other Person, except in
Material compliance with Environmental Laws.
(d) The Company has made available to Buyer true and complete
copies and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by the Company pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning compliance
by any Associated Company, with Environmental Laws.
3.20 Employees.
(a) No current key employee or current director of any
Associated Company is a party to, or is otherwise bound by, any agreement or
arrangement that in any way adversely affected, affects, or will affect (i) the
performance of his duties as an employee or director of the Associated Companies
or (ii) the ability of any Associated Company to conduct its business. No
director, officer, or other key employee of an Associated Company intends to
terminate his employment with such Associated Company in the immediate future.
3.21 Labor Disputes; Compliance. Other than as set forth in Part
3.21 of the Disclosure Letter,
(a) no Associated Company has been or is a party to any
collective bargaining Contract;
(b) there is no presently pending or existing, and there is not
threatened any strike, slowdown, picketing, work stoppage,, labor arbitration or
proceeding in respect of the grievance of any employee, charge or complaint
filed by an employee or union with the National Labor Relations Board or any
comparable Governmental Body, organizational activity, or other labor dispute
against or affecting any of the Associated Companies or their Facilities, and no
application for certification of a collective bargaining agent is pending or is
threatened;
(c) no event has occurred or circumstance exists that is
reasonably likely to provide the basis for any Material work stoppage or other
Material labor dispute;
(d) there is no lockout of any employees by any Associated
Company, and no such action is contemplated by any Associated Company;
(e) the Associated Companies have complied in all Material
respects with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, the payment
of social security and similar taxes, occupational safety and health; and
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(f) no Associated Company is liable for the payment of any
Material taxes, fines, penalties, or other amounts, however designated, for
failure to comply with any of the foregoing Legal Requirements.
3.22 Certain Payments. Since January 1, 1994, neither an Associated
Company nor any director, officer, agent, or employee of an Associated Company,
or any other Person acting for or on behalf of an Associated Company, has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services in Material
violation of any Legal Requirement (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, or (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of the Company or any Affiliate of the Company, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of an Associated Company.
3.23 Disclosure.
(a) The representations and warranties of the Company in this
Agreement together with the Disclosure Letter taken as a whole do not contain
any untrue statement of a Material fact and do not omit to state a Material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a Material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
(c) There is no fact that has specific application to an
Associated Company (other than general economic or industry conditions) and that
Materially adversely affects the assets, business, prospects, financial
condition, or results of operations of the Associated Companies that has not
been set forth in this Agreement, the Disclosure Letter, or the Financial
Statements.
3.24 Brokers or Finders. Except as set forth in Part 3.24 of the
Disclosure Letter, the Associated Companies and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
4. Representations and Warranties of Buyer. Buyer represents and
warrants to the Company as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
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4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of this Agreement and the Rights
Agreement (collectively, the "Buyer's Closing Documents"), the Buyer's Closing
Documents will constitute the legal, valid, and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws affecting
creditor's rights generally. Buyer has the absolute and unrestricted right,
power, and authority to execute and deliver this Agreement and the Rights
Agreement and to perform its obligations under this Agreement and the Rights
Agreement.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or
the stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which
Buyer may be bound.
Other than as required by the HSR Act with regard to the Tendered Shares
to be acquired at the Second Closing, Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
4.3 Investment Intent; Investigation.
(a) Buyer is familiar with the business and financial
condition, properties, operations and prospects of the Company. Buyer has been
given full access to all Material information concerning the condition,
properties, operations and prospects of the Company and its subsidiaries. Buyer
has had an opportunity to ask questions of, and to receive information from, the
Company and persons acting on its behalf concerning the terms and conditions of
Buyer's investment in the Shares, and to obtain any additional information
necessary to verify and accuracy of the
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information and data received by Buyer. The Buyer has had an opportunity to
discuss with Company the financial statements delivered to the Buyer.
(b) Buyer has made such independent investigation of the
Company and its subsidiaries, its management, and related matters as the
undersigned deems to be necessary or advisable in connection with this
investment; and the undersigned has received all information and data which the
undersigned has requested from the Company and which Buyer believes to be
necessary in order to reach an informed decision as to the advisability of
investing in the Shares.
(c) Buyer understands that the purchase of the Shares involves
various risks, including those outlined in this Agreement. Among other risks,
Buyer understands that it is unlikely that any market will exist for any resale
of the Shares and that the Shares will be subject to restrictions on transfer as
set forth in the Company's Third Restated Articles of Incorporation.
(d) THE BUYER IS ACQUIRING THE SHARES SOLELY FOR ITS OWN
BENEFICIAL ACCOUNT, FOR INVESTMENT PURPOSES, AND NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION OF THE SHARES. The Buyer
understands that the Shares have not been registered under the Securities Act,
or the securities laws of any state (collectively referred to as "State
Securities Laws") by reason of specific exemptions under the provisions thereof
which depend in part upon the investment intent of the undersigned and of the
other representations made by the undersigned in this Agreement. Buyer
understands that the Company is relying upon the representations and agreements
contained in this Agreement (and any supplemental information) for the purpose
of determining whether this transaction meets requirements for such exemptions.
(e) Buyer understands that the Shares are "restricted
securities" under the Securities Act and that the Securities Act and the rules
of the Securities and Exchange Commission (the "Commission") provide in
substance that the undersigned may dispose of the Shares only pursuant to an
effective registration statement under the Securities Act or an exemption
therefrom, and understands that the Company has no obligation or intention to
register any of the Shares thereunder, or to take action so as to permit sales
pursuant to the Securities Act. Accordingly, Buyer understands that under the
Commission's rules the undersigned may dispose of the Shares principally only in
"private placements" which are exempt from registration under the Securities
Act, in which event the transferee will acquire "restricted securities" subject
to the same limitations as in the hands of the undersigned. As a consequence,
Buyer understands that it must bear the economic risks of the investment in the
Shares for an indefinite period of time.
(f) Buyer is a corporation with total assets in excess of
$5,000,000.
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4.4 Certain Proceedings. There is no pending Proceeding that has
been commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To the Buyer's Knowledge, no such Proceeding has been
threatened.
4.5 Brokers or Finders. Buyer has incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commission or other similar payment or connection with this Agreement.
4.6 Consent. Buyer hereby consents to the Company granting stock
options, stock bonuses and similar rights to purchase shares of the common stock
of the Company in excess of the number of shares of common stock of the Company
which is equal to 30% of the outstanding shares of common stock of the Company.
5. Covenants of the Company Prior and Subsequent to First Closing
Date.
5.1 Access and Investigation. Between the date of this Agreement
and the First Closing Date, the Company will, and will cause the Associated
Companies and their Representatives to (a) afford Buyer and its Representatives
free and full access to the Company's management to discuss the Company's
business operations, assets, liabilities, actual or potential litigation and
claims, properties and prospects with the Company's employees, agents,
accountants, attorneys, customers, suppliers, and other persons having business
dealings with the Company or knowledge of the issues, (b) afford Buyer and its
Representatives full and free access to the Company's properties (including
subsurface testing), contracts, books and records, and other documents and data,
(c) furnish Buyer and Buyer's Advisors with copies of all such contracts, books
and records, and other existing documents and data as Buyer may reasonably
request and (d) furnish Buyer with such additional financial, operating, and
other data and information as Buyer may reasonably request in the Company's
possession or control, or as to which the Company has Knowledge.
5.2 Operation of the Business of the Company. Between the date of
this Agreement and the First Closing Date, the Company will, and will cause the
Associated Companies, unless the Company obtains the written consent of Buyer
(which shall not be unreasonably withheld or delayed) to:
(a) conduct the business of the Associated Companies only in
the Ordinary Course of Business;
(b) not declare any extraordinary dividends;
(c) not pay any incentives or bonuses not normally given within
the Ordinary Course of Business nor pay or grant any out of the ordinary
compensation increases;
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(d) use their Best Efforts to preserve intact the current
business organization of the Associated Companies, keep available the services
of the current officers and employees of the Associated Companies, and maintain
the relations and good will with suppliers, customers, landlords, creditors,
employees, agents and others having business relationships with the Associated
Companies;
(e) otherwise report to Buyer as reasonably requested
concerning the status of the business, operations and finances of the Associated
Companies.
5.3 Negative Covenant. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and First Closing Date, the
Company will not, and will cause the Associated Companies not to, without the
prior consent of Buyer, which shall not be unreasonably withheld or delayed,
take any affirmative action, or fail to take any reasonable action within their
or its control, as a result of which any of the changes or events listed in
Section 3.16 is likely to occur.
5.4 Required Approvals. As promptly as practicable after the First
Closing Date the Company will make all filings required by Legal Requirements to
be made by it in order to consummate the Contemplated Transactions (including
all filings under the HSR Act). Between the date of this Agreement and each
Closing Date, the Company will (a) cooperate with Buyer with respect to all
filings that Buyer elects to make or is required by Legal Requirements to make
in connection with the Contemplated Transactions and (b) cooperate with Buyer in
obtaining early termination of any applicable waiting period under the HSR Act).
5.5 Notification. Between the date of this Agreement and the Second
Closing Date, the Company will promptly notify Buyer in writing if the Company
becomes aware of any fact or condition that causes or constitutes a Breach of
any representations and warranties of the Company, or if the Company becomes
aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such fact or condition require any change
in the Disclosure Letter if the Disclosure Letter were dated the date of the
occurrence or discovery of any such fact or condition, the Company will promptly
deliver to Buyer a supplement to the Disclosure Letter specifying such change.
During the same period, the Company will promptly notify Buyer of the occurrence
of any Breach of any covenant in this Section 5 or of the occurrence of any
event that may make the satisfaction of the conditions in Section 7 or 9
impossible or unlikely.
5.6 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Section 9, the Company will not, and will cause the
Associated Companies and each of their Representatives not to, directly or
indirectly solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate
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with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the business, or assets (other than in
the Ordinary Course of Business) of the Company or any of the capital stock of
the Company (other than pursuant to currently outstanding stock options held by
employees of the Company), or any merger, consolidation, business combination or
similar transaction involving the Company.
5.7 Best Efforts. Between the date of this Agreement and the Second
Closing Date, the Company will use its Best Efforts to cause the conditions in
Sections 7 and 9 as applicable, respectively to be satisfied.
5.8 Supplements to Disclosure Letter. The Company shall have the
right, from time to time, on or prior to the First Closing Date, to supplement
the Material set forth in the Disclosure Letter initially delivered by the
Company to Buyer. Any references in this Agreement or in any other document
entered into in connection with this Agreement to the Disclosure Letter shall be
mean the Disclosure Letter as fully amended and supplemented on or prior to the
First Closing Date.
5.9 Solicitation of Shareholders. Subject to Legal Requirements, as
promptly as practicable after the determination of the Purchase Price, the
Company shall prepare necessary documentation and take all actions necessary to
solicit the Shareholders for the tender of the Tendered Shares and to cause the
release of funds and the Tendered Shares pursuant to the terms of the Escrow
Agreement.
6. Covenants of Buyer Prior to Second Closing Date.
6.1 Access to Information. Between the date of this Agreement and
the First Closing Date, Buyer will afford the Company full and free access, upon
the request, to copies of Buyer's public filings under the Securities Act, the
Exchange Act, and other information the Company shall reasonably request.
6.2 Approvals of Governmental Bodies. As promptly as practicable
after the First Closing Date, Buyer will make all filings required by Legal
Requirements to be made by them to consummate the Contemplated Transactions
(including all filings under the HSR Act). Between the date of this Agreement
and the Second Closing Date, Buyer will (a) cooperate with the Company with
respect to all filings that the Company elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions and (b)
cooperate with the Company in obtaining all consents identified in Part 3.2(b)
of the Disclosure Letter (including taking all actions requested by the Company
to cause early termination of any applicable waiting period under the HSR Act.)
6.3 Best Efforts. Between the date of this Agreement and the Second
Closing Date, Buyer will use its Best Efforts to cause the conditions in
Sections 7, 8 and 9 as applicable, respectively to be satisfied.
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<PAGE> 43
6.4 Notification. Between the date of this Agreement and the Second
Closing Date, the Buyer will promptly notify the Company in writing if the Buyer
becomes aware of any fact or condition that causes or constitutes a Breach of
any representations and warranties of the Company or the Buyer, or if the Buyer
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, the Buyer will promptly
notify the Company of the occurrence of any Breach of any covenant of the Buyer
in this Section 6 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7 or 9 impossible or unlikely.
6.5 Solicitation of Shareholders. Following the determination of
the Purchase Price, Buyer shall fully cooperate with the Company to facilitate
the solicitation of the Shareholders for the tender of the Tendered Shares and
to cause the release of funds pursuant to the terms of the Escrow Agreement.
7. Conditions Precedent to Buyer's Obligation to Close. Buyer's
obligation to purchase the Shares and to take the other actions required to be
taken by Buyer at the First Closing is subject to the satisfaction, at or prior
to the First Closing, of each of the following conditions (any of which may be
waived by Buyer, in whole or in part):
7.1 Accuracy of Representations. Each of the representations and
warranties in Section 3 of this Agreement must have been accurate in all
Material respects as of the date of this Agreement, and must be accurate in all
Material respects as of the First Closing Date as if made on the First Closing
Date.
7.2 Completion of Investigations, Inspections and Studies. Buyer
has performed or caused the performance of any and all investigations,
inspections and studies including financial, environmental, title and asset and
liability condition, the methods and results of all of which it deems
satisfactory in its sole discretion. In addition, Buyer has performed any and
all investigations and inspections as to: financial matters, insurance, employee
benefit plans, including job cost and estimates; legal matters, including review
of pending or potential claims or suits (of whatever type for and against the
Company), and review of contracts and other documents; environmental matters,
including site assessments; equipment and plant appraisals, verification of
reserves; and real property, including appraisals, the results of which must be
satisfactory to Buyer in its sole discretion and will include, but not be
limited to, interviews with the Company's key employees and review of backlog
and projects.
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7.3 The Company's Performance.
(a) All of the covenants and obligations that the Company is
required to perform or to comply with pursuant to this Agreement at or prior to
the First Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all Material respects.
(b) The Company must have delivered each of the documents
required to be delivered pursuant to Section 2.5, and each of the other
covenants and obligations in Section 5 required to be performed by the Company
must have been performed and complied with in all Material respects.
7.4 Consents. Each of the Consents required to be obtained to
consummate the transactions contemplated by this Agreement must have been
obtained and must be in full force and effect.
7.5 Additional Documents. The Company must have caused the
following documents to be delivered to Buyer:
(a) an opinion of counsel to the Company, dated the Closing
Date, in the form reasonably acceptable to Buyer; and
(b) such other documents as Buyer may reasonably request for
the purpose of (i) enabling its counsel to provide the opinion referred to in
Section 8.4(a), (ii) evidencing the accuracy of any of the Company's
representations and warranties, (iii) evidencing the performance by the Company
of, or the compliance by the Company with, any covenant or obligation required
to be performed or complied with by the Company, (iv) evidencing the
satisfaction of any condition referred to in this Section 7 or (v) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
7.6 No Proceedings. Since the date of this Agreement, there must
not have been commenced or threatened against Buyer, or against any Person
affiliated with Buyer, any Proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the Contemplated Transactions
or (b) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the Contemplated Transactions.
7.7 Disclosure Letter. The Company shall have provided Buyer full
and complete and final copies of the Disclosure Letter which shall be acceptable
to Buyer in its sole discretion.
7.8 Election of Additional Directors. David H. Watts, William E.
Barton, William G. Dorey and Patrick M. Costanzo shall have been duly elected to
the Board of Directors of the Company, effective as of the First Closing. At the
First
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Closing, the members of the Board of directors of the Company shall be R.W.
McKenzie, William P. Davis, John M. Roos, Edwin F. Wambsganss, Glen C. Jeckel,
Gary B. McKenzie, James F. Kissane, Edward J. Vanderwall, John C. Paul, Leroy
Meador, David H. Watts, William E. Barton, William G. Dorey and Patrick M.
Costanzo.
8. Conditions Precedent to the Company's Obligation to Close. The
Company's obligation to sell the Shares and to take the other actions required
to be taken by the Company at the First Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by the Company, in whole or in part):
8.1 Accuracy of Representations. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all Material respects as of the date of this Agreement and must be
accurate in all Material respects as of the First Closing Date as if made on the
First Closing Date.
8.2 Buyer's Performance.
(a) All of the covenants and obligations that Buyer is required
to perform or to comply with pursuant to this Agreement at or prior to the First
Closing (considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
Material respects.
(b) Buyer must have delivered each of the documents required to
be delivered by Buyer pursuant to Section 2.5 and must have paid the Minimum
Purchase Price for the Shares required to be paid by Buyer pursuant to Section
2.
8.3 Consents. Each of the Consents required to be obtained to
consummate the transactions contemplated by this Agreement must have been
obtained and must be in full force and effect.
8.4 Additional Documents. Buyer must have caused the following
documents to be delivered to the Company:
(a) opinions of Gray Cary Ware & Freidenrich, dated the Closing
Date, in the form reasonably acceptable to the Company; and
(b) such other documents as the Company may reasonably request
for the purpose of (i) enabling their counsel to provide the opinion referred to
in Section 7.5(a), (ii) evidencing the accuracy of any representation or
warranty of Buyer, (iii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be performed or
complied with by
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Buyer, (iv) evidencing the satisfaction of any condition referred to in this
Section 8 or (v) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.5 No injunction. There must not be in effect any Legal
Requirement or any injunction or other Order that prohibits the issuance and
sale of the Shares to Buyer.
9. Additional Conditions Precedent to Buyer's and the Company's
Obligation to Close at Second Closing.
9.1 Consents. All required consents, including any required
consent under the HSR Act, shall have been obtained.
9.2 No Material Adverse Change. There shall have been no Material
Adverse Change in the Associated Companies and the Company shall have delivered
certificate to Buyer so certifying.
9.3 Completion of Tender Offer. The Tender Offer shall have been
completed in accordance with applicable law and all obligations of Buyer, the
Company and the holders of the Tendered Shares set forth in the Escrow Agreement
and documents relating to the Tender Offer shall have been satisfied.
9.4 Opinion of Otten, Johnson, Robinson, Neff & Ragonetti, P.C.
("Company Counsel"). Buyer shall have received an opinion from Company Counsel
reasonably satisfactory to Buyer as to matters not provided in the opinion(s)
delivered to Buyer at the First Closing.
10. Termination.
10.1 Termination Events. This Agreement may, by written notice, be
terminated:
(a) at or prior to the First Closing by either Buyer or the
Company if a Material Breach of any provision of this Agreement has been
committed by the other party and such Breach has not been waived;
(b) at or prior to the First Closing:
(i) By Buyer if any of the conditions in Section 7 has
not been satisfied as of the First Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Buyer to
comply with its obligations under this Agreement) and Buyer has not waived such
condition on or before the First Closing Date; or
(ii) By the Company, if any of the conditions in Section 8
has not been satisfied as of the First Closing Date or if satisfaction of such a
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condition is or becomes impossible (other than through the failure of the
Company to comply with its obligations under this Agreement) and the Company has
not waived such condition on or before the First Closing Date;
(c) at or prior to the Second Closing;
(i) By Buyer if any of the conditions in Section 9 has
not been satisfied as of the Second Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of the
Company to comply with its obligations under this Agreement) and Buyer has not
waived such condition on or before the Second Closing Date;
(ii) By the Company if any of the conditions in Section 9
has not been satisfied as of the Second Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the failure of the
Company to comply with its obligations under this Agreement) and the Company has
not waived such condition on or before the Second Closing Date;
(d) by mutual consent of Buyer and the Company; or
(e) at any time after the Termination Date by either Buyer or
the Company if either Closing has not occurred (other than through the failure
of any party seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before the Termination Date, or such
later date as the parties may agree upon.
10.2 Effect of Termination. Each party's right of termination under
Section 10.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 10.1, all
further obligations of the parties under this Agreement will terminate;
provided, however, that if this Agreement is terminated by a party because of
the Breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
11. General Provisions.
11.1 Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel and accountants. Buyer will be responsible for
payment of its own expenses and the Company will be responsible for payment of
the
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Company's expenses, except, provided however, that the Company shall pay
reasonable fees of Gray Cary Ware & Freidenrich, counsel to Buyer, not to exceed
$15,000 that are incurred in connection with the Tender Offer. All accounting
expenses of the Company, shall be deemed to be ordinary business expenses of the
Company and shall be paid by the Company.
11.2 Public Announcements. Neither party shall issue any press
release or make any public announcement related to the subject matter of this
Agreement prior to the Closing without the prior written approval of the other
party; provided, however, that any party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning the publicly-traded securities of such party (in which case
the disclosing party will use its reasonable best efforts to advise the other
party prior to making the disclosure). The Company and Buyer will consult with
each other concerning the means by which the Company's employees, customers and
suppliers and others having dealings with the Company will be informed of the
Contemplated Transactions.
11.3 Confidentiality. Between the date of this Agreement and five
(5) years after the Closing Date, Buyer and the Company will maintain in
confidence, and will cause the directors, officers, employees, agents, and
advisors of Buyer and the Company to maintain in confidence, and not use to the
detriment of another party or the Company any written, oral, or other
information obtained in confidence from another party or the Company in
connection with this Agreement or the Contemplated Transactions, expressly
including the reports of all consultants retained pursuant to the terms of this
Agreement, unless (a) such information becomes publicly available through no
fault of such party, (b) the use of such information is necessary or appropriate
in making any filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions, or (c) the furnishing or use of
such information is legally required.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request.
11.4 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of receipt), provided
that a copy is mailed within three business days by registered mail, return
receipt requested, (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested) or (d) three business
days after being sent by registered or certified mail, return receipt requested,
in each case to the appropriate addresses and facsimile numbers set forth below
(or to such other addresses and facsimile numbers as a party may designate by
notice to the other parties):
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The Company: TIC Holdings, Inc.
40185 County Road 129
P.O. Box 774848
Steamboat Springs, CO 80477
Attention: Michael A. Ross
FAX No.: (970) 879-5052
with a copy to: Otten, Johnson, Robinson,
Neff & Ragonetti, P.C.
1800 Colorado National Building
950 Seventeenth Street
Denver, Colorado 80202
Attention: Karen L. Barsch
FAX No.: (303) 825-6525
Buyer: Granite Construction Company
P. O. Box 50085
Watsonville, California 95077
Attention: Michael Futch, Legal Department
FAX No.: (408) 761-7846
with a copy to: Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attention: Eric J. Lapp
FAX No.: (415) 327-3699
11.5 Binding Arbitration; Service of Process. In the event of a
dispute between the parties related to or arising out of this Agreement or the
Rights Agreement, representatives of the parties will meet promptly in an effort
to resolve the dispute amicably. If the parties cannot agree upon a resolution
within thirty days of either party requesting a meeting for resolution of a
dispute, then the matter will promptly be submitted to binding arbitration in
accordance with this Section 11.5.
(a) Arbitration will be held in Denver, Colorado, in
accordance with the rules and regulations of the American Arbitration
Association. The number of arbitrators will be one (1) for disputes less than
$200,000 and three (3) for all other disputes and will be selected in accordance
with the rules and regulations of the American Arbitration Association. The
determination of the arbitrator will be conclusive and binding upon the parties,
and any determination by the arbitrator of an award may be filed with the clerk
of a court of competent jurisdiction as a final adjudication of the claim
involved, or application may be made to such court for judicial acceptance of
the award and an order of enforcement, as the case may be. Except to the extent
otherwise directed by the arbitrator, each party will bear its own expenses,
including legal and accounting fees, if any, with respect to the
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arbitration, and one-half of the costs of the arbitrator and of the fees imposed
by the American Arbitration Association.
(b) In any arbitration hereunder, the demand for arbitration
shall specifically delineate the claims asserted and the Material issues with
respect thereto. Within thirty days after filing a demand for arbitration,
claimant shall provide to respondent a list of all fact witnesses known to
claimants the names and curriculum vitae of each expert witness anticipated to
be called by claimant, and a copy of relevant documents. Within thirty days
after receipt of the foregoing information, respondent shall provide to claimant
a list of all fact witnesses known to respondent, the names and curriculum vitae
of each, expert witness anticipated to be called by respondent, and a copy of
relevant documents known to respondent. Within ten days after discovery has been
closed by the arbitrator (but in no event later than sixty days prior to the
arbitration hearing), claimant shall present to respondent a list of all fact
and expert witnesses anticipated to be called by claimant, a summary of the
substance of each such witness' testimony, and a list of all documents
anticipated to be introduced by claimant (and a copy of such documents if not
previously provided to respondent). Within thirty days after receipt of the
foregoing information, respondent shall present to claimant a list of all fact
and expert witnesses anticipated to be called by respondent, a summary of the
substance of each such witness' testimony and a list of all documents
anticipated to be introduced by respondent (and a copy of such documents if not
previously provided to claimant). Any award by the arbitrator shall be subject
to all dollar and other limitations set forth in this Agreement.
(c) A demand for arbitration may be served on Buyer or the
Company by certified U.S. Mail, postage prepaid, or reliable overnight delivery
service, to the address set forth in Section 11.4 hereof.
11.6 Further Assurances. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents and (c) to do such other acts and things, all as
the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
11.7 Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power or privilege under this Agreement or
the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except
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in the specific instance for which it is given and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
11.8 Indemnification. To the fullest extent permitted by law, the
Company shall indemnify, defend with counsel reasonably satisfactory to Buyer
and hold harmless Buyer, its officers, directors, employees and agents (each an
"Indemnified Party"), from and against (i) any and all claims, demands, causes
of action arising in connection with the solicitation and purchase of the
Tendered Shares, except in the case of willful misconduct or gross negligence on
the part of an Indemnified Party, or (ii) any loss, liability, damages, expenses
incurred by any Indemnified Party as a result of any action by the Company or by
a Shareholder or breach by the Company or a Shareholder of a representation or
warranty contained in any document of transfer related to the Tendered Shares.
11.9 Entire Agreement and Modification, Survival of Representations
and Warranties. This Agreement supersedes all prior agreements between the
parties with respect to its subject matter (including the Draft Summary of Terms
of Proposed Investment by Granite Construction, Inc. ("Granite") in TIC
Holdings, Inc. ("TIC"), and constitutes (along with the exhibits and other
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment. The representations and
warranties contained in Section 3 of this Agreement shall survive until the
third anniversary of the First Closing. The agreements and covenants contained
in this Agreement, including all obligations to provide indemnification, shall
survive the Closings until full performance thereof.
11.10 No Personal Liability. Buyer agrees that no officer,
director, employee or agent of the Company, shall be subject to personal
liability in connection with this Agreement, other than in the event of fraud.
11.11 Assignments, Successors and No Third Party Rights. Neither
party may assign any of its rights under this Agreement without the prior
consent of the other party, which will not be unreasonably withheld, if such
rights are of a purely financial nature without strategic implications, except
that Buyer may assign any of its rights under this Agreement to Granite
Construction Company, but Buyer will not be relieved of its obligations
hereunder as a result of such assignment. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole
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and exclusive benefit of the parties to this Agreement and their successors and
assigns.
11.12 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
11.13 Section Headings, Construction. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Sections" refer to the
corresponding Sections of this Agreement. All words used in this Agreement will
be construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms.
11.14 Time of Essence. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
11.15 Governing Law. This Agreement will be governed by and
construed under the laws of the State of Colorado without regard to conflicts of
laws principles.
11.16 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
"Buyer":
GRANITE CONSTRUCTION INCORPORATED
By: /s/ William E. Barton By : /s/ Michael Futch
------------------------------- --------------------------
Printed Name: William E. Barton Michael Futch
Title: Vice President and Vice President and General
Chief Financial Officer Counsel and Secretary
"The Company":
TIC HOLDINGS, INC.
By: /s/ R. W. McKenzie
--------------------------
Printed Name: R. W. McKenzie
Title: President
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COOPERATION AND RIGHTS AGREEMENT
This Cooperation and Rights Agreement (this "Agreement") is entered into
as of December 23, 1996 (the "Effective Date"), by and among Granite
Construction Incorporated, a Delaware corporation ("Granite"), TIC Holdings,
Inc., a Colorado corporation (the "Company") and the shareholders of the Company
listed on Exhibit A hereto (the "Holders"). Unless otherwise indicated,
capitalized terms have the meanings ascribed to them in that certain Stock
Purchase Agreement of even date herewith between Granite and the Company (the
"Purchase Agreement"). Granite, the Company and the Holders are collectively
referred to herein as the "Parties".
RECITALS
A. As of September 30, 1996 the Company had authorized 5,000,000 shares of
stock, of which 2,000,000 shares have been classified as Preferred Stock, none
of which are outstanding, 2,500,000 shares have been classified as Class A
Common Stock, of which 771,379 shares were outstanding as of September 30, 1996,
and 500,000 shares have been classified as Class B Common Stock, none of which
are outstanding. Immediately prior to the First Closing under the Purchase
Agreement, the Holders hold 291,133 shares of the Company's outstanding Class A
Common Stock. Class A common stock, Class B common stock, Preferred Stock and
all other classes of stock authorized and issued by the Company (consistent with
Section 5 of this Agreement) (all section references are to the sections of this
Cooperation and Rights Agreement, unless otherwise indicated) are collectively
referred to herein as "Stock".
B. Granite is purchasing from the Company and from shareholders of the
Company 257,126 shares of the Company's Class A Common Stock ("Granite Shares")
pursuant to the Purchase Agreement.
C. The Company, the Holders and Granite desire to set forth certain rights
and obligations of the Parties as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, the parties agree as follows:
1. Right of Maintenance; Right to Acquire 51%; Standstill.
1.1 The Right to Purchase Adjustment Stock and Majority Stock. The
Company hereby grants to Granite the right to purchase from the Company all or
any part of the Adjustment Stock (as defined in Section 1.2), if any, within
thirty (30) days after October 31 of each year during the five years after the
Effective Date and in addition, the right to purchase from the Company the
Majority Stock (as defined in Section 1.2) within the one month period
commencing on the sixth anniversary of the Effective Date, provided that neither
the Company nor Granite has exercised their rights pursuant to Sections 6.1 or
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6.2 of this Agreement (or given notice of their intent to exercise such rights)
as of the date of any purchase of Adjustment Stock or Majority Stock. The
purchase price per share for each share of Adjustment Stock and Majority Stock
shall equal the Designated Purchase Price (as defined in Article VI.A. of the
Company's Third Restated Articles of Incorporation (the "Restated Articles"))
used to transfer shares under Article VI of the Restated Articles as of the date
of each respective purchase of Adjustment Stock or Majority Stock by Granite
hereunder and shall be paid to the Company by wire transfer on or before the
applicable date that Granite's right to purchase such shares under this Section
1.1 expires, if and to the extent Granite elects to purchase such shares.
1.2 Adjustment Stock and Majority Stock. "Adjustment Stock" shall
mean that number of shares of the Company's Class A Common Stock (rounded to the
nearest whole share) which, when issued and sold to Granite, will result in
Granite owning 30% of the total number of outstanding shares of the Company's
Stock entitled to vote ("Voting Stock") immediately after Granite purchases such
Voting Stock based upon the Voting Stock outstanding as of October 31 of such
year. "Majority Stock" shall mean that number of shares of the Company's Class A
Common Stock (rounded to the nearest whole share) which, when issued and sold to
Granite, will result in Granite owning 51% of the Voting Stock immediately after
Granite purchases such Voting Stock based upon the Voting Stock outstanding as
of October 31, 2002.
1.3 Notice. Between October 31 and November 10 of each year,
beginning in the year after the Effective Date, the Company shall provide
Granite with written notice as to the number of shares of Adjustment Stock or
Majority Stock, as the case may be, that may be purchased by Granite in such
year, together with the basis for such calculation and the then effective
Designated Purchase Price.
1.4 Standstill. Notwithstanding any other provision herein to the
contrary, other than upon the exercise of its rights pursuant to Section 2
below, pursuant to Section VI.C.2 of the Restated Articles or upon receipt of
the prior written consent of the Company, Granite agrees not to acquire more
than 49.9% of the Voting Stock of the Company that is issued and outstanding
during the five year period commencing on the Effective Date.
1.5 Contingent Waiver of Rights. The Parties do not intend to
qualify as a "Controlled Group of Corporations" under Section 1563 of the
Internal Revenue Code of 1986, as amended (the "Code"). In furtherance of this
stated intent:
(a) Company Waiver. The Company hereby waives its rights under
Article VI of the Restated Articles to purchase the Stock held by the
shareholders of the Company listed on Exhibit B attached hereto (the "Waiver
Shareholders"), if and to the extent such waiver is necessary to avoid Granite
and the Company Qualifying as a "Controlled Group of Corporations" under Section
1563 of the Code. This waiver shall be irrevocable as to each Waiver Shareholder
without the prior written consent of such Waiver Shareholder and Granite.
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(b) Granite Waiver. Granite hereby waives its rights, if any,
under Article VI of the Restated Articles to purchase the Stock from the Waiver
Shareholders, if and to the extent such waiver is necessary to avoid Granite and
the Company qualifying as a "Controlled Group of Corporations" under Section
1563 of the Code. This waiver shall be irrevocable as to each Waiver Shareholder
without the prior written consent of such Waiver Shareholder and the Company.
(c) To the extent the waivers described in Sections 1.5(a) and
1.5(b), above, are collectively insufficient to avoid Granite and the Company
qualifying as a Controlled Group of Corporations, the Company hereby waives its
rights under Article VI of the Restated Articles and Granite hereby waives its
rights, if any, under Article VI of the Restated Articles to purchase Stock from
any of the Shareholders of the Company who are also employees of the Company,
other than the Waiver Shareholders (the "Employee Shareholders"), as specified
hereafter. The maximum number of shares of Stock to which this waiver applies
shall be the minimum number of shares of Stock held by Employee Shareholders as
may be necessary to avoid Granite and the Company qualifying as a Controlled
Group of Corporations under Section 1563 of the Code. The number of shares of
Stock held by any Employee Shareholder which is subject to the waiver shall be
the total number of shares of Stock held by such Employee Shareholder multiplied
by a fraction, the numerator of which is the total number of shares of Stock
subject to this waiver and the denominator of which is the total number of
shares of Stock owned by the Employee Shareholders. This waiver provided in this
Section 1.5(c) shall apply only in the event that the waivers described in
Sections 1.5(a) and 1.5(b), above, are collectively insufficient to avoid
Granite and the Company qualifying as a Controlled Group of Corporations and, in
such event, this waiver shall be in addition to the waivers set forth in Section
1.5(a) and 1.5(b), above. The waiver contained in this Section 1.5(c) shall be
irrevocable.
(d) The provisions of this Section 1.5 shall be interpreted in
such a manner as to be consistent with the objective of Granite and the Company
not qualifying as a Controlled Group within the meaning of Section 1563 of the
Code.
1.6 Company Undertaking. At all times that Granite holds less than
51% of the issued and outstanding shares of the voting stock of the Company, the
Company agrees that it shall not, without Granite's prior written consent,
redeem or repurchase shares of its voting stock, if upon the completion of such
redemption or repurchase Granite would own or be considered to own for purposes
of Code Section 1563, eighty percent (80%) or more of the Company's voting
stock.
2. Right of First Offer in the Event of a Proposed Sale to Third
Parties.
(a) For as long as (i) Granite holds at least fifteen percent (15%)
of the Voting Stock of the Company, but less than 75% of the Voting Stock of the
Company and (ii) neither the Company nor Granite has exercised their rights
pursuant to Sections 6.1 or 6.2 of this Agreement (or given notice of their
intent to exercise such rights), the Company hereby grants to Granite, subject
to Section 2(b)(i)(B) below, the right to purchase: (A) any
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Stock or any securities evidencing an ownership interest in the Company, or any
securities convertible into, exchangeable for or exercisable for Stock or any
securities issuable pursuant to any agreement or commitment to issue Stock (the
"Securities") or (B) the assets ("Assets") offered for sale in connection with
the sale of all or substantially all of the assets of the Company, which
Securities or Assets the Company may, from time to time, propose to issue or
sell to persons or entities other than Granite ("Third Parties"), whether in an
effort to raise capital through the issuance of new Securities or pursuant to a
sale of the Company by reason of merger, reorganization to avoid bankruptcy,
acquisition or asset sale. If Granite exercises the right to purchase described
herein, the purchase price and all other transaction terms shall be equivalent
to those proposed to be offered to the Third Parties.
(b) Procedure.
(i) Each time the Company proposes to offer Securities or
Assets to a Third Party, the Company shall first make an offering of such
Securities or Assets to Granite in accordance with the following provisions:
(A) The Company shall deliver a notice ("Notice") to
Granite stating (i) its bona fide intention to offer such Securities or Assets
to a Third Party, (ii) the description of Securities or Assets to be offered and
(iii) the price and terms, if any, upon which it proposes to offer such
Securities or Assets.
(B) Within 20 calendar days after receipt of the Notice,
Granite may elect to purchase or obtain, at the price and on the terms specified
in the Notice, all of the Securities or Assets offered by delivery of written
notice of such election to the Company, provided however, that if the proposed
sale is of Securities for purposes of raising capital for the Company, Granite
may elect to purchase either (i) all of such Securities, or (ii) up to 30% of
such Securities if the Third Parties continue to be willing to purchase the
remainder of the offering.
(ii) If Granite does not timely elect to purchase all of the
Securities or Assets which Granite is entitled to obtain pursuant to Section
2(b)(i) above, the Company may, during the 180-day period following the
expiration of the period provided in subsection (i) hereof, offer the remaining
unsubscribed portion of such Securities or Assets to any person or persons at a
price not less than, and upon terms no more favorable to the offeree than, those
specified in the Notice. If the Company does not enter into an agreement for the
sale of the Securities or Assets within such 180 day period, or if such
agreement is not consummated within 90 days of the execution thereof, the right
provided hereunder shall be deemed to be revived and such Securities or Assets
shall not be offered unless first re-offered to Granite in accordance with the
terms of this Section 2.
(c) Granite Transferees. In addition to any limitations or
restrictions contained in the Restated Articles, any person or entity acquiring
Stock from or through Granite will be subject to all the obligations,
restrictions, limitations and other duties of Granite contained in this
Agreement. No transfer of any Stock held by Granite shall serve
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<PAGE> 58
to terminate, cancel, alter, amend, diminish or otherwise affect the rights of
the Company, the Holders or the shareholders of the Company other than Granite
(the "Non-Granite Shareholders") referenced in this Agreement.
(d) Stock Rights of Holders. No part of this Agreement (including,
but not limited to this Section 2) shall preclude the Company from issuing stock
options or stock bonuses and/or from selling Stock to its employees (and the
employees of the Associated Companies) subject to approval by the Board of
Directors and consistent with the past practices of the Company and any such
issuance shall not be subject to Granite's Right of First Offer set forth in
this Section 2.
3. Voting Rights.
3.1 Election of Members of the Board of Directors. Provided neither
the Company nor Granite has exercised their rights (or given notice of their
intent to exercise their rights) pursuant to Section 6.1 or 6.2 of this
Agreement, with respect to any proposal concerning the election of directors of
the Company, the Parties agree as follows:
(a) Representatives of Granite. At all times following Granite's
purchase of the Granite Shares in accordance with the Purchase Agreement, the
Company and the Holders agree to cause to be nominated, and each of the Holders
agrees to vote all shares of the Company's Voting Stock then owned by such
Holder to elect the nominees of Granite to the Board of Directors of the
Company; provided, however, that the Company and the Holders shall not be
required to nominate and no Holder shall be required to vote such Holder's
shares for more than that number of Granite designees equal to the total number
of directors then authorized and serving multiplied by the percentage of shares
of Voting Stock of the Company then held by Granite or its affiliates, rounded
to the nearest whole number. Granite designates David H. Watts, William E.
Barton, William G. Dorey and Patrick H. Costanzo as its initial designees and
the Holders and the Company shall cause such persons to be elected by the
current Board of Directors effective upon the First Closing of Granite's
purchase of the Granite Shares in accordance with the terms of the Purchase
Agreement.
(b) Non-Granite Representatives. At all times following
Granite's purchase of the Granite Shares in accordance with the Purchase
Agreement, Granite agrees to vote all shares of the Company's Voting Stock then
owned by Granite to elect the nominees designated by a majority of the members
of the Board not previously designated or nominated by Granite ("Non-Granite
Board Members") and if such Non-Granite Board Members fail to so designate, the
nominees designated by a majority of the Non-Granite Shareholders; provided,
however, that Granite shall not be required to vote its shares for more than
that number of Non-Granite designees equal to the total number of directors then
authorized and serving multiplied by the percentage of shares of Voting Stock of
the Company then held by Non-Granite Shareholders, rounded to the nearest whole
number.
(c) Authorized Number of Directors. The authorized number of
directors shall be determined in accordance with the Bylaws of the Company.
Granite
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agrees to vote all of its votes on the Board with the majority decision of the
Non-Granite Board Members in all proposed actions to fix or modify the
authorized number of members of the Board.
4. Approval of Certain Changes.
(a) The Company covenants and agrees that it shall not, without the
approval of a majority of the Board, including at least one director designated
by Granite and elected as set forth in Section 3 above, take any of the
following actions:
(i) Change the salary structure, incentive compensation
plans, or other compensation programs that would have the effect of
significantly increasing the Company's salaried employee compensation levels as
a percentage of the Company's total revenue or as a percentage of the Company's
total profits.
(ii) Except to the extent of those dividends necessary to
maintain the Cross Purchase Insurance Trust (the "Trust") (i.e. the PS-58
dividend) and an equivalent dividend to those shareholders, including Granite,
that do not participate in the Trust, declare any dividend to the Company's
shareholders that would negatively impact the share of profits or equity
increase that would otherwise accrue to Granite or declare any dividend in
excess of fifteen percent (15%) of after-tax profits not in accordance with past
practice of the Company.
(iii) Change the Company's capital structure in a manner that
would disproportionately impact Granite's participation in profits or equity.
(iv) Conclude an initial public offering of the Company.
(v) File for voluntary bankruptcy or a dissolution of the
Company.
(vi) Enter any extraordinary borrowing arrangements
inconsistent with past practice of the Company.
(vii) Approve an acquisition by the Company of any entity:
(A) Competitive with Granite;
(B) At a purchase price in excess of ten percent (10%) of
stockholders' equity as shown on the Company's most recent financial statements;
or
(C) Outside the Company's traditional line of business.
(viii) Excluding contractual joint ventures, consortiums or
other similar arrangements in which the Company (or any of its subsidiaries) is
or may become a party, acquire equity interests in projects or minority
interests in other companies in
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<PAGE> 60
excess of twenty percent (20%) of the Company's total stockholders' equity when
such acquisition or investment is cumulated with other similar investments.
(ix) Excluding the issuance of stock options or stock bonuses
consistent with the past practices of the Company, authorize and issue any new
classes of stock of the Company.
(x) Enter into a transaction that would cause it to fail to
maintain the following ratios: (A) Consolidated liabilities less permitted
subordinated debt to consolidated tangible equity plus permitted subordinated
debt in a ratio of no more than two to one; and (B) cash flow coverage ratio
defined as net income plus depreciation and amortization divided by current
maturities of long term debt in a ratio of no less than 1.75 to one.
(b) The foregoing provisions notwithstanding, any and/or all of the
foregoing actions may be taken by the Company without the approval of any Board
member designated by Granite where such actions are taken pursuant to the
exercise of the Company's rights provided in Section 6.1 or to fulfill the
Company's obligations pursuant to the exercise of Granite's rights provided in
Section 6.2.
5. Understandings Regarding Granite's Role in TIC.
5.1 The Parties acknowledge that Granite's acquiring the Granite
Shares is a possible first step toward establishing a long term relationship
with the Company for the strategic and financial benefit of shareholders of both
Granite and the Company. This Agreement has been structured to enable Granite
and the Company to avoid making irrevocable long term commitments until
officers, employees and directors of each company have had a three year
opportunity to decide whether such a closer long term relationship is in their
mutual interest.
5.2 At all times that Granite is a shareholder of the Company,
Granite and the Directors of the Company who Granite designates shall be mindful
of the best interests of the Non-Granite Shareholders, of the Company's
corporate culture and Core Values and of the Company's history and reputation in
its marketplace.
5.3 In the event Granite does acquire fifty-one percent (51%) or
more of the Voting Stock, Granite will exercise its fiduciary duty to protect
the rights of the Non-Granite Shareholders in accordance with applicable law and
consistent with this Agreement. Specifically, and without limitation of the
foregoing, Granite will maintain equity incentive plans generally consistent
with the past practices of the Company and a Stock repurchase policy for
employees and shareholders of the Company and the Associated Companies. Such
Stock repurchase policy will include a mechanism for the sale of such Stock into
the public market, to Granite and/or to the Company. Such programs shall be
maintained by the Board and/or the Board of Granite and shall provide for the
repurchase of Stock by the Company and/or Granite consistent with the past
practice of the Company as to eligibility. Such repurchases of Stock shall be
made, to the
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<PAGE> 61
extent of shareholders desiring to sell, in an amount at least equal to one
hundred and twenty percent (120%) of the average level of funds available for
repurchases using the formula established by the Company's bank covenants for
fiscal year 1997 as specified in the Second Amendment to First Amended and
Restated Loan Agreement by and among TIC Holdings, Inc. and its subsidiaries,
Norwest Bank Colorado, National Association, Bank One, Arizona, N.A. and Harris
Trust and Savings Bank dated July 1, 1996 for the six (6) year period prior to
the time Granite becomes entitled to acquire the Majority Stock, provided either
Granite or the Company have the financial ability to make such repurchases on
the repurchase date.
6. Repurchase of Granite's Shares by the Company.
6.1 The Company's Call Right.
(a) The Right. The Company shall have the right, upon providing
thirty (30) days prior written notice to Granite, to repurchase all or any part
of the Granite Shares and any or all other shares of the Company then held by
Granite, upon any of the following events or dates:
(i) any proposed transfer of all or any part of the
Granite Shares and other shares of the Company then held by Granite to a third
party, excluding for such purposes transfers by Granite to Granite Construction
Company ("Granite Company");
(ii) the closing of any merger or consolidation or exchange
of stock of Granite and/or Granite Company, if the Granite Shares or any other
shares of the Company have been transferred to Granite Company, with any other
corporation or entity after which any party or group of related parties acquires
more than 50% of the voting stock of the resulting entity.
(iii) the acquisition of the majority of the issued and
outstanding voting stock of Granite and/or Granite Company, if the Granite
Shares or any other shares of the Company have been transferred to Granite
Company, by a person or entity not a Granite shareholder as of the Effective
Date;
(iv) Granite's total stockholder's equity, as indicated in
any public annual or quarterly financial statement of Granite, is less than
$50,000,000; or
(v) during the one month period commencing three years
after the Effective Date.
(b) Amount and Delivery of Repurchase Price. The price per share
and payment terms for any purchase pursuant to this Section 6.1 shall be
determined as follows:
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(i) For repurchases described in Section 6.1(a)(i), the
purchase price per share and terms shall be the price per share and proposed
terms of the proposed transfer. Each time that Granite proposes to offer Stock
to a party that is not a shareholder of the Company ("Granite Offeree"), Granite
shall first deliver a notice ("Notice") to the Company stating (i) its bona fide
intention to offer such Stock to a Granite Offeree and the name of the Granite
Offeree, (ii) the description of Stock to be offered and (iii) the price and
terms, if any, upon which it proposes to offer such Stock. Within 20 calendar
days after receipt of the Notice, the Company may exercise its rights under
Section 6.1(a), at the price and on the terms specified in the Notice. If the
Company does not timely elect to obtain all of the Stock which Granite proposes
to sell within the 20 day period specified herein, Granite may, during the
180-day period following the expiration of the 20 day period, offer the Stock to
the person or persons specified in Granite's Notice at a price not less than,
and upon terms no more favorable to the Granite Offeree than, those specified in
the Notice. If Granite does not enter into an agreement for the sale of the
Stock consistent with its Notice within such 180 day period or if such agreement
is not consummated within 90 days of the execution thereof, the Company's right
hereunder shall be deemed to be revived and such Stock shall not be offered to a
third party unless first re-offered to the Company in accordance with the terms
of this Section 6.
(ii) For repurchases described in Section 6.1(a)(ii), (iii)
or (iv) and in Section 6.2, the purchase price per share shall be equal to the
Designated Purchase Price (as defined in Article VI.A. of the Restated Articles)
as of the date of notice of the repurchase. Granite shall give the Company
written notice of the occurrence of any of the events described in Section
6.1(a)(ii), (iii) or (iv) within 20 business days of the happening of such
event. Payment of the purchase price to Granite shall be made by five year
promissory note secured by the assets of the Company (subject to all then
existing security interests and bonding obligations of the Company and execution
of any normal and customary subordination agreements required by the Company's
primary lender) bearing interest at the 60 day reference rate charged by Bank of
America NT&SA providing for five annual installments of principal with accrued
interest, with the first installment due one year following the date of notice
of repurchase.
(iii) For repurchases described in Section 6.1(a)(v), the
purchase price per share shall be equal to the greater of: (A) the purchase
price determined according to Section 6.1(b)(ii); or (B) the original
acquisition price per share paid by Granite for the Granite Shares plus
interest, compounded annually, from the date the shares were paid for by Granite
calculated at one percent (1%) above the 60-day reference rate charged by Bank
of America NT&SA. The purchase price shall be payable at any time as the Company
shall elect prior to the second anniversary of the date of notice delivered
pursuant to Section 6.1(a)(v).
6.2 Granite's Put Right. Granite shall have the option to cause the
Company to repurchase all or any part of the Granite Shares and other shares of
the Company then held by Granite by giving written notice to the Company during
the one week period commencing three years after the Effective Date. The
purchase price shall be calculated and paid as set forth in Section 6.1(b)(ii).
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7. Strategic Cooperation.
7.1 Best Efforts. In order to maximize the effectiveness of
interactions between Granite and the Company and to take advantage of their
respective areas of expertise and market positions, Granite and the Company
agree to use their respective best efforts to seek out opportunities to maximize
business opportunities for their joint benefit, including but not limited to the
following:
(a) The Company and Granite each agree to create opportunities
for reciprocal introductions among the employees of each company.
(b) The Company agrees to discuss the possible inclusion of
Granite as a joint venture partner in any Western Summit Constructors, Inc.
project in excess of $40,000,000 or any project of the Company in excess of
$70,000,000 and/or on any other project where Granite's resources may be
helpful.
(c) Granite agrees to seek opportunities similar to those set
forth in Section 7.1(b) above to involve the Company as a joint venture partner
on Granite projects.
(d) Both parties agree to seek specific opportunities for joint
activities in the following target areas:
(i) International projects;
(ii) Privatization projects;
(iii) Projects requiring equity participation;
(iv) Water and waste water treatment projects;
(v) Marine/bridge projects in the southeastern United
States;
(vi) Overall marketing opportunities in the southeastern
United States; and
(vii) Larger projects that have types of work commonly
undertaken by the Company and Granite.
(e) Granite agrees to discuss with the Company the potential
acquisition of any industrial construction firm and to seek a cooperative method
of making any such acquisition.
7.2 Certain Limitations. At all times consistent with Section 5 of
this Agreement, Granite's involvement with the Company shall be limited to
participation on the Company's Board of Directors as set forth herein, joint
ventures, joint marketing efforts and "cross-pollination" of people so long as
the Company is able to maintain historical
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<PAGE> 64
patterns of profitability and viability. In addition, the Company shall maintain
its identity and the integrity of its systems and financial structure so long as
it is able to maintain historical patterns of profitability and viability.
Notwithstanding the foregoing, it is specifically agreed and understood that
neither the foregoing language nor any other provision of this Agreement shall
be interpreted as abrogating, contravening or preventing the Company's Board of
Directors from exercising its best business judgment, normal corporate rights
and/or the statutory duties of corporate governance.
8. Stock Legends. (a) All certificates representing shares of capital
stock of the Company held by Granite shall bear the following legend;
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN VOTING RESTRICTIONS, RIGHTS OF REPURCHASE AND RIGHTS OF FIRST REFUSAL
SET FORTH IN THE CORPORATION'S THIRD RESTATED ARTICLES OF INCORPORATION AND A
COOPERATION AND RIGHTS AGREEMENT AMONG THE CORPORATION, THE HOLDER HEREOF AND
CERTAIN OTHER SHAREHOLDERS OF THE COMPANY. COPIES OF THE ARTICLES AND SUCH
AGREEMENT ARE ON FILE AT THE PRINCIPAL OFFICES OF THE CORPORATION."
(ii) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR
REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS AND ARE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE
SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT
(i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii) PURSUANT TO AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION OR COMPLIANCE IS
NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION.
(b) All certificates representing shares of capital stock of the
Company held by the Holders shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN VOTING RESTRICTIONS SET FORTH IN A COOPERATION AND RIGHTS
AGREEMENT AMONG THE CORPORATION, THE HOLDER HEREOF AND CERTAIN
OTHER SHAREHOLDERS OF THE COMPANY, A COPY OF WHICH AGREEMENT IS ON
FILE AT THE PRINCIPAL OFFICES OF THE CORPORATION."
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9. Miscellaneous.
9.1 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of receipt), provided
that a copy is mailed within three business days by registered mail, return
receipt requested, (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested) or (d) three business
days after being sent by registered or certified mail, return receipt requested,
in each case to the appropriate addresses and facsimile numbers set forth under
the signature of the party (or to such other addresses and facsimile numbers as
a party may designate by notice to the other parties).
9.2 Binding Arbitration. In the event of a dispute between the
Parties related to or arising out of this Agreement, representatives of the
Parties will meet promptly in an effort to resolve the dispute amicably. If the
Parties cannot agree upon a resolution within thirty days of either Party
requesting a meeting for resolution of a dispute, then the matter will promptly
be submitted to binding arbitration in accordance with the arbitration
provisions contained in the Purchase Agreement.
9.3 Further Assurances. The Parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents and (c) to do such other acts and things, all as
the other Party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
9.4 Waiver. The rights and remedies of the Parties hereunder are
cumulative and not alternative. Neither the failure nor any delay by any Party
in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one Party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other Party; (b) no waiver that may be
given by a Party will be applicable except in the specific instance for which it
is given and (c) no notice to or demand on one Party will be deemed to be a
waiver of any obligation of such Party or of the right of the Party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
9.5 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the Parties with respect to its subject matter
(including the Draft Summary of Terms of Proposed Investment by Granite
Construction, Inc. ("Granite") in TIC Holdings, Inc. ("TIC")) and constitutes a
complete and exclusive statement of the terms
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<PAGE> 66
of the agreement between the Parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by Granite
and the Company, unless such change affects the Holders, in which case it must
also be executed by Holders holding a majority of the shares of Voting Stock of
the Company then held by the Holders as a group.
9.6 Assignments, Successors and No Third Party Rights. Neither
Party may assign any of its rights under this Agreement without the prior
consent of the other Party, which will not be unreasonably withheld if such
rights are of a purely financial nature without strategic implications except
that Granite may assign any of its rights under this Agreement to Granite
Construction Company, but Granite will not be relieved of its obligations
hereunder as a result of such assignment. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the Parties. Nothing
expressed or referred to in this Agreement will be construed to give any person
other than the Parties (and with regard to Sections 5 and 7, shareholders of the
Company) any legal or equitable right, remedy or claim under or with respect to
this Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the Parties
to this Agreement (and with regard to Sections 5 and 7, shareholders of the
Company) and their successors and assigns.
9.7 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
9.8 Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
9.9 Governing Law. This Agreement will be governed by and construed
under the laws of the State of Colorado without regard to conflicts of laws
principles.
9.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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<PAGE> 67
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
"Granite":
GRANITE CONSTRUCTION INCORPORATED
By: /s/ William E. Barton By: /s/ Michael Futch
--------------------------- ----------------------------------
Printed Name: William E. Barton Michael Futch
Title: Vice President and Title: Vice President, General Counsel
Chief Financial Officer and Secretary
Address: P.O. Box 50085
Watsonville, California 95077
Attention: Michael Futch, Esq.,
Legal Department
FAX No.: (408) 761-7846
with a copy to:
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attention: Eric J. Lapp
FAX No.: (415) 327-3699
"The Company":
TIC HOLDINGS, INC.
By: /s/ R.W. McKenzie
------------------------
Printed Name: R. W. McKenzie
Title: President
Address: 40185 County Road 129
P.O. Box 774848
Steamboat Springs, CO 80477
Attn: Michael A. Ross, Esq.
FAX No.: (970) 879-5052
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<PAGE> 68
with a copy to:
Otten, Johnson, Robinson Neff & Ragonetti, P.C.
1600 Colorado National Building
950 Seventeenth St.
Denver, Colorado 80202
Attn: Karen L. Barsch
FAX No.: (303) 825-6525
15
<PAGE> 69
COUNTERPART SIGNATURE PAGE
TO COOPERATION AND RIGHTS AGREEMENT
Dated as of December 23, 1996
"Holder"
If you are an individual, print your
name and sign below.
R. W. McKenzie
Name (Please Print)
/s/ R.W. McKenzie
- -----------------
Signature
Address:
------------------------
------------------------
FAX No.:
------------------------
16
<PAGE> 70
COUNTERPART SIGNATURE PAGE
TO COOPERATION AND RIGHTS AGREEMENT
Dated as of December 23, 1996
"Holder"
If you are an individual, print your
name and sign below.
Edwin F. Wambsganss
Name (Please Print)
/s/ Edwin F. Wambsganss
- -----------------------
Signature
Address: 100 Coulter Place
Castle Rock, CO 80104
FAX No.: (303) 660-5148
17
<PAGE> 71
COUNTERPART SIGNATURE PAGE
TO COOPERATION AND RIGHTS AGREEMENT
Dated as of December 23, 1996
"Holder"
If you are an individual, print your
name and sign below.
Glen C. Jeckel
Name (Please Print)
/s/ Glen C. Jeckel
- ------------------
Signature
Address: Box 880940
Steamboat Springs, CO 80488
FAX No.:
18
<PAGE> 72
Exhibit A
"Holders"
Number of Shares of Class A
Name Common Stock Owned
R. W. McKenzie 77,319
Edwin F. Wambsganss 50,688
Glen C. Jeckel 163,126
-------
Total 291,133
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<PAGE> 73
Exhibit B
Waiver Shareholders
The following shareholders of the Company, by executing in the space
opposite their name, hereby acknowledge and consent to the waiver of the
Company's and Granite's rights under Article VI of the Restated Articles to
purchase the Stock held by such shareholders as set forth in that certain
Cooperation and Rights Agreement dated December 23, 1996, to which this Exhibit
B is attached.
R. W. McKenzie /s/ R.W. McKenzie
------------------------
William P. Davis /s/ William P. Davis
------------------------
J. F. Kissane /s/ J.F. Kissane
------------------------
Edward J. Vanderwall /s/ Edward J. Vanderwall
------------------------
John C. Paul /s/ John C. Paul
------------------------
John M. Roos /s/ John M. Roos
------------------------
Edwin F. Wambsganss /s/ Edwin F. Wambsganss
------------------------
Gary B. McKenzie /s/ Gary B. McKenzie
------------------------
Leroy Meador /s/ Leroy Meador
------------------------
Glen C. Jeckel /s/ Glen C. Jeckel
------------------------
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<PAGE> 74
TIC HOLDINGS, INC.
Officer's Certificate
The undersigned officer of TIC Holdings, Inc., a Colorado corporation
("TIC")(1), in connection with the rendering by Gray Cary Ware & Freidenrich
("GCWF") of the opinion with respect to the Stock Purchase Agreement and the
Cooperation and Rights Agreement (the "Rights Agreement") by and between Granite
Construction Incorporated, a Delaware corporation ("Granite"), and TIC, and
recognizing that GCWF will rely on this Certificate in rendering such opinion,
hereby certifies as follows:
1. On September 30, 1996, a total of 771,379 shares of Class A Common
Stock of TIC Holdings, Inc. ("Common Stock") was outstanding. This number of
outstanding shares of Common Stock does not include any shares of Common Stock
held as Treasury Stock by TIC, nor does this number include any authorized but
unissued shares of Preferred Stock and/or Class B Common Stock.
2. No voting rights are associated with shares of Class B Common Stock,
and the voting rights of Preferred Stock are to be determined by the Board of
Directors of TIC (the "Board") upon the issuance of any shares of Preferred
Stock. As of the Effective Date of the Rights Agreement and immediately prior
thereto, there are no outstanding shares of Class B Common Stock or Preferred
Stock.
3. On September 30, 1996, the 771,379 shares of outstanding Common Stock
were held by the following categories of shareholders in the amounts indicated
below:
NUMBER OF SHARES SHAREHOLDER CATEGORY
414,626 Employee Shareholders who
are Board Members
322,982 Employee Shareholders who
are not Board Members
33,771 Non-Employee Shareholders
4. As of the Effective Date of the Rights Agreement and immediately prior
to Granite's purchase of the Shares pursuant to the terms of the Stock Purchase
Agreement, the total number of outstanding shares of Common Stock and the total
number of shares of Common Stock held by Employee Shareholders who are Board
Members, Employee Shareholders who are not Board Members and Non-Employee
Shareholders is substantially the same as set forth in paragraph 3.
- ------------
(1) Defined terms used and not defined herein have the same meanings ascribed to
them as in the Stock Purchase Agreement and/or the Rights Agreement.
<PAGE> 75
5. The undersigned is authorized to make the representations set forth
herein on behalf of TIC.
IN WITNESS WHEREOF, the undersigned has signed this Certificate this 30th
day of December, 1996.
TIC Holdings, Inc.,
a Colorado corporation
By: /s/ [SIG]
-----------------------
Dated: December 30, 1996
--------------------
-2-
<PAGE> 76
[GRAY CARY WARE FREIDENRICH LETTERHEAD]
December 30, 1996
To TIC Holdings, Inc.,
a Colorado corporation:
We are legal counsel to Granite Construction Incorporated, a Delaware
corporation (the "Buyer") and we are rendering this opinion pursuant to Section
8.4 of the Stock Purchase Agreement dated December 23, 1996 between the TIC
Holdings. Inc., a Colorado corporation (the "Company") and Buyer (the "Stock
Purchase Agreement") and the Cooperation and Rights Agreement dated December 23,
1996 between the Company, Buyer and certain shareholders of the Company (the
"Rights Agreement") in connection with the purchase by Buyer of up to 257,126
shares of the Company's Class A Common Stock (the "Shares"). Capitalized terms
used in this opinion, unless specifically defined herein, have the meanings
assigned them in the Stock Purchase Agreement. The Stock Purchase Agreement and
the Rights Agreement may collectively be referenced to herein as the
"Agreements."
In connection with this opinion, we have reviewed only the documents of
Buyer listed on Exhibit A hereto. As to factual matters, we have relied solely
upon, and assumed the accuracy, completeness, and genuineness of, a certificate
of an officer of the Buyer (the "Certificate"), certificates of public officials
and oral and written representations made to us by officers of Buyer. We have
made no independent investigation of any of the facts stated in any such
certificate or representation; however, nothing has come to our attention which
would lead us to believe that such facts are inaccurate. With respect to our
opinion in Paragraph 3 hereof regarding material agreements of Buyer, we have
relied solely upon our review of agreements filed as exhibits to Buyer's filings
with the Securities and Exchange Commission ("SEC"). With respect to our opinion
in Paragraph 3 regarding judgments, decrees and orders, we have relied solely
upon a representation made to us in the Certificate to the effect that except as
may otherwise be set forth in the Agreements and the Exhibits thereto, there are
no judgments, decrees or orders binding upon Buyer. We are not aware of any
judgment, decree or order binding upon Buyer.
In those instances in which our opinion is "to our knowledge," it is based
solely upon an inquiry of attorneys within our firm who perform legal services
for the Company, review of the Certificate and such additional review as is
specified above.
In addition, we have assumed that the representations and warranties as to
factual matters made by the Company and Buyer in Sections 3 and 4, respectively,
of the Stock
<PAGE> 77
Page 2
Purchase Agreement are true and correct. We have also assumed the genuineness
and authenticity of all documents submitted to us as originals, the conformity
to originals of all documents submitted to us as copies, the due execution and
delivery of the Agreements and all other documents referenced therein by any
party other than the Buyer when due execution and delivery are a prerequisite to
the effectiveness thereof, that you have received all of the documents that you
were required to receive under the Agreements, and that the Agreements and all
other documents referenced therein are binding obligations of the Company.
We are admitted to practice law only in the State of California, and we
express no opinion concerning any law other than the law of the State of
California, the corporation laws of the State of Delaware ("Delaware Law") and
the federal law of the United States. As to matters of Delaware Law, we have
based our opinion solely upon our examination of such laws and the rules and
regulations of the authorities administering such laws, all as reported in
standard, unofficial compilations. Opinions of counsel licensed to practice law
in states or jurisdictions other than the State of California have not been
obtained. We call your attention to the fact that the Agreements state that they
are governed by the laws of the State of Colorado and that we are not rendering
any opinion with respect to Colorado laws. We have not examined the question of
what law would govern the interpretation or enforcement of the Agreements and
our opinion is based on the assumption that the internal laws of the State of
California and federal law would govern the provisions of the Agreements and the
transactions contemplated thereby. We note that if the Agreements are not, in
fact, legal, valid, binding and enforceable under the laws of the State of
Colorado, the Agreements may not be enforced by a California court under
applicable conflicts of law principles. We express no opinion with respect to
any questions of choice of law, choice of venue or conflict of laws.
We express no opinion with respect to (i) the availability of equitable
remedies, including specific performance, (ii) the enforceability of the
Agreement under Section 1670.5 of the California Civil Code.
Subject to the foregoing, it is our opinion that as of the date hereof.
1. The Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Buyer has all requisite
corporate power to own and operate its properties and assets, and to carry on
its business as presently conducted.
2. The Company has all requisite corporate power to enter into the
Agreements, to purchase the Shares and the Tendered Shares, and to carry out and
perform its obligations under the terms thereof. The Agreements have been duly
authorized by all necessary corporate action on the part of Buyer and have been
duly executed and delivered by Buyer. The Agreements are valid and binding
obligations of Buyer, enforceable in accordance with their terms, except as
limited by applicable
<PAGE> 78
Page 3
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting the enforcement of creditors' rights.
3. The execution, delivery or performance of the Agreements will not
violate any term of Buyer's Certificate of Incorporation or By-Laws; and, to our
knowledge, such transactions will not, in any material respect, violate or
conflict with or constitute a default under the provisions of any material
agreement, judgment, decree or order binding upon the Buyer.
4. To our knowledge, except as described or disclosed in the Agreements or
in exhibits thereto, no action, suit, proceeding or investigation is pending or
threatened against Buyer or its properties, which would prevent Buyer from
carrying out its obligations under the Agreements.
5. As of the date of the First Closing, all consents, approvals and
authorizations of and filings with any federal or California governmental
authority required on the part of Buyer, if any, in connection with the valid
execution and delivery of the Agreements or the consummation of the transactions
contemplated thereby have been obtained or made, except filings to be made under
the HSR Act which filing is required prior to the Second Closing.
The foregoing opinion is intended solely for your benefit and is not to be
made available to or be relied upon by any other person, firm, or entity without
our express prior written consent.
Very truly yours,
/s/ Gray Cary Ware & Freidenrich
GRAY CARY WARE & FREIDENRICH,
A Professional Corporation
<PAGE> 79
EXHIBIT A
1. Copies of the Certificate of Incorporation of Buyer as amended to the date
hereof.
2. Copies of the By-Laws of Buyer, as amended to the date hereof and as
certified to be complete and true by the Secretary of Buyer.
3. The minutes of the meetings of the Board of Directors of Buyer in which
the transactions with the Company were authorized.
4. The Agreements and all other agreements referenced therein, including all
exhibits thereto.
5. Certificate of Status issued on December 30, 1996, by the Delaware
Secretary of State.
6. Material agreements attached as exhibits to SEC filings of the Buyer.
<PAGE> 80
GRANITE CONSTRUCTION INCORPORATED
COMPLIANCE CERTIFICATE
The undersigned, William E. Barton, Vice President and Chief Financial
Officer of Granite Construction Incorporated, a Delaware corporation (the
"Company"), does hereby certify on behalf of the Company in such capacity as
follows:
1. He is familiar with the terms of the Stock Purchase Agreement between
the Company and TIC Holdings, Inc., a Colorado corporation ("TIC") dated
December 23, 1996 (the "Agreement") and is familiar with the terms and
conditions of the various documents mentioned and described in the Agreement.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.
2. As to matters herein set forth, the undersigned has personal knowledge
or has obtained information from officers or other employees of the Company and
makes this Certificate pursuant to the provisions of subsection 2.5(b)(ii) of
the Agreement.
3. The representations and warranties made by the Company in Section 4 of
the Agreement are true and correct hereto as of the First Closing Date with the
same force and effect as if the Agreement had been made on the First Closing
Date.
IN WITNESS WHEREOF, the undersigned has signed this certificate on this
30th day of December, 1996.
GRANITE CONSTRUCTION
INCORPORATED
/s/ William E. Barton
------------------------------------------
William E. Barton
Vice President and Chief Financial Officer
<PAGE> 81
6
<PAGE> 82
[GRAY CARY WARE FREIDENRICH LETTERHEAD]
December 30, 1996
Granite Construction Incorporated
585 West Beach Street
Watsonville, CA 95076
Ladies and Gentlemen:
This opinion is provided in connection with the Stock Purchase Agreement
between Granite Construction Incorporated, a Delaware corporation ("Granite")
and TIC Holdings, Inc., a Colorado corporation ("TIC") and in connection with
the Cooperation and Rights Agreement (the "Rights Agreement") between Granite
and TIC.
Pursuant to the Stock Purchase Agreement, TIC is issuing and selling to
Granite 102,850 shares of TIC's Class A Common Stock and Granite is buying an
additional 154,276 shares of TIC's Class A Common Stock directly from TIC
shareholders. Pursuant to the Rights Agreement, TIC is granting Granite the
right to purchase up to 30% of the total number of outstanding shares of TIC
voting stock during each of the five years after the Effective Date of the
Rights Agreement as well as the right, for a one-month period commencing on the
sixth anniversary of the Effective Date of the Rights Agreement, to acquire
additional shares as will enable it to own 51% of TIC voting stock.
Additionally, Granite will have a right of first purchase in the event TIC
proposes to issue and sell TIC voting stock to third parties. The Rights
Agreement further provides that Granite shall not acquire more than 49.9% of the
outstanding shares of TIC voting stock during the five-year period following the
Effective Date of the Rights Agreement (the "Standstill") except pursuant to its
exercise of its right of first purchase pursuant to the Rights Agreement or its
purchase of TIC stock pursuant to the terms of the Restated Articles of
Incorporation of TIC (the "Restated Articles"). Pursuant to the terms of the
Rights Agreement, TIC reserves the right (the "Call Right") to repurchase all or
any part of the TIC stock owned by Granite upon the occurrence of certain events
(such as a proposed sale of TIC stock by Granite), upon 30 days prior written
notice, and during the one-month period commencing three years after the
Effective Date of the Rights Agreement. If TIC should exercise its Call Right,
Granite's right to purchase 51% of the TIC voting stock will terminate. The
Rights Agreement further provides for the irrevocable waiver by TIC and Granite
of certain repurchase rights they hold pursuant to the terms of the Restated
Articles (the "Waiver").
<PAGE> 83
December 30, 1996
Page Two
Except as otherwise provided, capitalized terms referred to herein have
the meanings set forth in the Stock Purchase Agreement and Rights Agreement, as
appropriate. All section references, unless otherwise indicated, are to the
Internal Revenue Code of 1986, as amended (the "Code").
In our capacity as legal counsel to Granite in connection with the Stock
Purchase Agreement and Rights Agreement and for the purpose of rendering this
opinion, we have examined and are relying upon (without any independent
investigation or review thereof) the truth and accuracy, at all relevant times,
of the statements, covenants, representations and warranties contained in the
following documents (including all schedules and exhibits thereto): (1) the
Stock Purchase Agreement; (2) the Rights Agreement; (3) Article VI of the
Restated Articles; (4) a certificate from TIC (the "TIC Certificate") that
contains representations with respect to the number of shares of TIC stock
outstanding, the number of shares held by employees that are subject to a right
of first purchase and the number of shares subject to the Waiver; (5) an opinion
of counsel from Otten, Johnson, Robinson, Neff & Rogonetti, P.C. to (the "Otten
Opinion") to the effect that the Rights Agreement, and in particular the Waiver,
is fully enforceable in accordance with its terms, and (6) such other
instruments and documents related to the transactions contemplated by the
parties as we have deemed necessary or appropriate.
In connection with rendering this opinion, we have assumed or obtained
representations (and are relying thereon, without any independent investigation
or review thereof) that:
1. Original documents (including signatures) are authentic,
documents submitted to us as copies conform to the original documents, and there
has been (or will be by the Effective Date of the Stock Purchase Agreement and
the Rights Agreement) due execution and delivery of all documents where due
execution and delivery are prerequisites to effectiveness thereof.
2. Granite's purchase of TIC voting stock will be consummated
pursuant to the terms of the Stock Purchase Agreement and Rights Agreement and
will be effective under the applicable state law.
3. Any representation or statement made "to the best of knowledge"
or similarly qualified is correct without such qualification. As to all matters
in which a person or entity making a representation referred to above has
represented that such person or entity either is not a party to, does not have,
or is not aware of, any plan or intention, understanding or agreement, there is
in fact no such plan, intention, understanding or agreement.
4. Granite shall at no time own, acquire or obtain options to
acquire eighty percent (80%) or more of the shares of TIC voting stock.
5. The Waiver is enforceable according to its terms.
<PAGE> 84
December 30, 1996
Page Three
6. The Otten Opinion has been delivered and not withdrawn.
In addition to the assumptions set forth above, this opinion is
subject to the exceptions, limitations and qualifications set forth below.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we are
of the opinion that the execution of the Stock Purchase Agreement and the Rights
Agreement by Granite and the consummation of the actions contemplated thereunder
will not render TIC and Granite members of the same "controlled group of
corporations," as that term is defined in Sections 414(b) and 1563 of the Code,
provided that Granite does not subsequently acquire or own or obtain an option
to acquire eighty percent (80%) or more of the shares of TIC voting stock,
regardless of whether such eighty percent (80%) acquisition or ownership by
Granite results from the purchase of additional shares of TIC voting stock by
Granite or the repurchase or redemption by TIC of shares of its voting stock
owned by shareholders other than Granite.
This opinion represents and is based upon our best judgment regarding the
application of federal income tax laws arising under the Code, existing judicial
decisions, administrative regulations and published rulings and procedures. Our
opinion is not binding upon the Internal Revenue Service ("IRS"), the Department
of Labor ("DOL") or the courts, and the IRS is not precluded from successfully
asserting a contrary position. Furthermore, no assurance can be given that
future legislative, judicial or administrative changes, on either a prospective
or retroactive basis, would not adversely affect the accuracy of the conclusions
stated herein. Nevertheless, we undertake no responsibility to advise you of any
new developments in the application or interpretation of federal tax laws or in
the application or interpretation of the Employee Retirement Income Security Act
of 1974, as amended.
Our opinion in this letter is based solely upon existing federal law and
federal regulatory and judicial interpretations thereunder that pertain to
controlled group status. We express no opinion as to the enforceability or
validity of the Waiver under federal or Colorado state law. We are not admitted
to practice law in any state or jurisdictions other than the State of
California. Therefore, we are relying solely on the Otten opinion for its
interpretation of federal law and the laws, regulations, and rules of the State
of Colorado with respect to the enforceability of the Waiver.
This opinion addresses only the classification of TIC and Granite as
members of the same controlled group of corporations under Sections 414(b) and
1563 of the Code. No opinion is expressed as to any other matter or any other
transaction (including any transaction undertaken in connection with these
agreements) under any foreign, federal, state, or local law.
No opinion is expressed as to any other matter or to any matter whatsoever
if all the terms of the Stock Purchase Agreement and the Rights Agreement are
not carried out in accordance
<PAGE> 85
December 30, 1996
Page Four
with the terms of such Agreements and without waiver or breach of any material
provision thereof or if all of the representations, warranties, statements and
assumptions upon which we relied are not true and accurate at all relevant
times. In the event any one of the statements, representations, warranties or
assumptions upon which we have relied to issue this opinion is incorrect, our
opinion might be adversely affected and may not be relied upon.
This opinion is intended solely for your benefit and may not be relied
upon by any other person or entity, and may not be made available to any other
person or entity without our prior written consent.
Very truly yours,
/s/ GRAY CARY WARE & FREIDENRICH
GRAY CARY WARE & FREIDENRICH
A Professional Corporation
<PAGE> 86
[GRANITE LETTERHEAD]
FOR IMMEDIATE RELEASE
GRANITE TO ACQUIRE MINORITY INTEREST IN TIC
HOLDINGS
WATSONVILLE, CALIFORNIA (December 30, 1996) Granite Construction Incorporated
(NASDAQ/NMS:GCCO) announced today that it has reached an agreement to acquire
30% of the outstanding stock of TIC Holdings Inc., a Steamboat Springs,
Colo.-based industrial construction company, for approximately $21 million.
According to the terms of the agreement, Granite will acquire 10% of the company
this year and make a tender offer to TIC shareholders for an additional 20% of
the shares next spring upon completion of TIC's 1996 audited financial
statements. The Watsonville, Calif.-based heavy civil contractor plans to
finance the transaction through its existing credit lines.
TIC, founded in 1974, operates both nationally and internationally. The company
has annual revenues of approximately $500 million. By market sector, 59% of its
1995 revenue came from industrial/petrochemical projects, 23% from power-related
projects, 16% from water/sewer/wastewater projects and the remaining 2% derived
from transportation-related work. The company employs over 4,000 worldwide.
<PAGE> 87
Granite President and Chief Executive Officer David H. Watts said "our
investment in TIC gives us a strong foothold in the growing industrial process
marketplace, provides a broader diversification of our core business and is
expected to provide joint venture opportunities for our existing operations via
a strategic alliance with TIC."
TIC Chairman, President and Chief Executive Officer R.W. McKenzie added that
"Granite's investment in TIC Holdings provides us with more flexibility to
expand our industrial construction capabilities in targeted areas such as
engineer-procure-construct, design-build and international."
Granite is the third largest heavy civil contractor in the U.S. The company is
also a large producer of sand, gravel, asphalt and other construction materials.
The company has offices in California, Arizona, Nevada, Utah, Texas and Georgia.
TIC is one of the leading merit shop, general heavy industrial contractors in
the U.S. The company is ranked in the Top 20 in both the industrial and power
marketplaces by Engineering News-Record magazine. TIC self-performs all major
disciplines including civil, structural steel erection, heavy mechanical,
process piping and electrical/instrumentation. TIC has offices in Colorado,
Georgia, California, Texas, Louisiana, Kansas, Nevada, Oregon and Wyoming.
<PAGE> 88
TIC Holdings, Inc.,
a Colorado Corporation
CLOSING CERTIFICATE
TIC HOLDINGS, INC., a Colorado corporation (the "Company"), pursuant to
Section 2.5(a)(iii) of that certain Stock Purchase Agreement between the Company
and Granite Construction Incorporated dated December 23, 1996 (the "Stock
Purchase Agreement"), does hereby certify that as of the date hereof, and
subject to the terms of the Stock Purchase Agreement, all of the representations
and warranties of the Company contained in the Stock Purchase Agreement are
accurate in all Material respects. In addition, the Company has performed and/or
complied with all covenants and or obligations required to be performed or
complied with by the Company prior to the First Closing as of the date hereof.
Furthermore, all conditions required to be satisfied by the Company prior to the
First Closing pursuant to the terms of Section 7 of the Stock Purchase Agreement
have been satisfied as of the date hereof.
IN WITNESS WHEREOF, the undersigned have executed this Closing Certificate
as of this 30th day of December, 1996.
TIC HOLDINGS, INC.,
a Colorado Corporation
By: /s/ MICHAEL A. ROSS
--------------------------------
Michael A. Ross
Vice President & General Counsel
<PAGE> 89
Number Shares
1736 102,050
INCORPORATED UNDER THE LAWS OF THE STATE OF COLORADO
TIC HOLDINGS, INC.
2,500,000 Class A common shares $.10 par value authorized
500,000 Class B common shares $.10 par value authorized
2,000,000 Preferred $1.00 par value authorized
Transfer of shares represented Class A common shares
by this certificate is restricted
as stated on the reverse
side hereof.
THIS CERTIFIES THAT Granite Construction Incorporated is the owner of One
Hundred Two Thousand Eight Hundred Fifth and no/100 fully paid and
non-assessable Shares of the above Corporation transferable only on the books of
the Corporation by the holder hereof in person or by duly authorized Attorney
upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated December 30, 1996
<PAGE> 90
The corporation will furnish to any shareholder upon request and without charge
a full statement of the designations, preferences, limitations and rights of the
shares of each class authorized to be issued and the variations in the relative
rights and preferences between the shares of each such series, so far as the
same have been fixed and determined, and the authority of the board of directors
to fix and determine the relative rights and preferences of subsequent series.
The securities represented by this certificate are subject to certain voting
restrictions, rights of repurchase and rights of first refusal set forth in the
Corporation's Third Restated Articles of Incorporation and a Cooperation and
Rights Agreement among the Corporation, the holder hereof and certain other
shareholders of the Company. Copies of the articles and such agreement are on
file at the principal offices of the Corporation.
The securities represented by this certificate have not been registered under
the securities act of 1933, as amended (the "Act") or registered or qualified
under any applicable state securities laws and are "Restricted Securities" as
defined in Rule 144 promulgated under the Act. The securities may not be sold or
offered for sale or otherwise distributed except (i) in conjunction with an
effective registration statement for the shares under the Act or (ii) in
compliance with rule 144, or (iii) pursuant to an opinion of counsel
satisfactory to the Corporation that such registration or compliance is not
required as to said sale, offer or distribution.
To the extent that California Securities Laws are applicable: "It is unlawful to
consummate a sale or transfer of this security, or any interest therein, or to
receive any consideration therefor, without the prior written consent of the
commissioner of corporations of the State of California, except as permitted in
the commissioners rules."
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written in full according to
applicable laws or regulations. Additional abbreviations may also he used though
not in the list.
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian - (Minor) under Uniform Gifts to Minors
Act - (State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
For value received, the undersigned hereby sells, assigns and transfers unto
- --------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNED
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints
-----------------------------------------------------------------------
Attorney to transfer the said shares on the books of the within-named
Corporation with full power of substitution in the premises.
Dated,
-----------------------
In presence of --------------------------
- -----------------------------
[NOTICE PARAGRAPH NOT SHOWN]
<PAGE> 91
[TIC COMPANY LETTERHEAD]
December 30, 1996
Granite Construction Incorporated
P.O. Box 50085
Watsonville, CA 95077
Ladies and Gentlemen:
I am in-house legal counsel to TIC Holdings, Inc., a Colorado corporation
("TIC"). This opinion is delivered to you at the request of TIC pursuant to
paragraph 7.5(a) of that certain Stock Purchase Agreement dated December 23,
1996 (the "Agreement") by and between TIC and Granite Construction Incorporated,
a Delaware corporation ("Buyer"). Unless otherwise defined herein, terms defined
in the Agreement are used herein as therein defined.
In connection with this opinion, I have examined the Agreement and all schedules
and exhibits thereto, and that certain Cooperation and Rights Agreement by and
among TIC, Buyer, and certain shareholders of TIC (the "Rights Agreement"), and
such other records of TIC, certificates and other documents, as I have deemed
necessary or appropriate as a basis for the opinions hereinafter expressed.
This opinion is rendered only with respect to Colorado law and applicable
federal law.
Based upon the foregoing and upon such investigation as I have deemed necessary,
I am of the opinion that:
(1) The Agreement and the Rights Agreement have been duly executed and
delivered by TIC; and
(2) As of December 30, 1996, the authorized capital stock of the Company
consists of 2,000,000 shares of preferred stock, par value $1.00 per share, none
of which are issued and outstanding, 2,500,000 shares of Class A Common Stock,
par value of $.10 per share, of which 770,771 shares are issued and outstanding
(not counting the Granite Shares), and 500,000 Shares of Class B Common Stock,
par value of $.10 per share, none of which are issued and outstanding. All such
issued and outstanding shares have been duly authorized and are validly issued,
fully paid and nonassessable. To the best of my knowledge, except as described
in the Disclosure Letter, there are no outstanding rights, options, warrants,
conversion rights or agreements for the purchase or acquisition from the Company
of any shares of its capital stock.
<PAGE> 92
Granite Construction Incorporated
Page Two
December 30, 1996
The opinion set forth herein is as of the date hereof and I disclaim any
undertaking or obligation to advise Buyer of changes which may hereafter be
brought to my attention.
This opinion has been prepared solely for the use of Buyer and may not be quoted
in whole or in part or otherwise referred to in any financial statement, or
filed with or furnished to any governmental agency or other party, without my
prior written consent. Notwithstanding the foregoing, the law firm of Otten,
Johnson, Robinson, Neff & Ragonetti, P.C. is hereby expressly authorized to rely
upon this opinion in giving their opinions in connection with the Agreement and
the Rights Agreement.
Very truly yours,
/s/ MICHAEL A. ROSS
Michael A. Ross
General Counsel
MAR:an
[TIC LOGO]
<PAGE> 93
[OTTEN, JOHNSON, ROBINSON, NEFF & RAGONETTI, P.C LETTERHEAD]
December 30, 1996
Granite Construction Incorporated
P.O. Box 50085
Watsonville, California 95077
Ladies and Gentlemen:
We have acted as special counsel to TIC Holdings, Inc., a Colorado
corporation (the "Company") in connection with that certain Stock Purchase
Agreement dated December 23, 1996 (the "Agreement"), by and between the Company
and Granite Construction Incorporated, a Delaware corporation ("Buyer"). This
opinion letter is provided to you at the request of the Company pursuant to
Section 7.5(a) of the Agreement. Except as otherwise indicated herein,
capitalized terms used herein are defined as set forth in the Agreement.
As special counsel for the Company in connection with this opinion
letter, we have examined the following documents:
1. The Agreement.
2. That certain Cooperation and Rights Agreement by and among the
Company, Buyer and certain shareholders of the Company dated
December 23, 1996 (the "Rights Agreement").
3. The Articles of Incorporation of the Company, and all
amendments thereto which have been duly filed with the
Colorado Secretary of State and the bylaws of the Company, as
amended to date (the "Organization Documents").
We have also examined such corporate records and other documents and have made
such examination of law as we have deemed necessary in connection with this
opinion letter.
In rendering this opinion letter, as to questions of fact material to
this opinion letter we have relied, to the extent we have deemed such reliance
appropriate, without investigation, on certificates and other communications
from public officials and others and from directors, officers and employees of
the Company and on representations of the Company set forth in the Agreement.
<PAGE> 94
Granite Construction Incorporated
December 30, 1996
Page 2
Wherever we indicate that our opinion with respect to the existance or
absence of facts is based on our knowledge, our opinion is based solely on the
current actual knowledge of the attorneys in this firm who are representing the
Company in connection with the transactions contemplated by the Agreement
(collectively, the "Contemplated Transactions"), and we have conducted no
special investigation of factual matters in connection with this opinion letter.
With respect to opinions which are qualified by reference to materiality, we
have relied upon the opinions of officers and representatives of the Company.
In connection with this opinion letter, we have assumed the accuracy
and completeness of all documents and records that we have reviewed, the
genuineness of all signatures, the authenticity of the documents submitted to us
as originals and the conformity to authentic original documents of all documents
submitted to us as certified, conformed or reproduced copies. We have further
assumed that:
(i) Granite has legal existence;
(ii) The Contemplated Transactions have been duly
authorized by all necessary corporate or other action
on the part of Granite;
(iii) All of Granite's representations contained in Section
4.3 of the Agreement are true and correct;
(iv) Persons acting on behalf of Granite were duly
authorized so to act;
(v) Granite has complied with all legal requirements
applicable to it that affect the Contemplated
Transactions;
(vi) The Agreement and the Rights Agreement have been duly
executed and delivered by Granite;
(vii) There has not been any mutual mistake of fact or
misunderstanding, fraud, duress or undue influence;
and
(viii) The Contemplated Transactions comply with any test of
good faith or fairness required by law.
Based upon and subject to the foregoing and subject to the
qualifications and exceptions hereinafter set forth, it is our opinion that:
<PAGE> 95
Granite Construction Incorporated
December 30, 1996
Page 3
(1) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Colorado.
(2) The Company has corporate power and authority to enter into
the Agreement and the Rights Agreement and to perform its
obligations thereunder. The execution and delivery of the
Agreement and the Rights Agreement and the consummation of the
Contemplated Transactions have been duly authorised by all
necessary corporate action on the part of the Company.
(3) Based upon the legal opinion of Michael A. Ross of even date
herewith, a copy of which is attached hereto as Exhibit A (the
"Ross Opinion"), opining that the Agreement and the Rights
Agreement have been duly executed by the Company, such
agreements constitute the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance
with their terms. The provisions set forth in Sections 1.5 and
1.6 in the Rights Agreement are valid and binding against the
Company and Granite and are fully enforceable in accordance
with their terms.
(4) The execution and delivery by the Company of the Agreement and
the Rights Agreement and the performance of the Company's
obligations under such documents, do not violate applicable
provisions of statutory law or regulation, subject to
compliance with those filing and consent requirements set
forth in paragraph (7) below.
(5) The execution and delivery of the Agreement and the Rights
Agreement and the performance of any of the Contemplated
Transactions by the Company will not violate any provision of
its Organization Documents, or to our knowledge, based solely
on inquiry of officers of the Company, any covenant, indenture
or agreement binding upon or affecting the Company or its
property or assets, except that under the Company's primary
loan facility, the Company will be required to obtain the
consent of the lenders prior to granting any security interest
in its assets, if and when required by Section 6.1 of the
Rights Agreement.
<PAGE> 96
Granite Construction Incorporated
December 30, 1996
Page 3
(6) The Shares, when issued in compliance with the provisions of
the Agreement, including, but not limited to, payment of the
Purchase Price by Granite, will be duly authorized, validly
issued, fully paid and nonassessable. Except as described in
the Agreement (and the Disclosure Letter delivered pursuant
thereto) and in the Organisation Documents, the issuance of
the Shares is not subject to any preemptive rights or, to our
knowledge, rights of first refusal created by the Company.
(7) To our knowledge, the Company has obtained all Consents
required to be obtained from any person in connection with the
execution and delivery of the Agreement or the Rights
Agreement or the consummation performance of nay of the
Contemplated Transactions, except for (i) the Notification and
Report Form which is required to be filed with the Federal
Trade Commission and the United States Department of Justice
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 and the rules and regulations promulgated thereunder,
and (ii) the Consent of the Company's primary lenders
described in paragraph (5) above; and (iii) such other
consents, authorizations, filings, approvals and registrations
which if not obtained or made would not have a material
adverse effect on the Company.
(8) Except as disclosed in the Disclosure Letter, to our
knowledge, there is no action, arbitration, hearing,
litigation or suit involving any Governmental Authority
pending or threatened against the Company, nor is there any
Order outstanding against the Company, that, individually or
in the aggregate, would reasonably be expected to be Material
to the Company.
(9) Based solely upon the Ross Opinion (i) the authorized capital
stock of the Company consists of 2,000,00 shares of preferred
stock, par value $1.00 per share, none of which are issued and
outstanding, 2,500,000 shares of Class A Common Stock, par
value of $.10 per share, of which 770,771 shares are issued
and outstanding, and 500,000 shares of Class B Common Stock,
par value $.10 per share, none of which are issued and
<PAGE> 97
Granite Construction Incorporated
December 30, 1996
Page 5
outstanding; (ii) all such issued and outstanding shares have
been duly authorized and are validly issued, fully paid and
nonassessable; and (iii) except as described in the Disclosure
Letter, there are no outstanding rights, options, warrants,
conversion rights or agreements for the purchase or
acquisition from the Company of any shares of its capital
stock.
We express no opinion to the enforceability of any provisions of the
Agreement or Rights Agreement: (i) that provide that any waivers or amendments
may only be in writing; (ii) which purport to assign or in any way delegate the
fiduciary obligations of members of the board of directors of the Company; (iii)
contained in Section 5 of the Rights Agreement; (iv) which requires the Company
to redeem or repurchase capital stock of the Company at a time in which the
Company has inadequate liquidity and/or assets as prescribed by C.R.S. Section
7-106-401; or (v) as such agreements may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting the enforcement of creditors' rights. In addition, Section 4 of the
Rights Agreement, which requires that certain actions be approved by at lease
one of the directors designated by Granite, may not be enforceable based upon
C.R.S. Section 7-108-205 which requires that increased voting requirements be
set forth in the bylaws of the Company. However, the Company has amended its
bylaws to require that at least 73% of the directors in office approve those
actions set forth in Section 4 of the Rights Agreement, therefore, so long as,
Granite designates at lease 30% of the total directors in office, at least one
of the directors designated by Granite will have to vote in favor of such action
in order for the board of directors of the Company to approve such action,
therefore the intended affect of Section 4 should be achieved.
Our opinions expressed above are limited to the laws of the State of
Colorado and the laws of the United States of America, and we do not express any
opinion herein concerning any other state laws or any ordinances, administrative
decisions, rules or regulations of any county, town, municipality or special
political subdivision (whether created or enabled through legislative action at
the federal, state or regional level). This opinion letter is given as of the
date hereof and we assume no obligation to advise you of changes that may
hereafter be brought to our attention. This opinion letter is solely for the
information of the addressee hereof and is not to be quoted in whole or in part
or otherwise referred to, nor is it to be filed with any governmental agency or
any other person, without our prior written consent. No one other than the
addressee hereof is entitled to rely on this opinion
<PAGE> 98
Granite Construction Incorporated
December 30, 1996
Page 6
letter. This opinion letter is rendered solely for purposed of the Contemplated
Transactions and should not be relied upon for any other purpose.
Very truly yours,
/s/ OTTER, JOHNSON, ROBINSON, NEFF & RAGONETTE, P.C.
----------------------------------------------------
Otter, Johnson, Robinson, Neff & Ragonette, P.C.
<PAGE> 99
EXHIBIT A
[TIC LETTERHEAD]
December 30, 1996
Granite Construction Incorporated
P.O. Box 50085
Watsonville, CA 95077
Ladies and Gentleman:
I am in-house legal counsel to TIC Holdings Inc., Colorado corporation ("TIC").
This opinion is delivered to you at the request of TIC pursuant to paragraph
7.5(a) of that certain Stock Purchase Agreement dated December 23, 1996 (the
"Agreement") by and between TIC and Granite Construction Incorporated, a
Delaware corporation ("Buyer"). Unless otherwise defined herein, terms defined
in the Agreement are used herein as therein defined.
In connection with this opinion. I have examined the Agreement and all schedules
and exhibits thereto, and that certain Cooperation and Rights Agreement by and
among TIC, Buyer, and certain shareholders of TIC (the "Rights Agreement"), and
such other records of TIC, certificates and other documents, as I have deemed
necessary or appropriate as a basis for the opinions hereinafter expressed.
This opinion is rendered only with respect to Colorado law and applicable
federal law.
Based upon the foregoing and upon such investigation as I have deemed necessary,
I am of the opinion that:
(1) The Agreement and the Rights Agreement have been duly executed and
delivered by TIC; and
(2) As of December 30, 1996, the authorized capital stock of the
Company consists of 2,000,000 shares of preferred stock, par value $1.00 per
share, none of which are issued and outstanding 2,500,000 shares of Class A
Common Stock, per value of $.10 per share, of which 770,771 shares are issued
and outstanding (not counting the Granite Shares), and 500,000 Shares of Class B
Common Stock, per value of $.10 per share, none of which are issued and
outstanding. All such issued and outstanding shares have been duly authorised
and are validly issued, fully paid and nonassessable. To the best of my
knowledge, except as described in the Disclosure Letter, there are no
outstanding rights, options, warrants, conversion rights or agreements for the
purchase or acquisition from the Company of any shares of its capital stock.
<PAGE> 100
Granite Construction Incorporated
Page Two
December 30, 1996
The opinion act forth herein is as of the date hereof and I disclaim any
undertaking or obligation to advice Buyer of changes which may hereafter be
brought to my attention.
This opinion has been prepared solely for the use of Buyer and may not be quoted
in whole or in part or otherwise referred to in any financial statement, or
filed with or furnished to any governmental agency or other party, without my
prior written consent. Notwithstanding the foregoing, the law firm of Otten,
Johnson, Robinson, Neff & Regonetti, P.C. is hereby expressly authorised to rely
upon this opinion in giving their opinions in connection with the Agreement and
the Rights Agreement.
Very truly yours,
/s/ MICHAEL A. ROSS
Michael A. Ross
General Counsel
MAR:an
[TIC LOGO]
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
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<LEGEND>
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0
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<COMMON> 179
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