EXHIBIT 10.57
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TRANSIT DEBTOR-IN-POSSESSION BOND FACILITY
Dated as of October 5, 2001
among
RAILWORKS CORPORATION,
a Debtor and Debtor-in-Possession
as Borrower and Indemnitor,
TRAVELERS CASUALTY & SURETY COMPANY OF AMERICA,
and
CERTAIN SUBSIDIARIES OF THE BORROWER,
as Debtors and Debtors-in-Possession,
as Indemnitors.
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................
Section 1.01
ARTICLE II THE BONDS.............................................
Section 2.01
ARTICLE III CONDITIONS...........................................
Section 3.01
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................
Section 4.01
ARTICLE V AFFIRMATIVE COVENANTS..................................
Section 5.01
ARTICLE VI NEGATIVE COVENANTS....................................
Section 6.01
ARTICLE VII EVENTS OF DEFAULT....................................
Section 7.01
ARTICLE VIII GUARANTY............................................
Section 8.01
ARTICLE IX MISCELLANEOUS.........................................
Section 9.01
SCHEDULES
Schedule 4.02 Adverse Changes and Restricted Payments Since December 31, 2000
Schedule 4.11(a) List of Subsidiaries
Schedule 4.11(b) List of Indemnitors
Schedule 4.14 List of Bank Accounts
Schedule 5.09 List of Non-Wholly-Owned Subsidiaries
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This TRANSIT DEBTOR-IN-POSSESSION BOND FACILITY, dated as of October 5,
2001, is entered into by and among RAILWORKS CORPORATION, a Delaware
corporation, as a debtor and debtor-in-possession under Chapter 11 of the
Bankruptcy Code (as hereinafter defined) (the "Borrower"), TRAVELERS CASUALTY &
SURETY COMPANY OF AMERICA (together with any surety or co-surety that may
participate in the issuance, payment, or performance of any Bond (as hereinafter
defined) or obligation arising under any Bond issued pursuant to this facility,
"Travelers"), and the other Indemnitors (as hereinafter defined).
W I T N E S S E T H
WHEREAS, on September 20, 2001 (the "Filing Date"), the Borrower and
its Domestic Subsidiaries (as hereinafter defined) each filed a voluntary
petition for relief (collectively, the "Bankruptcy Cases") under Chapter 11 of
the Bankruptcy Code (as hereinafter defined) with the United States Bankruptcy
Court for the District of Maryland (Baltimore Division) (the "Bankruptcy
Court"); and
WHEREAS, the Indemnitors continue to operate their businesses pursuant
to Sections 1107 and 1108 of the Bankruptcy Code; and
WHEREAS, the Indemnitors have an immediate need for Bonds to continue
to operate their businesses and the Indemnitors have been unable to obtain Bonds
from any other source sufficient to continue their business operations on an
unsecured basis; and
WHEREAS, the Borrower has requested that Travelers issue Bonds on
behalf of one or more of the Indemnitors through a post-petition bond facility
permitting the issuance of Bonds in an aggregate penal sum of up to
$100,000,000; and
WHEREAS, the Indemnitors have agreed to secure the performance of their
obligations to Travelers under this Agreement and under any Bond issued pursuant
to this Agreement by issuing to Travelers with respect to each such Bond a
letter of credit or cash collateral in an amount equal to 40% of the penal sum
of such Bond as security for such Bond, and by further granting to Travelers
with respect to any Indemnitor's obligations under the Bonds to Travelers the
administrative priority provided in Section 364(c)(1) of the Bankruptcy Code;
and
WHEREAS, pursuant to Section 364(c)(1) of the Bankruptcy Code, the
Indemnitors agree and acknowledge that their obligations arising hereunder and
under any Bond issued pursuant to this Agreement shall constitute allowed
administrative expense claims in their respective Bankruptcy Cases, having
priority over all administrative expenses of the kind specified in Sections
503(b) and 507(b) of the Bankruptcy Code; and
WHEREAS, Travelers has indicated its willingness to issue Bonds on
behalf of the Indemnitors on the terms and conditions of this Agreement; and
WHEREAS, on the date hereof, the Borrower, the guarantors from time to
time as parties thereto, the lenders named therein (the "Bank Lenders") and Bank
of America, N.A., as administrative agent, are entering into that certain
Debtor-In-Possession Financing Agreement (as in effect on the date hereof, the
"TP&S Revolving Credit Agreement"), pursuant to which, among other things, the
Bank Lenders shall provide a secured super-priority revolving credit facility to
the Borrower in an aggregate principal amount not to exceed $35,000,000, for the
purposes specified therein; and
WHEREAS, on the date hereof, the Indemnitors, the lender parties named
therein, and CSFB Global Opportunities Advisers, LLC ("CSFBGOA") are entering
into that certain Debtor-In-Possession Transit Revolving Credit Agreement (as in
effect on the date hereof, the "Transit Credit Agreement"), pursuant to which,
among other things, the Transit Lenders (as defined herein) shall provide a
secured super-priority credit facility to the Borrower in an aggregate principal
amount not to exceed $30,000,000, for the purposes specified therein; and
WHEREAS, on the date hereof, the Borrower, the lenders from time to
time party thereto (the "Bond Support Lenders"), the guarantors from time to
time party thereto, any issuer of letters of credit party thereto, and CSFBGOA,
as administrative agent, are entering into that certain Debtor-in-Possession
Bond Support Credit
Agreement (as in effect on the date hereof, the "Bond Support Credit
Agreement"), pursuant to which, among other things, the Bond Support Lenders
shall provide a secured super-priority (a) term loan facility and (b) letter of
credit facility, in an aggregate principal amount of up to $40,000,000 for the
purposes specified therein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Item 51.
DEFINITIONS
(a) Definitions. As used in this Agreement, the following terms shall
have the meanings specified below unless the context otherwise requires:
"Acceptable Letters of Credit" has the meaning specified in Section
2.02.
"Acquisition" means any transaction in which the Borrower or any
Indemnitor directly or indirectly (a) acquires any Property with which an
ongoing business is conducted or is to be conducted, (b) acquires all or
substantially all of the assets of any Person or division thereof, whether
through a purchase of assets, merger or otherwise, (c) acquires (in one
transaction or as the most recent transaction in a series of transactions)
control of at least a majority of the Voting Stock of a corporation, other than
the acquisition of Voting Stock of a wholly-owned Subsidiary solely in
connection with the organization and capitalization of that Subsidiary by the
Borrower or a Domestic Subsidiary, or (d) acquires control of more than 50%
ownership interest in any Person.
"Administrative Agent" means CSFBGOA as administrative agent pursuant
to the Transit Credit Agreement and any successor thereto.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract, or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" means this Transit Debtor-in-Possession Bond Facility as
the same may be amended, supplemented, restated or otherwise modified from time
to time with the consent of Travelers as provided herein.
"Availability Period" means the period from the Closing Date to the
earlier of (i) the Business Day immediately preceding the Maturity Date, or (ii)
the date on which Travelers terminates the issuance of any further Bonds in
accordance with the provisions of this Agreement.
"Bank Administrative Agent" means the administrative agent under the
TP&S Revolving Credit Agreement and any successor thereto.
"Bank Lenders" has the meaning specified in the recitals hereto.
"Bankruptcy Cases" has the meaning specified in the recitals hereto.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"Bankruptcy Court" has the meaning specified in the recitals hereto.
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"Bond" means any contractual obligation which may be undertaken by
Travelers pursuant to this Agreement on behalf of or at the request of any
Indemnitor, including renewals and extensions.
"Bonded Receivable" means any and all amounts payable in connection
with jobs bonded by Travelers.
"Bond Support Administrative Agent" means the administrative agent
under the Bond Support Credit Agreement and any successor thereto.
"Bond Support Credit Agreement" has the meaning specified in the
recitals hereto.
"Bond Support Lenders" has the meaning specified in the recitals
hereto.
"Borrower" has the meaning specified in the preamble hereto.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in Baltimore, Maryland or New York, New York are
authorized or required by law to close.
"Businesses" has the meaning specified in Section 4.13.
"Capital Lease" means, as applied to any Person, any lease of any
Property by that Person as lessee which, in accordance with GAAP, is or should
be accounted for as a capital lease on the balance sheet of that Person.
"Capital Lease Obligation" means the capital lease obligations relating
to a Capital Lease determined in accordance with GAAP.
"Capital Stock" means (a) in the case of a corporation, capital stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership interests (whether
general or limited), (d) in the case of a limited liability company, membership
interests and (e) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Carve-Out" has the meaning specified in the definition of Permitted
Liens.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition, (b) U.S. Dollar denominated
time deposits and certificates of deposit of any domestic commercial bank of
recognized standing (i) having capital and surplus in excess of $500,000,000 and
(ii) whose short-term commercial paper rating from S&P is at least A-1 or the
equivalent thereof or from Xxxxx'x is at least P-1 or the equivalent thereof
(any such bank being an "Approved Bank"), in each case with maturities of not
more than 270 days from the date of acquisition, (c) commercial paper and
variable or fixed rate notes issued by any Approved Bank (or by the parent
company thereof) or any variable rate notes issued by, or guaranteed by, any
domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody's and maturing within six
months of the date of acquisition, (d) repurchase agreements entered into by a
Person with a bank or trust company or recognized securities dealer having
capital and surplus in excess of $500,000,000 for direct obligations issued by
or fully guaranteed by the United States of America in which such Person shall
have a perfected first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market value of at least
100% of the amount of the repurchase obligations, (e) obligations of any State
of the United States or any political subdivision thereof, the interest with
respect to which is exempt from federal income taxation under Section 103 of the
Internal Revenue Code, having a long term rating of at least AA- or Aa-3 by S&P
or Moody's, respectively, and maturing within three years from the date of
acquisition thereof, (f) Investments in municipal auction preferred stock (i)
rated AAA (or the equivalent thereof) or better by S&P or Aaa (or the equivalent
thereof) or better by Moody's and (ii) with dividends that reset at least once
every 365 days, (g) Investments, classified in accordance with GAAP as current
assets, in money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable financial
institutions
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having capital of at least $100,000,000 and the portfolios of which are limited
to Investments of the character described in the foregoing subdivisions (a)
through (f), and (h) other Investments deemed to be cash equivalents in
accordance with GAAP.
"Cass County Contract" means that certain agreement, dated as of
September 21, 1999, by and among Neosho Construction Company, Incorporated and
the Texas Department of Transportation, Cass County, which has been bonded by
Reliance (Travelers), bond number B2968607 and which has an estimated loss of
$1,132,000 as determined by the Borrower's management.
"Change of Control" means the occurrence of either of the following
events: (a) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Borrower, a corporation owned directly or
indirectly by the stockholders of the Borrower or any of their respective
Affiliates, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Borrower
representing 50% or more of the total voting power represented by the Borrower's
then outstanding securities that vote generally in the election of directors; or
(b) during any period of two consecutive years, individuals who at the beginning
of such period constitute the Borrower's Board of Directors and any new
directors whose election by the Borrower's Board of Directors or nomination for
election by the Borrower's stockholders was approved by a vote or a majority of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Borrower's Board
of Directors.
"Claims" has the meaning set forth in Section 2.04.
"Closing Date" means the date on which the conditions specified in
Sections 3.01 are satisfied (or waived by Travelers in its sole discretion).
"Collateral" means the Property subject to the security interests and
liens granted to the Administrative Agent under the Transit Credit Agreement and
the Bond Support Lenders under the Bond Support Agreement.
"Consolidated Group" means the Borrower and its consolidated
subsidiaries as determined in accordance with GAAP.
"Contract" means an agreement of any Indemnitor or other Subsidiary of
the Borrower for which Travelers executes a surety bond, procures a surety bond,
or has guaranteed performance, whether issued or guaranteed by Travelers
pursuant to this Agreement or issued, administered, or guaranteed by Travelers
prior to the Closing Date.
"Contractual Obligation" means, as to any Person, any obligation of
such Person or any material agreement, instrument or undertaking to which such
Person is a party or by which it or any of its property is bound.
"Credit Facilities" has the meaning specified in Section 3.01.
"CSFBGOA" has the meaning specified in the recitals hereto.
"Default" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"DIP Financing Order" means the Interim DIP Financing Order or the
Final DIP Financing Order, as applicable.
"Divestiture" means any transaction by which the Borrower or any other
Indemnitor sells, leases, transfers or otherwise disposes of (a) any Property;
or (b) the Capital Stock of any of its Subsidiaries, in each case other than (x)
the sale of inventory in the ordinary course of business, (y) the sale, lease,
transfer or other disposition of plant, property and equipment which is no
longer used or useful in the business of an Indemnitor, and (z) sales, leases,
transfers or other dispositions of Property or capital stock of a Subsidiary by
one Indemnitor to another Indemnitor.
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"Dollars" and "$" means dollars in lawful currency of the United States
of America.
"Domestic Subsidiary" means any Subsidiary which is incorporated or
organized under the laws of any State of the United States or the District of
Columbia.
"Environmental Laws" means any and all lawful and applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or other governmental restrictions relating to the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"Equity Transaction" means, with respect to any Indemnitor, any
issuance of shares of its Capital Stock, other than (a) an issuance by an
Indemnitor to the Borrower or another Indemnitor, (b) an issuance in connection
with a conversion of debt securities to equity, (c) an issuance in connection
with the exercise by a present or former employee, officer or director under a
stock incentive plan, stock option plan or other equity-based compensation plan
or arrangement, and (d) an issuance needed to qualify directors under applicable
law.
"Event of Default" has the meaning specified in Section 7.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Facilities" has the meaning specified in Section 4.12.
"Filing Date" has the meaning specified in the recitals hereto.
"Final DIP Financing Order" means the final order entered by the
Bankruptcy Court authorizing and approving the Credit Facilities and in each
case the transactions contemplated thereby, which shall include, without
limitation, the provisions required to be included in the Interim DIP Financing
Order hereunder and otherwise be in form and substance satisfactory to
Travelers.
"First Day Orders" means all orders entered by the Bankruptcy Court on
the Petition Date, or within ten days of the Petition Date, or based on motions
filed on the Petition Date.
"Foreign Subsidiary" means a Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to the terms of Section 1.03.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Indebtedness" means, with respect to any Person, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, or upon which interest
payments are customarily made, (c) all obligations of such Person under
conditional sale or other title retention agreements relating to Property
purchased by such Person (other than customary reservations or retentions of
title under agreements with suppliers entered into in the ordinary course of
business), (d) all obligations of such Person issued or assumed as the deferred
purchase price of Property or services purchased by such Person (other than
trade debt incurred in the ordinary course of business and due within six months
of the incurrence thereof) which would appear as liabilities on a balance sheet
of such Person, (e) all obligations of such Person under take-or-pay or similar
arrangements or under commodities agreements, (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, Property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, provided that for
purposes hereof the amount of such Indebtedness
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shall be limited to the greater of (i) the amount of such Indebtedness as to
which there is recourse to such Person and (ii) the fair market value of the
Property which is subject to the Lien, (g) all Support Obligations of such
Person, (h) the principal portion of all obligations of such Person under
Capital Leases, (i) all obligations of such Person in respect of interest rate
protection agreements, foreign currency exchange agreements, commodity purchase
or option agreements or other interest or exchange rate or commodity price
hedging agreements, (j) the maximum amount of all standby letters of credit
issued or bankers' acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (k) all preferred stock issued by such Person and required by the
terms thereof to be redeemed, or for which mandatory sinking fund payments are
due, by a fixed date, (l) the outstanding attributed principal amount under any
Securitization Transaction and (m) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product to which such Person is a party,
where such transaction is considered borrowed money indebtedness for tax
purposes but is classified as an operating lease in accordance with GAAP. The
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer, but
only to the extent to which there is recourse to such Person for payment of such
Indebtedness.
"Indemnitor" means the Borrower and each of its Domestic Subsidiaries
that is a signatory hereto or that may become bound hereby as provided herein.
"Initial Transit Budget" has the meaning specified in Section 5.01.
"Intellectual Property" means all Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks and Trademark Licenses, as each of those
terms are defined in the Security Agreement (as defined in the Transit Credit
Agreement).
"Interim DIP Financing Order" means the interim order entered by the
Bankruptcy Court authorizing and approving, subject to the approval of the Final
DIP Financing Order, the Financing Agreements (as defined in the Transit Credit
Agreement), this Agreement, and the transactions contemplated hereby, which
order shall be in the form attached hereto as Exhibit A.
"Interim Period" means the period commencing on the date of entry of
the Interim DIP Financing Order and ending on the earlier of (i) 45 days
thereafter and (ii) the date of entry of the Final DIP Financing Order by the
Bankruptcy Court.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to time.
References to sections of the Internal Revenue Code shall be construed also to
refer to any successor sections.
"Investment" in any Person, means any loan or advance to such Person,
any purchase or other acquisition of any Capital Stock, warrants, rights,
options, obligations or other securities of, or equity interest in, such Person,
any capital contribution to such Person or any other investment in such Person,
including, without limitation, any Support Obligation incurred for the benefit
of such Person.
"Joinder Agreement" means a joinder agreement in form reasonably
satisfactory to Travelers executed and delivered by a Domestic Subsidiary which
is a member of the Transit Group in accordance with the provisions of this
Agreement.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, and
any lease in the nature thereof).
"Management Fee" has the meaning specified in Section 2.07.
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"Material Adverse Effect" means a material adverse effect on (a) the
condition (financial or otherwise), operations, business, prospects, assets or
liabilities of an Indemnitor, the Transit Group, or the Consolidated Group taken
as a whole, (b) the ability of the Indemnitors taken as a whole to perform any
obligation under this Agreement, (c) the legality, validity or enforceability of
this Agreement or any Bond, (d) the rights and remedies of Travelers under this
Agreement, the Interim DIP Financing Order and the Final DIP Financing Order.
"Material Pleading" means (i) a plan of reorganization or disclosure
statement and any pleading relating thereto, (ii) any pleading regarding the
sale, lease, or other disposition of any materials asset of any member of the
Consolidated Group, including any Foreign Subsidiary, (iii) any pleading that
involves any issue that would impair, or would have the effect of impairing, the
Borrower's or any Indemnitor's ability to repay or honor its obligations arising
hereunder, under any Bond, or under the Interim DIP Financing Order, (iv) any
pleading seeking approval of any "debtor-in-possession financing" (other than
the financing contemplated by this Agreement) that does not on or before the
Maturity Date (or such other time as Travelers and the Borrower may agree)
provide for the obligations arising hereunder or under any surety bond issued or
administered by Travelers to be collateralized or otherwise assured of
satisfaction or payment in an amount and manner acceptable to Travelers, (v) any
pleading relating to the appointment of a trustee or examiner, (vi) any pleading
regarding the dismissal or conversion of any of the Bankruptcy Cases, (vii) any
pleading adversely affecting any obligation bonded by Travelers, and (viii) any
similar pleading adversely affecting the operations of the Indemnitors or the
material interests of Travelers.
"Materials of Environmental Concern" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Laws, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date" means the earliest to occur of (a) September 30, 2002,
(b) the effective date of any plan of reorganization of any member of the
Transit Group and (c) the sale of the Transit Group or the sale of all or
substantially all of the Transit Group's Property.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating securities.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the lessee at
any time) of any Property which is not a Capital Lease other than any such lease
in which that Person is the lessor.
"Permitted Investments" means Investments which are (a) Investments
that are approved by the Bankruptcy Court; (b) cash and Cash Equivalents; (c)
accounts receivable created, acquired or made in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; (d)
Investments consisting of stock, obligations, securities or other property
received in settlement of accounts receivable (created in the ordinary course of
business) from obligors; (e) Support Obligations permitted by Section 6.01; (f)
Investments existing on the Filing Date made by the Borrower or any other
Indemnitor in or to its Subsidiaries; and (g) Investments by the Borrower or any
other Indemnitor in and to another Indemnitor.
"Permitted Liens" means:
(a) Liens in favor of the Pre-Petition Agents and the Pre-Petition
Lenders in connection with the Pre-Petition Credit Facility, and any adequate
protection liens therefor granted pursuant to the Interim DIP Financing Order
and the Final DIP Financing Order; provided, however, that any adequate
protection liens shall be junior to (i) any right of subrogation that Travelers
may have, (ii) any right Travelers may have with respect to any Surplus on any
bonded Contract in the Transit Group, including any Contract transferred to the
Transit Group as a Specified Contract, (iii) Travelers' super-priority
administrative claims against the members of the Transit Group under Section
364(c)(1) of the Bankruptcy Code, and (iv) the lien rights of any beneficiary of
a bond that Travelers has issued or administered, whether pursuant to this
Agreement or prior to the Closing Date, that is or would be senior to the Liens
in favor of the Pre-Petition Lenders in the absence of any such adequate
protection lien, except as Travelers may otherwise agree;
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(b) any Lien securing the payment of professional fees, court fees, and
the fees of the United States Trustee as permitted pursuant to the DIP Financing
Orders and the Credit Facilities (the "Carve-Out");
(c) Liens relating to periods or arising after the Filing Date (other
than Liens created or imposed under ERISA) for taxes, assessments, or
governmental charges or levies not yet due or Liens for taxes being contested in
good faith by appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the Property subject
to any such Lien is not yet subject to foreclosure, sale or loss on account
thereof);
(d) Liens in respect of Property imposed by law arising in the ordinary
course of business such as materialmen's, mechanics', warehousemen's, carriers',
suppliers', landlords', and other like Liens provided that (i) for any such
Liens arising before the Filing Date, the enforcement and collection of such
Liens is stayed by section 362 of the Bankruptcy Code, and (ii) for any such
Liens arising after the Filing Date, such Liens secure only amounts not overdue
for a period of more than 30 days or are being contested in good faith by
appropriate proceedings for which adequate reserves determined in accordance
with GAAP have been established (and as to which the Property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account thereof);
(e) Liens (other than Liens created or imposed under ERISA) consisting
of deposits made by the Borrower and the other Indemnitors in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of tenders, statutory obligations,
bids, leases, government contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money);
(f) Liens in connection with attachments or judgments (including
judgment or appeal bonds) provided that the judgments secured shall, within 30
days after the entry thereof, have been discharged or execution thereof stayed,
or shall have been discharged within 30 days after the expiration of any such
stay;
(g) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use or value
of the encumbered Property for its intended purposes;
(h) Liens securing purchase money Indebtedness (including Capital
Leases) to the extent permitted hereunder provided that any such Lien attaches
only to the Property financed and such Lien attaches thereto concurrently with
or within 90 days after the acquisition thereof in connection with the purchase
money transactions;
(i) leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any Subsidiary;
(j) any interest of title of a lessor under, and Liens arising from UCC
financing statements (or equivalent filings, registrations or agreements in
foreign jurisdictions) relating to, leases permitted by this Agreement;
(k) 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;
(l) Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 6.05;
(m) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions provided, however, that any
setoff right held by the Pre-Petition Lenders or other Person with respect to
any assets of the Transit Group shall be junior to (i) any right of subrogation
that Travelers may have, (ii) any right Travelers may have with respect to any
Surplus on any bonded Contract in the Transit Group, including any Contract
transferred to the Transit Group as a Specified Contract, (iii) Travelers'
super-priority administrative claims against the members of the Transit Group
under Section 364(c)(1) of the Bankruptcy Code, and (iv) the lien
8
rights of any beneficiary of a bond that Travelers has issued or administered,
whether pursuant to this Agreement or prior to the Closing Date, that would
ordinarily be senior to a right of setoff under applicable nonbankruptcy law;
(n) Liens in respect of Indebtedness permitted under Section 6.01(g),
limited solely to sums payable under the policy or policies to which such
Indebtedness relates;
(o) Liens on the Capital Stock of any Foreign Subsidiary (other than
any Capital Stock owned by the Borrower or any Guarantor) securing Indebtedness
of Foreign Subsidiaries;
(p) Liens existing as of the Filing Date; provided that no such Lien
shall at any time be extended to or cover any Property other than the Property
subject thereto on the Closing Date or to secure any Indebtedness other than
that secured on the Filing Date;
(q) Liens in favor of Travelers;
(r) Liens in favor of the Administrative Agent, the Transit Lenders,
the Bond Support Administrative Agent, and the Bond Support Lenders provided
that any such Liens (i) shall not impair any right of subrogation that Travelers
may have, (ii) with respect to any receivable on any Contract subject to a bond
issued or administered by Travelers, shall attach and be senior only to any
right Travelers may have with respect to any Surplus on any such bonded
Contract, including any Contract transferred to the Transit Group as a Specified
Contract, and (iii) shall not be senior to any lien rights of any beneficiary of
a bond that Travelers has issued or administered, whether pursuant to this
Agreement or prior to the Closing Date, as to which Travelers may have an
interest pursuant to its right of subrogation.
"Person" means any individual, partnership, joint venture on whose
behalf, at any time, Bonds have been issued and are outstanding, firm,
corporation, limited liability company, association, trust or other enterprise
(whether or not incorporated) or any Governmental Authority.
"Pre-Petition Agents" means the administrative agent and the collateral
agent under the Pre-Petition Credit Agreement and the documents related thereto.
"Pre-Petition Credit Agreement" means that certain Credit Agreement,
dated as of April 28, 2000, as amended, by and among the Borrower, the guarantor
parties thereto, the lenders identified therein and Bank of America, N.A. as
administrative agent.
"Pre-Petition Lenders" means the lenders party to the Pre-Petition
Credit Agreement.
"Prime Rate" has the meaning specified in the Transit Credit Agreement.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment (including the abandonment or discarding of barrels, containers
and other closed receptacles containing any Materials of Environmental Concern).
"Requirement of Law" means, as to any Person, any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
material property is subject.
"Responsible Officer" means the Chief Executive Officer, the Chief
Financial Officer, the Controller, the Chief Operating Officer, the Chief
Accounting Officer and the Treasurer of the Borrower.
"Restricted Payment" by any Person means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of such Person now or hereafter outstanding, except (i) a dividend
9
payable solely in shares of that class to the holders of that class, (ii)
dividends and other distributions payable to an Indemnitor, (b) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of Capital Stock of such
Person now or hereafter outstanding, and (c) any payment made to retire, or to
obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of Capital Stock of such Person now or hereafter
outstanding.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc., or any successor or assignee of the business of such division in the
business of rating securities.
"SEC" means the Securities and Exchange Commission and any successor
Governmental Authority.
"Securitization Transaction" means any financing transaction or series
of financing transactions that have been or may be entered into by an Indemnitor
pursuant to which such Indemnitor may sell, convey or otherwise transfer to (a)
a Subsidiary or affiliate (a "Securitization Subsidiary"), or (b) any other
Person, or may grant a security interest in, any receivables or interests
therein secured by merchandise or services financed thereby (whether such
receivables are then existing or arising in the future) of such member of the
Consolidated Group, and any assets related thereto, including without
limitation, all security interests in merchandise or services financed thereby,
the proceeds of such receivables, and other assets which are customarily sold or
in respect of which security interests are customarily granted in connection
with securitization transactions involving such assets.
"Senior Liens" means the Liens granted to the Administrative Agent
pursuant to the Transit Credit Agreement, the Bond Support Lenders pursuant to
the Bond Support Credit Agreement, and under the DIP Financing Order, provided,
however, (i) such Liens shall not impair any right of subrogation that Travelers
may have, (ii) with respect to any receivable on any Contract subject to a bond
issued or administered by Travelers, such Liens shall attach and be senior only
to any right Travelers may have with respect to any Surplus on any such bonded
Contract, including any Contract transferred to the Transit Group as a Specified
Contract, and (iii) such Liens shall not be senior to any lien rights of any
beneficiary of a bond that Travelers has issued or administered, whether
pursuant to this Agreement or prior to the Closing Date, as to which Travelers
may have an interest pursuant to its right of subrogation.
"Specified Contracts" means (a) the Cass County Contract, and (b) any
other contracts identified by the Bank Administrative Agent to the Transit
Administrative Agent within 30 days after the Filing Date; provided that (i) the
Bank Administrative Agent may identify no more than three such additional
contracts, and (ii) the aggregate estimated loss associated with or arising from
such additional contracts shall not exceed $1,868,000.
"Statutory Committee" means a committee selected pursuant to Section
1102 or 705 of the Bankruptcy Code.
"Subsidiary" means, as to any Person, (a) any corporation more than 50%
of whose Capital Stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time, any class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time owned by such Person directly or indirectly
through Subsidiaries, and (b) any partnership, association, joint venture on
whose behalf, at any time, Bonds have been issued and are outstanding or other
entity in which such Person directly or indirectly through Subsidiaries has more
than 50% of the voting interests at any time. Notwithstanding anything herein to
the contrary, the term "Subsidiary" shall not include Xxxxx South, Inc., a
Georgia corporation unless, at any time, Bonds have been issued on behalf of
Xxxxx South, Inc. and such Bonds remain outstanding. Unless otherwise
identified, "Subsidiary" shall mean a Subsidiary of the Borrower.
"Support Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (a) to purchase any such Indebtedness or
any Property constituting security therefor, (b) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements,
10
comfort letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (c) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder of such
Indebtedness against loss, or (d) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof, but specifically
excluding guaranties or other assurances with respect to any Indemnitor's
performance obligations under bids or contracts made or entered into in the
ordinary course of business. The amount of any Support Obligation hereunder
shall (subject to any limitations set forth therein) be deemed to be an amount
equal to the outstanding principal amount (or maximum principal amount, if
larger) of the Indebtedness in respect of which such Support Obligation is made.
"Surplus" means the amount of any receivables payable on a Contract or
other obligation bonded by Travelers which is left after deducting from the
total amount of the receivables on such Contract or other obligation (a) the
total amount of all claims, obligations or expenses incurred (including, without
limitation, attorneys' fees) to be paid by Travelers on account of its bond, and
(b) the amounts paid by Travelers with respect to such Contract or obligation,
determined after all of Travelers' obligations with respect to such Contract or
obligation have been fully satisfied and no further obligation remains
outstanding.
"TP&S Revolving Credit Agreement" has the meaning specified in the
recitals hereto.
"Track and Products and Services Group" means , collectively, the
Borrower (with respect to the "track and products and services" segment of its
business) and the guarantors from time to time parties to the TP&S Revolving
Credit Agreement, but excluding any member of the Transit Group.
"Transit Budget" has the meaning specified in Section 5.01.
"Transit Credit Agreement" has the meaning specified in the recitals
hereto.
"Transit Group" means, collectively, the Borrower (with respect to the
"transit" segment of its business) and the Indemnitors.
"Transit Lenders" means CSFBGOA and the lender parties named from time
to time in the Transit Credit Agreement and the Bond Support Credit Agreement.
"Travelers" means Travelers Casualty & Surety Company of America and
any of its Affiliates and Subsidiaries.
"UCC" means the Uniform Commercial Code, as in effect in any applicable
jurisdiction.
"Voting Stock" means, with respect to any Person, Capital Stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
(b) Computation of Time Periods
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
(c) Accounting Terms; Certain Calculations.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered hereunder shall be
prepared, in accordance with GAAP applied on a consistent basis.
11
(d) Certain Terms.
(a) The words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole, and not
to any particular Article, Section, subsection or clause in
this Agreement. References herein to an Exhibit, Schedule,
Article, Section, subsection or clause refer to the
appropriate Exhibit or Schedule to, or Article, Section,
subsection or clause in, this Agreement.
(b) Any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time
amended, supplemented, restated or otherwise modified, except
as otherwise expressly provided.
(c) As used herein, the term "sole discretion" means sole
discretion exercised in good faith.
Item 52.
THE BONDS
(a) Bonds. Subject to the terms and conditions set forth herein, Travelers
may issue one or more Bonds on behalf of one or more of the Indemnitors, each of
which (i) shall be issued on the Closing Date or from time to time thereafter if
requested by an Indemnitor pursuant to Section 2.02 during the Availability
Period, and (ii) shall not cause the total penal sum of all Bonds issued and
outstanding from time to time pursuant to this Agreement to exceed $100,000,000.
(b) Method of Request. An Indemnitor may request the issuance of a Bond on
its account from Travelers by making an application to Travelers and providing
such information to Travelers as Travelers in its sole discretion may from time
to time request. As a condition precedent to the issuance of any Bond pursuant
to this Agreement, the requesting Indemnitor shall supply Travelers with one or
more irrevocable letters of credit or cash collateral acceptable to Travelers in
its sole discretion in an amount equal to 40% of the penal sum of such Bond.
Prior to any extension or renewal of any Bond, if the extension or renewal would
increase the penal sum of any previously issued Bond, the requesting Indemnitor
shall supply Travelers with an irrevocable letter of credit or other form of
cash collateral acceptable to Travelers in its sole discretion equal to 40% of
the amount by which such extension or renewal exceeds, or causes an outstanding
bond to exceed, the penal sum of such previously issued Bond. As a condition
precedent to the effectiveness of any Bond issued pursuant to this Agreement,
Travelers shall be paid all premiums and fees as provided herein. Without
limiting the generality of Travelers' discretion with respect to any such
letters of credit, each such letter of credit shall provide that, at any time
that (a) the expiration date of such letter of credit will occur in less than 30
days and Travelers has not been provided with a substitute for or extension of
the term of such letter of credit, and (b)(i) the Bond with respect to which
such letter of credit was issued remains outstanding, (ii) any amount which was
paid upon such Bond has not been reimbursed to Travelers, or (iii) the sum of
the total undrawn amount of all letters of credit held by Travelers with respect
to any Bond under this paragraph shall be an amount that is less than 40% of the
penal sum of the Bond to which such letters of credit relate then outstanding
hereunder (except as Travelers may otherwise agree), such letter of credit may
be drawn upon by Travelers (letters of credit acceptable to Travelers in its
discretion are referred to herein as "Acceptable Letters of Credit"). Any such
drawing referred to in the preceding sentence, and any other cash collateral
held by Travelers hereunder, shall be held by Travelers in an interest bearing
demand account as cash collateral for the obligations of the Indemnitors
hereunder with respect to the Bond for which the letter of credit was issued.
Any cash collateral held by Travelers (and the proceeds of any other collateral
held by Travelers) securing the obligations of the Indemnitors hereunder may be
applied to such obligations, in such order and manner as may be determined by
Travelers in its discretion, at any time after the occurrence and during the
continuance of an Event of Default.
(c) Issuance of Bond by Travelers. Travelers may issue Bonds on behalf of
one or more of the Indemnitors, in the sole discretion of Travelers, based upon
its usual and customary bond underwriting criteria for the Borrower and other
similar companies. In the exercise of its discretion applying such criteria,
Travelers has the right to refuse to
12
provide any Bond, including final Bonds where Travelers provided a bid bond,
without incurring any liability whatsoever to any Indemnitor or other party.
(d) Indemnification and Exoneration. The Borrower and each of the other
Indemnitors jointly and severally agree to exonerate, indemnify and save
Travelers harmless from and against every claim, loss, damage, demand,
liability, cost, charge, suit, judgment, reasonable attorney's fee, and other
reasonable expenses which Travelers incurs in consequence of having executed, or
procured the execution of any Bond issued pursuant to this Agreement including
without limitation all amounts that are paid by Travelers to or for the benefit
of a beneficiary of a Bond (collectively, "Claims"), except Claims incurred as a
direct consequence of Travelers' gross negligence or willful misconduct.
Expenses include the cost of procuring or attempting to procure release from
liability, or in bringing suit to enforce this Agreement against any Indemnitor.
(e) Claim Settlement. Travelers shall have the right, in its sole
discretion, to determine for itself and any Indemnitor, whether any claim or
suit brought against Travelers or an Indemnitor upon any Bond issued pursuant to
this Agreement shall be paid, compromised, settled, defended, or appealed, and
its decision shall be binding and conclusive upon each of the Indemnitors. An
itemized statement thereof sworn to by an employee of Travelers or a copy of the
voucher of payment shall be prima facie evidence of the propriety and existence
of the Indemnitors' liability. Travelers shall be entitled to reimbursement for
any and all payments made by it under the reasonable belief it was necessary or
expedient to make such payments.
(f) Books, Records, and Credit. The Indemnitors shall furnish, and
Travelers shall have the right to free access to all the books, records,
documents, and accounts of the Indemnitors for the purpose of examining and
copying them. Access shall be granted during regular business hours in a manner
that avoids unreasonable interference with the business operations of the
Borrower and any Indemnitor. Travelers shall have the right to have such access
to the credit records of the Indemnitors for underwriting purposes, for purposes
of collecting or satisfying any obligation or Indebtedness owed to Travelers, or
any other purposes related to this Agreement or the Bonds.
(g) Premiums, Commissions, and Fees.
(a) Premiums. Indemnitors shall pay to Travelers, within 60 days
after the commencement of any project to which any Bond
relates, all premiums then due for every such Bond so issued.
Although such premiums are payable at the time set forth in
the preceding sentence, each premium is fully earned and
unconditionally payable as of the time that the Bond with
respect to which the premium is payable is issued. The initial
premium for each such Bond issued under this Agreement shall
be an amount calculated at the rate of $10.40 per $1,000 of
bonded contract amount. With respect to any Bond as to which
additional annual premiums are payable in accordance with
Travelers' customary practices and policies, Indemnitors shall
also pay to Travelers when due all such annual premiums until
Travelers is discharged and fully released in writing for such
Bond. Indemnitors shall also pay to Travelers when due all
premiums for any surety bond previously issued or administered
by Travelers prior to the Closing Date until Travelers is
discharged and fully released in writing for each such bond.
Indemnitors shall also pay to Travelers within thirty days of
the increase, extension or renewal of any bond, whether issued
pursuant to this Agreement or otherwise, all premiums and fees
for such increase, renewal or extension, at the rates charged
by Travelers at the time of such increase, renewal or
extension, until Travelers is discharged and fully released in
writing for each such Bond. Premiums paid hereunder shall not
be refundable except (i) in accordance with the ordinary and
customary practices of Travelers in connection with decreases
in the amount of a Bond as a result of changes in the cost of
the project that is the subject of the Bond, or (ii) as
required by applicable law.
(b) Commissions. Indemnitors shall be responsible for paying any
commission or broker's fee for the issuance of any Bond under
this Agreement, or any bond previously issued or administered
by Travelers prior to the Closing Date, and Travelers shall
have no obligation with respect thereto.
13
(c) Management Fee. In addition to any other premium, commission,
or fee payable by the Indemnitors to Travelers, the
Indemnitors shall pay to Travelers a nonrefundable,
noncreditable monthly fee of $10,000 (the "Management Fee")
until the earlier of (a) Travelers is discharged and fully
released in writing for all Bonds issued pursuant to this
Agreement, and (b) the effective date of any plan of
reorganization for the Borrower and the members of the Transit
Group, provided that the Management Fee shall not be payable
with respect to any month that commences more than 90 days
after the Closing Date unless the total penal sum of all Bonds
issued and outstanding under this Agreement shall at some time
during such month equal or exceed $40,000,000. The Management
Fee shall be paid in arrears and shall be due on the first
Business Day of each month.
(d) Payment of Fees. All fees payable hereunder shall be paid on
the dates due, in immediately available funds, to Travelers.
Fees paid hereunder shall not be refundable under any
circumstances.
(e) Interest. In the event (i) Travelers shall make any payment or
incur any loss on any Claim on account of any Bond issued
pursuant to this Agreement, for such time and to the extent
that such payment or loss shall remain unsatisfied by
Indemnitors for more than five (5) Business Days after demand,
or (ii) the Indemnitors shall fail to pay when due any other
amount payable by them to Travelers hereunder, Borrower shall
pay interest on the outstanding balance of any such payment or
loss from the date thereof until the principal amount thereof
shall be paid in full, at a rate per annum equal at all times
to the Prime Rate in effect from time to time plus 3.0% per
annum, payable monthly in arrears on the last day of each
month; provided, however, that for any such portion of such
payment or loss that shall remain unsatisfied for more than
ninety (90) days, such payment or loss shall bear interest to
the extent and for so long as such portion shall remain unpaid
beyond such ninety (90) days, payable on demand, at a rate per
annum equal at all times to the Prime Rate in effect from time
to time plus 5.0% per annum.
(h) Reserves. To the extent (a) a reserve is required by applicable laws
and regulations, and/or (b) after taking into account any collateral posted as
security for the satisfaction of any obligation covered by a Bond issued
pursuant to this Agreement, Travelers shall post a reserve, for any loss
incurred or expected to be incurred on any Bond issued pursuant to this
Agreement, the Indemnitors jointly and severally agree to pay to Travelers on
demand an amount equal to the amount of any such reserve. A certificate as to
the amount of any such reserve and the cost of such reserve, submitted to
Borrower, shall be conclusive and binding for all purpose, absent manifest
error.
(i) Payments and Computations.
(a) Indemnitors shall make each payment to be made hereunder on
the day when due, in Dollars, to Travelers in immediately
available funds without set-off or counterclaim. Payments
received by Travelers after 3:00 P.M. (New York City time)
shall be deemed to be received on the next Business Day.
(b) All computations of interest shall be made by Travelers on the
basis of a year of 365 or 366 days, as the case may be, for
the actual number of days (including the first day but
excluding the last day) occurring in the period for which such
interest is payable. Each determination by Travelers of an
interest rate hereunder shall be conclusive and binding for
all purposes, absent manifest error.
(c) Whenever any payment hereunder shall 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 payment of
interest, as the case may be.
(j) Trust Funds. All payments due, or received for or on account of any
Contract of any Indemnitor, shall be held in trust as trust funds by such
Indemnitor for the benefit and payment of all obligations for which Travelers as
beneficiary may be liable under any Bond issued by Travelers on behalf of any
Indemnitor under this Agreement or any surety bond issued or administered by
Travelers prior to the Closing Date. The Borrower shall not permit any Bonded
Receivable with respect to the Track and Products and Services Group to be used
other than to pay the
14
obligations bonded by Travelers for each such project, and shall segregate such
Bonded Receivable for such purpose, except as Travelers may otherwise expressly
agree and except that, after Travelers gives notice to the Borrower that
Travelers agrees that there is a Surplus with respect to a Contract, which
notice or agreement shall not be unreasonably withheld or delayed, the Borrower
may permit an amount up to the amount of such Surplus to be used for other
purposes. In the event Travelers shall take over any project as provided in
Section 7.02, any trust funds held with respect to such project shall be turned
immediately over to Travelers.
(k) Treatment of Bonds Prior to Maturity or Upon Sale or Liquidation. On or
before the Maturity Date (or at such other time as Travelers and the Borrower
may agree), the Borrower shall cause any surety bond issued by Travelers with
respect to any member of the Transit Group or the Track and Products and
Services Group, whether issued or administered by Travelers prior to the Closing
Date or pursuant to this Agreement, to be collateralized or otherwise assured of
satisfaction or payment in an amount and manner acceptable to Travelers. On or
before the date of (i) any sale of all or substantially all of the assets of any
Person that is a member of the Consolidated Group, in one or a series of
transactions, (ii) any liquidation of the assets of any Person that is a member
of the Consolidated Group, or (iii) any sale or other transfer by the Borrower
or any other Indemnitor of any Subsidiary to a Person that is not an Indemnitor,
in one or a series of transactions, of a majority of the Voting Stock of any
Person that is a member of the Consolidated Group, the Borrower shall cause any
surety bond issued by Travelers with respect to such Person or Subsidiary,
whether issued or administered by Travelers prior to the Closing Date or
pursuant to this Agreement, to be collateralized or otherwise assured of payment
in an amount and manner acceptable to Travelers.
Item 53.
CONDITIONS
(a) Conditions Precedent to Issuance of Bonds.
The right of the Borrower to request Bonds hereunder will become
effective upon the satisfaction (and continued satisfaction) of all of the
following conditions precedent:
15
(a) Certain Documents. Travelers shall have received, on the Closing
Date, the following, each dated the Closing Date (unless otherwise
indicated) in form and substance satisfactory to Travelers:
(a) From each Indemnitor either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written
evidence satisfactory to Travelers (which may include a
telecopy transmission of a signed signature page to this
Agreement) that such party has signed a counterpart of this
Agreement.
(b) A copy of the Bond Support Credit Agreement signed by each of
the parties thereto.
(c) A copy of the Transit Credit Agreement signed by each of the
parties thereto.
(d) A copy of the TP&S Revolving Credit Agreement signed by each
of the parties thereto (the Bond Support Credit Agreement, the
Transit Credit Agreement, and the TP&S Revolving Credit
Agreement are referred to collectively as the "Credit
Facilities").
(e) Receipt by Travelers of the following (or their equivalent)
for each of the Indemnitors, signed by a secretary or
assistant secretary, or, as applicable, certified by a
secretary or assistant secretary of such Indemnitor as of the
Closing Date to be true and correct and in force and effect as
of such date:
Resolutions. Copies of resolutions of the Board of Directors approving and
adopting this Agreement, and the transactions contemplated herein, and
authorizing execution and delivery hereof. Organizational Documents. Copies of
the organizational documents of each of the Indemnitors. Incumbency Certificate.
A certificate of the Secretary or an assistant secretary of each Indemnitor
certifying the names and true signatures of each officer of such Indemnitor who
has been authorized to execute and deliver this Agreement or other document
required hereunder to be executed and delivered by or on behalf of such
Indemnitor.
(f) Good Standing. Copies, where applicable, of (A) certificates
of good standing, existence or its equivalent certified as of
a recent date by the appropriate Governmental Authorities of
the state of incorporation and (B) certificates indicating
payment of all corporate franchise taxes certified as of a
recent date by the appropriate governmental taxing authorities
of the state of incorporation.
(g) Other Documents and Information. Such additional documents and
materials as Travelers may reasonably request.
(b) Fees and Expenses. All costs and accrued and unpaid fees and
reasonable expenses (including, without limitation, legal fees and
expenses) of Travelers incurred on or before the Closing Date required
to be paid under this Agreement shall have been paid.
(c) Absence of Legal Proceedings. The absence of any action, suit,
investigation or proceeding (other than the Bankruptcy Cases) pending
in any court or before any arbitrator or governmental instrumentality
which could reasonably be expected to have a Material Adverse Effect.
(d) DIP Financing Orders and First Day Orders. Receipt by Travelers of
evidence satisfactory to Travelers, in its sole discretion, that the
Interim DIP Financing Order and all First Day Orders relating to the
payment of any obligation bonded by Travelers have been entered by the
Bankruptcy Court and docketed by the Clerk of the Bankruptcy Court, and
that such orders shall be in full force and effect and shall not have
been vacated, reversed, modified, amended, or stayed pending appeal.
The relevant First Day Orders shall be satisfactory to Travelers.
16
(e) Motions, Etc. Travelers shall have reviewed and found satisfactory all
motions, orders and other pleadings or related documents to be filed or
submitted by the Borrower or an Indemnitor to the Bankruptcy Court in
connection with the approval or modification of this Agreement.
(f) Due Diligence. Travelers shall have completed a satisfactory due
diligence review.
(g) No Material Adverse Change. Since the Filing Date, there shall have
been no event, condition or change that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
(b) Conditions Precedent to Each Bond. The right of the Borrower to request
Bonds hereunder will also be subject to the satisfaction of each of the
following conditions precedent at each time that a Bond is issued:
(a) Accuracy of Certain Statements. The following statements shall be
true on the date of the issuance of each Bond:
(a) The representations and warranties of the Indemnitors
contained in Article IV of this Agreement are true and correct
on and as of such date as though made on and as of such date
(unless such representations and warranties are made as of
another date, in which case they shall be true and correct as
of such date); and
(b) No Default or Event of Default has occurred and is continuing
or will result from the Bond being made on such date.
(b) No Violation of Law or Injunction. The issuance of the Bond on such
date does not violate any Requirement of Law and is not enjoined,
temporarily, preliminarily or permanently.
(c) Payment of Bonded Payables. With respect to the issuance of any Bond
more than 60 days after the Closing Date, each Indemnitor shall be
current in the payment of all amounts owing with respect to any
Contract bonded by Travelers, whether the relevant bond was issued or
administered by Travelers prior to the Closing Date or pursuant to this
Agreement, except when the amount or validity of such obligations and
costs is currently being contested in good faith by appropriate
proceedings and reserves, if applicable, in conformity with GAAP with
respect thereto have been provided on the books of the Consolidated
Group.
(d) Final Order. With respect to any Bond requested to be issued after the
forty-fifth day after the Closing Date, the Bankruptcy Court shall have
entered the Final DIP Financing Order, certified by the Clerk of the
Bankruptcy Court as having been duly entered, and the Final DIP
Financing Order shall be in full force and effect and shall not have
been vacated, reversed modified, amended or stayed and no order shall
have been entered which has the effect of vacating, reversing,
modifying, amending, or staying the Final DIP Financing Order.
(e) Compliance with Other Conditions. The Indemnitors shall have complied
with any conditions set forth herein, including the conditions set
forth in Sections 2.02 and 2.03.
Item 54.
REPRESENTATIONS AND WARRANTIES
To induce Travelers to enter into this Agreement, each of the
Indemnitors hereby represents and warrants to Travelers that:
17
(a) Financial Condition. Each of the financial statements described below
(copies of which have heretofore been provided to Travelers), have been prepared
in accordance with GAAP consistently applied throughout the periods covered
thereby, are complete and correct in all material respects and present fairly
the financial condition and results from operations of the entities and for the
periods specified (subject in the case of interim company-prepared statements to
normal year-end adjustments and the absence of footnotes):
(a) audited consolidated and consolidating balance sheets for the
members of the Consolidated Group for the fiscal years ended
December 31, 1999 and December 31, 2000, together with related
audited consolidated and consolidating statements of operations,
shareholders equity and cash flows for such fiscal years, in each
case certified by Xxxxxx Xxxxxxxx LLP, certified public
accountants; and
(b) after the Closing Date, the annual and quarterly financial
statements provided in accordance this Agreement.
(b) No Changes or Restricted Payments. Since December 31, 2000, (a) other
than the commencement of the Cases and except as set forth in Schedule 4.02
hereto, there has been no circumstance, development or event relating to or
affecting the members of the Consolidated Group which has had or would be
reasonably expected to have a Material Adverse Effect, and (b) except as
permitted herein, no Restricted Payments have been made or declared by any
members of the Consolidated Group.
(c) Organization; Existence; Compliance with Law. Each of the Indemnitors
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has the corporate or
other necessary power and authority, and the legal right to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
entity and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, other than in such jurisdictions where the failure
to be so qualified or in good standing would not, in the aggregate, have a
Material Adverse Effect, and (d) is in compliance with its certificate of
incorporation and bylaws (or other organizational or governing documents) and
all Requirements of Law, except to the extent that the failure to comply
therewith would not, in the aggregate, be reasonably expected to have a Material
Adverse Effect.
(d) Power; Authorization; Enforceable Obligations.
(a) Subject to the entry of the Interim DIP Financing Order, each of
the Indemnitors has the corporate or other necessary power and
authority, and the legal right, to execute, make, deliver and
perform its obligations under this Agreement and the Credit
Facilities to which it is a party and has taken all necessary
corporate or other action to authorize the execution, delivery
and performance by it of its obligations under this Agreement and
the Credit Facilities to which it is a party.
(b) Subject to the entry of the Interim DIP Financing Order, the
execution, delivery and performance by each Indemnitor of this
Agreement and the Credit Facilities to which it is a party and
the consummation of the transactions contemplated thereby do not
and will not (i) contravene such Person's certificate of
incorporation or bylaws or other comparable governing documents,
(ii) violate any other applicable Requirement of Law, or any
order or decree of any Governmental Authority or arbitrator,
(iii) result in the creation or imposition of any Lien upon any
of the property of such Person or any of its Subsidiaries adverse
to the interest of Travelers except as permitted herein.
(c) Except for the entry of each of the DIP Financing Orders, no
consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other
Person is required in connection with acceptance of the Bonds or
the making of the guaranties hereunder (other than (i) those
which have been obtained and are in full force and effect, (ii)
such filings as are required by the Securities and Exchange
Commission and (iii) other filings necessary to fulfill other
reporting requirements with Governmental Authorities).
18
(d) Subject to the entry of the Interim DIP Financing Order, this
Agreement constitutes a legal, valid and binding obligation of
each Indemnitor in accordance with its terms without defense,
setoff, or counterclaim.
(e) No Material Litigation. Other than the Bankruptcy Cases, no claim,
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the best knowledge of any Indemnitor,
threatened by or against, any members of the Consolidated Group or against any
of their respective properties or revenues which (a) purports to affect the
legality, validity or enforceability of any of this Agreement or (b) is
reasonably likely to have a Material Adverse Effect.
(f) No Default. No Default or Event of Default has occurred and is
continuing.
(g) Ownership of Property; Liens. Each of the Indemnitors has good record
and marketable title in fee simple to, or a valid leasehold interest in, all its
real property material to the Consolidated Group, and good title to, or a valid
leasehold interest in, all its other property material to the Consolidated
Group, and none of such property is subject to any Lien, except for Permitted
Liens and Senior Liens.
(h) Intellectual Property. Each of the members of the Consolidated Group
owns, or has the legal right to use, the Intellectual Property necessary for it
to conduct its business as currently conducted, except for those the failure to
own or have such legal right to use would not be reasonably expected to have a
Material Adverse Effect. No claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does any
Indemnitor know of any such claim, and the use of such Intellectual Property by
the members of the Consolidated Group does not infringe on the rights of any
Person, except for such claims and infringements that in the aggregate, would
not be reasonably expected to have a Material Adverse Effect.
(i) No Burdensome Restrictions. Neither the certificate of incorporation or
bylaws (or other organizational or governing documents) of, nor any Requirement
of Law applicable to the members of the Consolidated Group would be reasonably
expected to have a Material Adverse Effect.
(j) Taxes. Each Indemnitor has filed all Federal and other tax returns and
material reports required to be filed, and has paid all Federal and other taxes,
assessments, fees and other governmental charges levied or imposed upon it or
its properties, income or assets otherwise due and payable unless such unpaid
taxes and assessments (a) arose prior to the Filing Date and are not the subject
of a pending and unstayed assessment or collection action; or (b) are (i) not
yet past due or (ii) being contested in good faith and by appropriate
proceedings diligently pursued and as to which adequate reserves determined in
accordance with GAAP have been established on such Indemnitor's books and
records and no Lien with respect to nonpayment thereof has been asserted. No
Indemnitor is aware of any proposed tax assessments against it, with respect to
any prior period, in excess of amounts accrued on its financial statements (as
required to be accrued in accordance with GAAP), nor does any Indemnitor
anticipate any further material tax liability with respect to any open taxable
years taken as a whole in excess of accrued amounts.
(k) Subsidiaries and Guarantors.
(a) Set forth on Schedule 4.11(a) are all of the Subsidiaries of the
Borrower at the Closing Date, the jurisdiction of their
incorporation and the direct or indirect ownership interest of
the Borrower therein.
(b) Set forth on Schedule 4.11(b) are all of the Indemnitors at the
Closing Date. Each Indemnitor is a member of the Transit Group.
The Borrower has no Domestic Subsidiaries that are in the Transit
Group other than the Indemnitors.
(l) Environmental Matters. Except as would not reasonably be expected to
have a Material Adverse Effect:
19
(a) Each of the facilities and Properties owned, leased or operated
by the members of the Consolidated Group (the "Facilities") and
all operations at the Facilities are in compliance with all
applicable Environmental Laws, and there is no violation of any
Environmental Law with respect to the Facilities or the
businesses operated by the members of the Consolidated Group (the
"Businesses"), and there are no conditions relating to the
Businesses or the Facilities that could give rise to liability
under any applicable Environmental Laws.
(b) None of the Facilities contains, or has previously contained, any
Materials of Environmental Concern at, on or under the Facilities
in amounts or concentrations that constitute or constituted a
violation of, or could give rise to liability under,
Environmental Laws.
(c) None of the members of the Consolidated Group has received any
written or verbal notice of, or inquiry from any Governmental
Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with
regard to any of the Facilities or the Businesses, nor does any
Indemnitor have knowledge or reason to believe that any such
notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Facilities, or generated, treated, stored or
disposed of at, on or under any of the Facilities or any other
location, in each case by or on behalf any members of the
Consolidated Group in violation of, or in a manner that would be
reasonably likely to give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the best knowledge of any Indemnitor,
threatened, under any Environmental Law to which any member of
the Consolidated Group is or will be named as a party, nor are
there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law
with respect to any member of the Consolidated Group, the
Facilities or the Businesses.
(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Facilities, or arising from
or related to the operations (including, without limitation,
disposal) of any member of the Consolidated Group in connection
with the Facilities or otherwise in connection with the
Businesses, in violation of or in amounts or in a manner that
could give rise to liability under Environmental Laws.
(m) Disclosure. Neither this Agreement, nor any other document,
certificate or statement furnished to Travelers (with the exception of
projections), nor any of the information delivered in writing to the Bankruptcy
Court by or on behalf of any member of the Consolidated Group in connection with
the transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained therein or herein not misleading.
(n) Bank Accounts. Schedule 4.14 contains a complete and accurate list of
all bank accounts maintained by the Credit Parties with any bank or other
financial institution.
(o) Insurance. All policies of insurance of any kind or nature owned by or
issued to the Borrower or any of the other Indemnitors, including, without
limitation, policies of life, fire, theft, product liability, public liability,
property damage, other casualty, employee fidelity, workers' compensation and
employee health and welfare insurance, are (a) in full force and effect, (b) to
the Borrower's knowledge, sufficient, and (c) of a nature and provide such
coverage as is customarily carried by companies of the size and character of
such Person.
(p) Labor Matters.
20
(a) There are no strikes, work stoppages, slowdowns or lockouts
pending or, to the Indemnitor's knowledge, threatened against or
involving any member of the Consolidated Group, other than those
which in the aggregate have no Material Adverse Effect.
(b) There are no arbitrations or grievances pending against or
involving any member of the Consolidated Group, nor are there any
arbitrations or grievances, to any Indemnitor's knowledge,
threatened involving any member of the Consolidated Group, other
than those which, in the aggregate, if resolved adversely to a
member of the Consolidated Group, would have no Material Adverse
Effect.
(c) There is no organizing activity involving any member of the
Consolidated Group pending or, to any Indemnitor's knowledge,
threatened by any labor union or group of employees, other than
those which in the aggregate have no Material Adverse Effect.
There are no representation proceedings pending or, to any
Indemnitor's knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees
of any member of the Consolidated Group has made a pending demand
for recognition, other than those which in the aggregate have no
Material Adverse Effect.
(d) There are no unfair labor practices charges, grievances or
complaints pending or in process or, to each Indemnitor's
knowledge, threatened by or on behalf of any employee or group of
employees of any member of the Consolidated Group, other than
those which in the aggregate, if adversely determined, would have
no Material Adverse Effect.
(e) There are no complaints or charges against any member of the
Consolidated Group pending or, to each Indemnitor's knowledge,
threatened to be filed with any Federal, state, local or foreign
court, governmental agency or arbitrator based on, arising out
of, in connection with, or otherwise relating to the employment
by any member of the Consolidated Group of any individual, other
than those which in the aggregate, if resolved adversely, would
have no Material Adverse Effect.
(f) Each member of the Consolidated Group is in compliance with all
laws, and all orders of any court, Governmental Authority or
arbitrator, relating to the employment of labor, including,
without limitation, all such laws relating to wages, hours,
collective bargaining, discrimination, civil rights, and the
payment of withholding and/or social security and similar taxes,
except for such non-compliances that in the aggregate have no
Material Adverse Effect.
Item 55.
AFFIRMATIVE COVENANTS
As long as any of the Bonds remain outstanding or the Borrower has any
right to request the issuance of a Bond hereunder, each Indemnitor agrees with
Travelers that:
21
(a) Financial Statements. The Borrower shall furnish, or cause to be
furnished, to Travelers :
(a) Audited Financial Statements. As soon as available, but in any
event within ninety-five (95) days after the end of each fiscal
year, an audited consolidated balance sheet of the Consolidated
Group as of the end of such fiscal year and the related
consolidated statements of operations, shareholders' equity and
cash flows for the year, all prepared in conformity with GAAP and
certified by Xxxxxx Xxxxxxxx LLP or other firm of independent
certified public accountants of nationally recognized standing
reasonably acceptable to Travelers, setting forth in each case in
comparative form the figures for the previous year.
(b) Quarterly Financial Statements. As soon as available and in any
event within forty-five (45) days after the end of each of the
first three fiscal quarters of each fiscal year, (i) a
consolidated balance sheet of the Consolidated Group as of the
end of such quarter, (ii) consolidated statements of income and
cash flows of the Consolidated Group, in each case for the period
commencing at the end of the previous fiscal year and ending with
the end of such fiscal quarter, all prepared in conformity with
GAAP and certified by the chief financial officer of the Borrower
as fairly presenting the financial condition and results of
operations of the Consolidated Group at such date and for such
period (subject to normal year-end adjustments).
(c) Borrower-Prepared Monthly Financial Statements. As soon as
available, but in any event within forty (40) days after the end
of the first calendar month ending after the Closing Date and
within thirty (30) days after the end of each subsequent calendar
month, company-prepared consolidated and consolidating balance
sheets of the Consolidated Group as of the end of such calendar
month and related company-prepared consolidated and consolidating
statements of operations, shareholders' equity and cash flows for
such monthly period and for the fiscal year to date, in each case
setting forth in comparative form the consolidated and
consolidating figures for the corresponding period or periods of
the preceding fiscal year or the portion of the fiscal year
ending with such period, as applicable, in each case subject to
normal year-end audit adjustments.
(d) Borrower-Prepared Budgets and Reconciliations.
(a) [reserved];
(b) within twenty (20) days of the Filing Date, a business
analysis for the Transit Group and the Track and Products
and Services Group in form, scope and substance satisfactory
to the Travelers that includes an evaluation of all open
bonded contracts with values in excess of $50,000 and
details the cash flows of such bonded contracts (to identify
in particular negative cash flow contracts) for the next
year or thereafter; and
(c) within thirty (30) days of the Closing Date, a business
analysis for the Transit Group and the Track and Products
and Services Group in form, scope and substance satisfactory
to the Travelers that includes an evaluation of all open non
bonded contracts with values in excess of $50,000 to include
a cash flow analysis of such non bonded contracts (to
identify in particular negative cash flow contracts) for the
next year or thereafter that addresses the profitability of
existing projects; and
(d) itemized budgets for each member of the Transit Group in
form, scope and substance satisfactory to Travelers (each, a
"Transit Budget"), with (A) the initial Transit Budget to be
for the 45-day period immediately following the Closing Date
(the "Initial Transit Budget") and to be delivered on or
prior to the Closing Date, (B) the subsequent Transit Budget
to be for the 45-day period immediately following the end of
the Initial Transit Budget period (the "Second Transit
Budget") and to be delivered at least 15 days prior to the
commencement of
22
such 45-day period, and (C) each subsequent Transit Budget
to be for the 180-day period immediately following the end
of the previous budgeted period and to be delivered at least
15 days prior to the commencement of such 180-day period,
and itemized budgets for each member of the Track and
Products and Services Group in form, scope and substance
satisfactory to the Administrative Agent in its sole
discretion (each, a "TP&S Budget"), with (A) the initial
TP&S Budget to be for the 45-day period immediately
following the Closing Date (the "Initial TP&S Budget") and
to be delivered on or prior to the Closing Date, (B) the
subsequent TP&S Budget to be for the 45-day period
immediately following the end of the Initial TP&S Budget
Period and to be delivered at least 15 days prior to the
commencement of such 45-day period (the "Second 45-Day
Budget"), and (C) each subsequent TP&S Budget to be for the
180-day period immediately following the end of the previous
budgeted period and to be delivered at least 15 days prior
to the commencement of such 180-day period; and
(e) within forty (40) days after the end of the first calendar
month ending after the Closing Date and within thirty (30)
days after the end of each subsequent calendar month, an
itemized report reconciling actual results from operations
of each member of the Transit Group and each member of the
Track and Products and Services Group for such calendar
month with the Borrower's original 2001 business plan or the
revised Business Plan submitted and accepted by Travelers in
accordance with clause (vi) of this Section, as the case may
be, for such period, in each case in form reasonably
acceptable to Travelers, together with a certificate from
the chief financial officer of the Borrower explaining any
variances between the actual results from operations and the
amounts set forth in the corresponding business plan; and
(f) on or before December 1, 2001, a business plan for the
Consolidated Group in form, scope and substance satisfactory
to Travelers (the "Business Plan").
All such financial statements and reports delivered pursuant to this
Section 5.01 shall be complete and correct in all material respects (subject, in
the case of interim statements, to normal year-end audit adjustments) and shall
be prepared in reasonable detail and, in the case of the annual and quarterly
financial statements provided in accordance with subsections (a) and (b) above,
in accordance with GAAP applied consistently throughout the periods reflected
therein and further accompanied by a description of, and an estimation of the
effect on the financial statements on account of, any change in the application
of accounting principles as provided in Section 1.03.
23
(b) Certificates; Other Information. The Borrower shall furnish, or cause
to be furnished, to Travelers:
(a) Accountant's Certificate and Reports. Concurrently with the
delivery of the financial statements referred to in subsection
5.01(a) above, a certificate of the independent certified public
accountants reporting on such financial statements stating that
in the course of the regular audit of the business of the
Borrower and its Subsidiaries, which audit was conducted by such
accounting firm in accordance with generally accepted auditing
standards, such accounting firm has obtained no knowledge that
the Borrower is not in compliance with the financial covenants
contained in the Credit Facilities, insofar as such covenants
relate to accounting matters, except as specified in such
certificate.
(b) Officer's Compliance Certificate. Concurrently with the delivery
of the financial statements referred to in Sections 5.01(b) and
5.01(c) above, a certificate of a Responsible Officer, stating
that, to the best of such Responsible Officer's knowledge and
belief, (i) the financial statements fairly present in all
material respects the financial condition of the parties covered
by such financial statements, (ii) during such period the
Indemnitors have observed or performed in all material respects
the covenants and other agreements hereunder relating to them,
and satisfied in all material respects the conditions contained
in this Agreement to be observed, performed or satisfied by them,
and (iii) such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such
certificate.
(c) Accountants' Reports. Promptly upon receipt, a copy of any final
(as distinguished from a preliminary or discussion draft)
"management letter" or other similar report submitted by
independent accountants or financial consultants to the members
of the Consolidated Group in connection with any annual, interim
or special audit or which refers in whole or in part to any
inadequacy, defect, problem, qualification or other lack of fully
satisfactory accounting controls utilized by the Borrower or any
of its Subsidiaries.
(d) Public Information. Within thirty days after the same are sent,
copies of all reports (other than those otherwise provided
pursuant to Section 5.01) and other financial information which
the Borrower sends to its public stockholders, and within thirty
days after the same are filed, copies of all financial statements
and non-confidential reports which the Borrower may make to, or
file with, the SEC.
(e) Bankruptcy Court Matters. Promptly, copies of all pleadings,
motions, applications, and other documents filed by any
Indemnitor or other member of the Consolidated Group with the
Bankruptcy Court or distributed by any Indemnitor or other member
of the Consolidated Group to the office of the United States
Trustee or to any member of any Statutory Committee.
(f) Other Information. Promptly, such additional financial and other
information as Travelers may from time to time reasonably
request.
(c) Notices. The Borrower shall give notice to Travelers of:
(a) Defaults. Immediately (and in any event within two (2) days)
after any Responsible Officer knows of the occurrence of any
Default or Event of Default.
(b) Contractual Obligations. Promptly (and in any event within ten
(10) days) after any Responsible Officer knows of the occurrence
of any default or event of default under any Contractual
Obligation of any member of the Consolidated Group occurring
after the Filing Date which would reasonably be expected to have
a Material Adverse Effect.
24
(c) Legal Proceedings. Promptly (and in any event within ten (10)
days) after any Responsible Officer knows of any litigation, or
any investigation or proceeding (including without limitation,
any environmental proceeding), or any material development in
respect thereof, affecting any member of the Consolidated Group
which, if adversely determined, would reasonably be expected to
have a Material Adverse Effect.
(d) Other. Promptly (and in any event within ten (10) days), any
other development or event which a Responsible Officer determines
could reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the relevant Indemnitor propose to
take with respect thereto.
(d) Payment of Obligations. Within 60 days of the Closing Date and
thereafter, and subject to the DIP Financing Orders, each Indemnitor shall pay,
discharge or otherwise satisfy all obligations of each Indemnitor of whatever
nature, together with any additional costs that are imposed as a result of any
failure to so pay, discharge or otherwise satisfy such obligations, arising in
connection with any Contract bonded by Travelers, except when the amount or
validity of such obligations and costs is currently being contested in good
faith by appropriate proceedings and reserves, if applicable, in conformity with
GAAP with respect thereto have been provided on the books of the Indemnitors, as
the case may be. In addition, within 60 days of the Closing Date and thereafter,
and subject to the DIP Financing Orders, the Borrower shall cause each member of
the Consolidated Group other than an Indemnitor to pay, discharge or otherwise
satisfy all material post-petition obligations of each such member of whatever
nature, together with any additional costs that are imposed as a result of any
failure to so pay, discharge or otherwise satisfy such obligations, arising in
connection with any Contract bonded by Travelers, except when the amount or
validity of such obligations and costs is currently being contested in good
faith by appropriate proceedings and reserves, if applicable, in conformity with
GAAP with respect thereto have been provided on the books of the Consolidated
Group, as the case may be.
(e) Conduct of Business and Maintenance of Existence. Subject to the DIP
Financing Orders, each Indemnitor shall (a) continue to engage in business of
the same general type as conducted on the Closing Date by such Indemnitor, and
similar or related businesses (including, without limitation, the provision of
any services to rail transportation businesses); (b) preserve, renew and keep in
full force and effect its corporate or other legal existence except as otherwise
permitted by this Agreement, (c) take all reasonable action to maintain all
rights, privileges, licenses and franchises necessary or desirable in the normal
conduct of its business except to the extent that failure to comply therewith
would not, in the aggregate, have a Material Adverse Effect, and (d) comply with
all post-petition Contractual Obligations, its certificate of incorporation or
bylaws (or other organizational or governing documents) and all Requirements of
Law applicable to it except to the extent that failure to comply therewith would
not, in the aggregate, have a Material Adverse Effect.
(f) Maintenance of Property; Insurance. Each member of the Transit Group
shall keep all material property useful and necessary in its business in
reasonably good working order and condition (ordinary wear and tear excepted)
except to the extent that failure to comply therewith would not, in the
aggregate, have a Material Adverse Effect; maintain with financially sound and
reputable insurance companies casualty, liability and such other insurance
(which may include plans of self-insurance) with such coverage and deductibles,
and in such amounts as may be consistent with prudent business practice and in
any event consistent with normal industry practice (except to any greater extent
as may be required by the terms of any Credit Facility) and furnish to
Travelers, upon request, full information as to the insurance carried.
(g) Environmental Laws.
(a) Each Indemnitor shall comply in all material respects with, and
take reasonable actions to ensure compliance in all material
respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply in all
material respects with and maintain, and take reasonable actions
to ensure that all tenants and subtenants obtain and comply in
all material respects with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by
25
applicable Environmental Laws except to the extent that failure
to do so would not reasonably be expected to have a Material
Adverse Effect; and
(b) Each Indemnitor shall conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and
other actions required under Environmental Laws and promptly
comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding
Environmental Laws except to the extent that the same are being
contested in good faith by appropriate proceedings and the
failure to do or the pendency of such proceedings would not
reasonably be expected to have a Material Adverse Effect.
(h) Additional Indemnitors.
(a) Domestic Subsidiaries. At any time that any Indemnitor forms,
creates or otherwise acquires any Domestic Subsidiary that is a
member of the Transit Group, such Indemnitor shall (i) notify
Travelers within 10 days thereof and (ii) within 30 days thereof,
(A) cause such Domestic Subsidiary to become an Indemnitor by
execution of a Joinder Agreement, and (B) cause such Domestic
Subsidiary to deliver with the Joinder Agreement such supporting
resolutions, incumbency certificates, corporate formation and
organizational documentation and opinions of counsel as Travelers
may reasonably request.
(b) Foreign Subsidiaries. At any time that any Indemnitor forms,
creates or otherwise acquires any Foreign Subsidiary that is a
member of the Transit Group directly owned by the Borrower or any
Domestic Subsidiary, the Borrower shall notify Travelers within
10 days thereof.
(i) Ownership of Subsidiaries. The Borrower shall, directly or indirectly,
own at all times 100% of the Voting Stock of each of its Subsidiaries, other
than as set forth on Schedule 5.09.
(j) Payment of Taxes, Etc. Each Indemnitor shall pay and discharge, before
the same shall become delinquent, all postpetition lawful governmental claims,
taxes, assessments, charges and levies, except where contested in good faith by
proper proceedings, if adequate reserves therefor have been established on the
books of such Indemnitor in conformity with GAAP; provided, however, that the
Indemnitors shall not be deemed in default of this Section if all such
non-payments in the aggregate have no Material Adverse Effect.
Item 56.
NEGATIVE COVENANTS
As long as any of Bonds remain outstanding or the Borrower has any right to
request the issuance of a Bond hereunder, each Indemnitor agrees with Travelers
that:
26
(a) Indebtedness. No member of the Transit Group shall contract, create,
incur, assume or permit to exist, any Indebtedness, including, without
limitation, any Indebtedness owed with respect to any Subsidiary in the Track
and Products and Services Group or otherwise arising under the TP&S Revolving
Credit Agreement, except:
(a) Indebtedness arising or existing under this Agreement and the
Transit Credit Agreement;
(b) Indebtedness existing on the Filing Date (including Indebtedness
in respect of pre-petition surety obligations);
(c) Indebtedness arising under the Bond Support Credit Agreement;
(d) purchase money Indebtedness (including Capital Lease Obligations)
incurred after the Closing Date to provide all or a portion of
the purchase price or costs of construction of an asset; provided
that (i) such Indebtedness when incurred shall not exceed the
purchase price or cost of construction of such asset, (ii) no
such Indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the time
of such refinancing, and (iii) the aggregate amount of all such
Indebtedness shall not exceed $1,000,000 at any time outstanding;
(e) Indebtedness and obligations owing under interest rate protection
agreements relating to the Obligations under the Transit Credit
Agreement and under interest rate, commodities and foreign
currency exchange protection agreements entered into in the
ordinary course of business to manage existing or anticipated
risks and not for speculative purposes;
(f) unsecured intercompany Indebtedness owing by a member of the
Transit Group to another member of the Transit Group to the
extent permitted hereunder;
(g) Indebtedness in respect of financed insurance premium
obligations; and
(h) Support Obligations of any member of the Transit Group in respect
of Indebtedness permitted under clauses (a) through (g) of this
Section 6.01.
(b) Liens. No member of the Transit Group shall contract, create, incur,
assume or permit to exist, any Lien with respect to any of its property or
assets of any kind (whether real or personal, tangible or intangible), whether
now owned or hereafter acquired, except for Permitted Liens and Senior Liens.
(c) Consolidation, Merger, Divestiture, etc.
(a) No member of the Transit Group shall enter into a transaction of
merger or consolidation, except the Borrower or any domestic
Indemnitor in the Transit Group may be a party to a transaction
of merger or consolidation with another domestic Indemnitor in
the Transit Group, provided that (i) if the Borrower is a party
thereto, it shall be the surviving corporation, and (ii) no
Default or Event of Default shall exist either immediately prior
to or immediately after giving effect thereto;
(b) No member of the Transit Group shall make any Divestiture unless
the consideration paid in connection therewith shall be cash or
Cash Equivalents (and such payment shall be contemporaneous with
consummation of such Divestiture) in an amount satisfactory to
Travelers and otherwise under terms and conditions satisfactory
to Travelers.
27
(c) None of the Indemnitors shall liquidate, wind-up or dissolve,
whether voluntarily or involuntarily (or suffer to permit any
such liquidation or dissolution), other than in connection with a
merger, consolidation or Divestiture permitted under this
Agreement.
(d) Acquisitions. None of the Indemnitors shall make any Acquisition.
(e) Investments. None of the Indemnitors shall make any Investment in any
Person except for Permitted Investments.
(f) Ownership of Equity Interests. None of the Indemnitors shall enter
into any Equity Transaction.
(g) Fiscal Year. The Borrower shall not change its fiscal year from a
December 31 fiscal year end.
(h) Restricted Payments. None of the Indemnitors shall make or permit any
Restricted Payments.
(i) Sale Leasebacks. None of the Indemnitors shall, directly or
indirectly, become or remain liable as lessee or as guarantor or other surety
with respect to any lease, whether an Operating Lease or a Capital Lease, of any
Property, whether now owned or hereafter acquired, (a) which such Person has
sold or transferred or is to sell or transfer to any other Person other than an
Indemnitor or (b) which such Person intends to use for substantially the same
purpose as any other Property which has been sold or is to be sold or
transferred by such Person to any other Person in connection with such lease.
(j) Limitations on Transactions with Affiliates. None of the Indemnitors
shall enter into or permit to exist any transaction or series of transactions
with any officer, director or Affiliate of such Person other than (a)
intercompany transactions expressly permitted hereunder, (b) normal compensation
and reimbursement of expenses of officers and directors and (c) except as
otherwise specifically limited in this Agreement, other transactions which are
entered into in the ordinary course of such Person's business on terms and
conditions substantially as favorable to such Person as would be obtainable by
it in a comparable arms-length transaction with a Person other than an officer,
director or Affiliate.
(k) Priority Claims. Except as expressly permitted by this Agreement, none
of the Indemnitors shall incur, create, assume, suffer or permit to exist, or
apply to the Bankruptcy Court for authority to incur, create, assume, suffer or
permit to exist, any claim against the Indemnitors or the Collateral to be pari
passu with or senior to the super-priority administrative claims of Travelers
against the Indemnitors.
(l) Payment of Other Indebtedness.
(a) None of the Indemnitors shall pay any Indebtedness arising prior
to the Filing Date except as permitted by this Agreement or
consented to by Travelers and as approved by the Bankruptcy
Court, but, subject to such approval, if required by this
Agreement, the Indemnitors shall pay the obligations required by
this Agreement to be paid.
(b) None of the Indemnitors shall prepay any Indebtedness, except the
obligations in accordance with the terms of this Agreement or in
connection with any mandatory prepayment provisions set forth in
the Credit Facilities or the DIP Financing Order.
(m) Investment Banking and Finder's Fees. None of the Indemnitors shall
pay or agree to pay, or reimburse any other party with respect to, any
investment banking or similar or related fee, underwriter's fee, finder's fee,
or broker's fee to any Person other than as may be approved by the Bankruptcy
Court on motion and notice to Travelers.
(n) No Material Pleadings.
(a) None of the Indemnitors shall file, or consent to the filing by
any other Person of, any Material Pleading without the prior written consent of
Travelers.
28
(b) None of the Indemnitors shall consent to, encourage, support, or
assist in any manner to the entry of an order with respect to a Material
Pleading filed by any other Person without the prior written consent of
Travelers.
(o) Modification of Contractual Obligations. The Borrower shall not, and
shall not permit any of its Subsidiaries to, alter, amend, modify, rescind,
terminate or waive any of their respective rights or obligations under, or fail
to comply in all material respects with, any of its obligations hereunder or any
of its Contractual Obligations arising with respect to any Contract bonded by
Travelers that would have a Material Adverse Effect.
(p) Accounting Changes. None of the Indemnitors shall make any change in
accounting treatment and reporting practices or tax reporting treatment, except
as required by GAAP or applicable law and disclosed to Travelers.
(q) Prohibition Regarding Rejection. Without Travelers prior written
consent, the Borrower shall not permit any member of the Consolidated Group,
including any Indemnitor or member of the Track and Products and Services Group,
to reject any Contract pursuant to Section 365 of the Bankruptcy Code or under
any plan of reorganization.
Item 57.
EVENTS OF DEFAULT
(a) Events of Default. An Event of Default shall exist upon the occurrence
of any of the following specified events (each an "Event of Default"):
(a) Payment or Performance. Any Indemnitor shall:
(a) default in the payment or performance as provided herein of
any obligation on any Contract bonded by Travelers pursuant
to any surety bond issued by Travelers or administered by
Travelers, whether pursuant to this Agreement or prior to
the Closing Date, except when the amount or validity of such
obligation is currently being contested in good faith by
appropriate proceedings and reserves, if applicable, in
conformity with GAAP with respect thereto have been provided
on the books of the Consolidated Group, and such default
shall continue for five (5) or more Business Days; or
(b) except as provided herein, breach or abandon any Contract
bonded by Travelers pursuant to any surety bond issued or
administered by Travelers prior to the Closing Date or
pursuant to this Agreement, or reject any Contract pursuant
to Section 365 of the Bankruptcy Code or pursuant to a plan
of reorganization; or
(c) fail to comply with the provisions of Section 2.08 hereof
within five (5) Business Days after receiving notice from
Travelers that a reserve is being posted with respect to a
bond; or
(d) improperly divert Contract funds or the assets of any
Indemnitor to the detriment of Contract obligations; or
(e) default, and such default shall continue for five (5) or
more Business Days, in the payment when due of (A) any
interest obligation owing under this Agreement, or (B) any
premiums, fees or other amounts owing under this Agreement
or otherwise in connection herewith; or
(b) Representations. Any representation, warranty or statement made
or deemed to be made herein, or in any statement or certificate
delivered or required to be delivered pursuant hereto shall prove
untrue in
29
any material respect on the date as of which it was made or
deemed to have been made (other than those which are untrue
solely as a result of changes permitted by this Agreement); or
(c) Covenants. Any Indemnitor shall default in the due performance or
observance of any material term, covenant, or agreement contained
herein when due, or
(d) Other Credit Documents. Any Indemnitor shall default in the due
performance, payment, or observance of any material term,
covenant, obligation, or agreement in any of the other Credit
Facilities (subject to applicable grace or cure periods, if any)
as such term, covenant, obligation, or agreement exists on the
Closing Date; or
(e) Guaranties. Except as to any Indemnitor which is dissolved,
released or merged or consolidated out of existence as the result
of or in connection with a dissolution, merger or disposition
permitted by this Agreement, the guaranty given by any Indemnitor
hereunder or any material provision thereof shall cease to be in
full force and effect, or any Indemnitor or any Person acting by
or on behalf of such Indemnitor shall deny or disaffirm a
Subsidiary Indemnitor's obligations hereunder; or
(f) Judgments. Any member of the Consolidated Group shall fail within
30 days of the date due and payable to pay, bond or otherwise
discharge any judgment, settlement or order for the payment of
money relating to claims arising after the Filing Date which
judgment, settlement or order, when aggregated with all other
such judgments, settlements or orders due and unpaid at such
time, exceeds $500,000, and which is not stayed on appeal (or for
which no motion for stay is pending) or is not otherwise being
executed; or
(g) Ownership. There shall occur a Change of Control; or
(h) Reorganization Plan. Any Indemnitor shall file, or shall consent
to, encourage, support or assist in any manner with, the filing
by any other Person, with the Bankruptcy Court of a
reorganization plan in respect of the Borrower or any of its
Subsidiaries that, on or before the Maturity Date (or at such
other time as Travelers and the Borrower may agree), does not
provide that any surety bond issued by Travelers with respect to
any member of the Transit Group or the Track and Products and
Services Group, whether issued or administered by Travelers prior
to the Closing Date or pursuant to this Agreement, shall be
collateralized or otherwise assured of satisfaction or payment in
an amount and manner acceptable to Travelers; or
(i) Bankruptcy Cases. Any of the Bankruptcy Cases shall be dismissed
or converted to a case under Chapter 7 of the Bankruptcy Code; a
trustee under Chapter 7 or Chapter 11 of the Bankruptcy Code
shall be appointed in any of the Bankruptcy Cases; or any
Indemnitor shall file or support any application for the approval
of, or there shall arise, any other claim which is an
administrative expense claim having priority over any or all
administrative expenses of the kind specified in Sections 503(b)
or 507(b) of the Bankruptcy Code; or the Bankruptcy Cases of any
two or more members of the Consolidated Group other than
Indemnitors in the Transit Group shall be substantively
consolidated without Travelers prior consent; or
(j) Relief to Lien Holders. The Bankruptcy Court shall enter an order
granting relief from the automatic stay applicable under section
362 of the Bankruptcy Code permitting foreclosure on any asset of
any Indemnitor with a net depreciated book value in excess of
$500,000; or
(k) Appointment of Trustee. An order of the Bankruptcy Court shall be
entered in any of the Bankruptcy Cases appointing a trustee or
examiner with expanded powers (powers beyond those set forth in
Section 1106(a)(3) and (4) of the Bankruptcy Code) to operate the
Borrower's business or a substantial portion thereof which is not
consented to in writing by Travelers; or
30
(l) DIP Financing Orders. An order of the Bankruptcy Court which is
not consented to in writing by Travelers shall be entered
amending, supplementing, staying for a period in excess of five
(5) days, vacating or otherwise modifying (or having the effect
of any of the foregoing with respect to) the Interim DIP
Financing Order or the Final DIP Financing Order which is not
consented to in writing by Travelers; or
(m) DIP Financing Final Order. The Final DIP Financing Order, in a
form satisfactory to Travelers and containing the provisions
outlined herein shall not have been entered by the Bankruptcy
Court on or before the expiration of the Interim Period; or
(n) Order of Bankruptcy Court. An order shall be entered by the
Bankruptcy Court confirming a plan of reorganization or
liquidation in the Bankruptcy Cases which does not provide that
any surety bond issued by Travelers with respect to any member of
the Transit Group or the Track and Products and Services Group,
whether issued or administered by Travelers prior to the Closing
Date or pursuant to this Agreement, shall be collateralized or
otherwise assured of satisfaction or payment in an amount and
manner acceptable to Travelers on or before the effective date of
such plan.
(b) Acceleration; Remedies. Upon the occurrence and during the
continuation of an Event of Default, without further order of, application to,
or action by the Bankruptcy Court, Travelers may on five days' written notice to
the Borrower terminate the issuance of any further Bonds and declare that all or
any portion of the Indemnitors' obligations under the Bonds and this Agreement
are immediately due and payable. In addition, subject solely to any requirement
of the giving of notice by the terms of the Interim DIP Financing Order or the
Final DIP Financing Order, the automatic stay provided in Section 362 of the
Bankruptcy Code shall be automatically vacated without further action or order
of the Bankruptcy Court, and Travelers shall be entitled to exercise all of its
respective rights and remedies under this Agreement and applicable law,
including without limitation, any right of exoneration. In the event the
Borrower or any Indemnitor shall abandon or default in the payment or
performance of any obligation on any Contract bonded by Travelers pursuant to a
bond issued by Travelers or administered by Travelers (other than a default
arising because the amount or validity of such obligation is currently being
contested in good faith by appropriate proceedings and reserves, if applicable,
in conformity with GAAP with respect thereto have been provided on the books of
the Consolidated Group), any receivable owing on such Contract shall be
segregated and held for the satisfaction of the defaulted or abandoned
obligation and Travelers, as the case may be. If Borrower or any member of the
Transit Group shall abandon or default in the payment or performance of any
obligation on any Contract in the Transit Group (including any Specified
Contract) bonded by Travelers pursuant to a bond issued by Travelers or
administered by Travelers (other than a default arising because the amount or
validity of such obligation is currently being contested in good faith by
appropriate proceedings and reserves, if applicable, in conformity with GAAP
with respect thereto have been provided on the books of the Consolidated Group),
Travelers, at its election, may take over such bonded Contract or obligation at
any time and complete the contract or obligation itself or with another
contractor or obligor, in which case Travelers may have the use of all job site
equipment for such purpose with the payment of a reasonable rental to be made
first to the Transit Lenders for so long as any indebtedness shall remain
outstanding under the Transit Credit Agreement and the Bond Support Credit
Agreement, thereafter to the Pre-Petition Agent for so long as any indebtedness
shall remain outstanding under the Pre-Petition Credit Agreement, and thereafter
to the Borrower. If Borrower or any member of the Track and Products and
Services Group shall abandon or default in the payment or performance of any
obligation on any Contract in the Track and Products and Services Group bonded
by Travelers pursuant to a bond issued by Travelers or administered by Travelers
(other than a default arising because the amount or validity of such obligation
is currently being contested in good faith by appropriate proceedings and
reserves, if applicable, in conformity with GAAP with respect thereto have been
provided on the books of the Consolidated Group), Travelers, at its election,
may take over such bonded Contract or obligation at any time and complete the
contract or obligation itself or with another contractor or obligor, in which
case Travelers may have the use of all job site equipment for such purpose with
the payment of a reasonable rental to be made first to the Bank Administrative
Agent for so long as any indebtedness shall remain outstanding under the TP&S
Revolving Credit Agreement, thereafter to the Pre-Petition Agent for so long as
any indebtedness shall remain outstanding under the Pre-Petition Credit
Agreement, and thereafter to the Borrower. Such reasonable rental shall be
determined (a) by agreement between Travelers and the Person to whom the rental
is initially payable or (b) if not agreed within thirty (30) days after
Travelers has commenced its use of the equipment, by order of the Bankruptcy
Court after notice and a hearing, provided that (i) Travelers shall have the
31
right to use the equipment with respect to a bonded Contract at all times after
it makes the election to take over such bonded Contract, regardless of whether
the rental has been determined, and (ii) Travelers shall not be responsible for
the payment of any rental with respect to any time prior to its taking over such
bonded Contract.
Item 58.
GUARANTY
(a) Joint and Several Guaranty. Each Indemnitor hereby guarantees to
Travelers the full and punctual payment when due, as well as the performance, of
all obligations and agreements of the Borrower hereunder and all obligations and
agreements of the other Indemnitors hereunder, including without limitation all
obligations and agreements arising from the issuance of any Bond, and including
all obligations which would become due but for the operation of the automatic
stay pursuant to Section 362 of the Bankruptcy Code and the operation of
Sections 502 and 506(b) of the Bankruptcy Code. This guaranty is an absolute,
unconditional and continuing guaranty of the full and punctual payment and
performance of all of such obligations and not of their collectibility only and
is in no way conditioned upon any requirement that Travelers first attempt to
collect any of such obligations from the Borrower or any Indemnitor or resort to
any collateral security or other means of obtaining payment. Should the Borrower
or any other Indemnitor default in the payment or performance of any of its
obligations or agreements hereunder, the obligations of each Indemnitor
hereunder with respect to such obligations and agreements in default shall
become immediately due and payable to Travelers, and performable for the benefit
of Travelers, without demand or notice of any nature, all of which are expressly
waived by each Indemnitor. Payments by the Indemnitors hereunder may be required
by Travelers on any number of occasions.
(a) Each of the obligations of the Indemnitors under this Agreement
are joint and several. Travelers is authorized to settle with any
one or more of the Indemnitors individually, and without
reference to the others, and such settlement shall not bar or
prejudice action against or affect the liability of the others,
subject only to the limitation that Travelers shall be entitled
to no more than a complete satisfaction of the obligations of the
Indemnitors to Travelers.
(b) Each Indemnitor hereby further agrees that, in the case of any
extension of time of payment or renewal of any of the obligations
owing to Travelers hereunder, the same will be promptly paid in
full when due in accordance with the terms of such extension or
renewal.
(c) Notwithstanding any provision to the contrary contained herein,
to the extent the obligations of an Indemnitor shall be
adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state,
provincial or Federal law relating to fraudulent conveyances or
transfers or the granting of financial assistance) then the
obligations of each Indemnitor hereunder shall be limited to the
maximum amount that is permissible under applicable law (whether
Federal, state or provincial and including, without limitation,
the Bankruptcy Code). In such case or otherwise at the request of
Travelers, each Indemnitor shall take such action and shall
execute and deliver all such further documents required by
Travelers to cause the obligations of such Indemnitor to be
enforceable to the extent required by this Agreement.
(b) Obligations Unconditional. The obligations of the Indemnitors under
this Section are absolute and unconditional under any and all circumstances.
Each Indemnitor agrees that such Indemnitor shall have no right of subrogation,
indemnity, reimbursement or contribution against the Borrower or any other
Indemnitor for amounts paid under this Article VIII until such time as all of
the obligations owing to Travelers hereunder have been paid or otherwise
satisfied in full, and all of the Bonds have been released. Without limiting the
generality of the foregoing, it is agreed that, to the fullest extent permitted
by law, the occurrence of any one or more of the following shall not alter or
impair the liability of any Indemnitor hereunder which shall remain absolute and
unconditional as described above:
32
(a) at any time or from time to time, without notice to any
Indemnitor, the time for any performance of or compliance with
any of the obligations owed to Travelers hereunder shall be
extended, or such performance or compliance shall be waived;
(b) the maturity of any of the obligations owed to Travelers
hereunder shall be accelerated, or any such obligation or this
Agreement shall be modified, supplemented, or amended in any
respect, or any right arising hereunder or in connection with the
issuance of a Bond shall be waived or any other guarantee of any
of the Indemnitors shall be released, modified, or exchanged in
whole or in part or otherwise dealt with, or there shall be any
refinancing, compromise, consolidation or renewal of any such
obligation or this Agreement;
(c) any of the obligations owed to Travelers hereunder shall be
determined to be void or voidable or shall be subordinated to the
claims of any Person;
(d) the failure of Travelers to assert any claim or demand or to
enforce any right or remedy against any other Indemnitor or any
other Person primarily or secondarily liable with respect to any
of such obligations; (iv) the addition, substitution or release
of any entity or other person primarily or secondarily liable for
any Obligation;
(e) the impairment of any collateral securing any of such
obligations, including without limitation the failure to perfect
or preserve any rights which Travelers might have in such
collateral security or the substitution, exchange, surrender,
release, loss or destruction of any such collateral security; and
(f) any other act or omission which might in any manner or to any
extent vary the risk of the Indemnitors or otherwise operate as a
release or discharge of the Indemnitors, all of which may be done
without notice to the Indemnitors.
To the fullest extent permitted by law, with respect to its obligations
hereunder, each Indemnitor hereby expressly waives diligence, presentment,
demand of payment, protest and all notices whatsoever, any requirement that
Travelers exhaust any right, power or remedy or proceed against any Person or
security, all defenses which may be available by virtue of any valuation, stay,
moratorium law or other similar law now or hereafter in effect, and all
suretyship defenses generally. To the fullest extent permitted by law, the
Indemnitors hereby expressly waive any and all rights or defenses arising by
reason of (A) any "one action" or "anti-deficiency" law which would otherwise
prevent Travelers from bringing any action, including any claim for a
deficiency, or exercising any other right or remedy (including any right of
set-off), against the Indemnitors before or after Travelers' commencement or
completion of any enforcement action, whether judicially, by exercise of power
of sale or otherwise, or (B) any other law which in any other way would
otherwise require any election of remedies by Travelers.
33
(c) Reinstatement. The obligations of the Indemnitors under this Article
VIII shall be automatically reinstated if and to the extent that for any reason
any payment by or on behalf of any Person in respect of any obligation owed to
Travelers hereunder is rescinded or must be otherwise restored, whether as a
result of any proceedings in bankruptcy or reorganization or otherwise, and each
Indemnitor agrees that it will indemnify Travelers on demand for all reasonable
costs and expenses (including, without limitation, reasonable fees and expenses
of counsel) incurred by Travelers in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
(d) Certain Additional Waivers. Each Indemnitor agrees that such
Indemnitor shall have no right of recourse to any security with respect to any
obligation owed to Travelers hereunder, except through the exercise of any right
of subrogation permitted herein.
(e) Continuing Guarantee. The guarantee of the Indemnitors in this Article
VIII is a continuing guarantee, and shall apply to all obligations owed to
Travelers with respect to any Bond issued hereunder whenever arising.
Item 59.
MISCELLANEOUS
(a) Notices. Except as otherwise expressly provided herein, all notices
and other communications shall have been duly given and shall be effective (i)
when delivered, (ii) when transmitted via telecopy (or other facsimile device)
to the number set out below, (iii) the day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (iv) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Borrower, the other
Indemnitors and Travelers, or at such other address as such party may specify by
written notice to the other parties hereto:
if to the Borrower or any other Indemnitor:
RailWorks Corporation
0000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: CFO
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx, Esq. and Xxxx Xxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
and
Xxxxxxxxx, Xxxxxx & Preston
Seven Saint Xxxx Street
Baltimore, MD 21202
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
34
if to Travelers:
Travelers Property Casualty
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
attn: G. Xxxx Xxxxxxxx, Xx.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) Right of Set-Off. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence of an Event of Default, Travelers is authorized at
any time and from time to time, without presentment, demand, protest or other
notice of any kind (all of which rights being hereby expressly waived), to
set-off and to appropriate and apply any and all deposits (general or special)
and any other indebtedness at any time held or owing by Travelers to or for the
credit or the account of any Indemnitor against obligations and liabilities of
such Person to Travelers, irrespective of whether Travelers shall have made any
demand hereunder and although such obligations, liabilities or claims, or any of
them, may be contingent or unmatured, and any such set-off shall be deemed to
have been made immediately upon the occurrence of an Event of Default even
though such charge is made or entered on the books of Travelers subsequent
thereto.
(c) Benefit of Agreement.
(a) Generally. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that, except as expressly
provided herein, none of the Indemnitors may assign or transfer
any of its interests without prior written consent of Travelers.
(b) Assignments. Travelers may assign participation of all or a
portion of its rights and obligations hereunder to any other
surety or co-surety.
(d) No Waiver; Remedies Cumulative. No failure or delay on the part of
Travelers in exercising any right, power or privilege hereunder and no course of
dealing between Travelers and any Indemnitor shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. The rights and remedies provided
herein are cumulative and not exclusive of any rights or remedies which
Travelers would otherwise have. No notice to or demand on any Indemnitor in any
case shall entitle the Borrower or any Indemnitor to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of Travelers to any other or further action in any circumstances without notice
or demand.
(e) Payment of Expenses; Indemnification.
(a) The Borrower agrees to: (i) pay all reasonable out-of-pocket
costs and expenses (A) of Travelers in connection with the
negotiation, preparation, execution and delivery, and
administration of this Agreement, the Credit Facilities, and
other matters related to Travelers' rights and interests with
35
respect to any surety bond that it has issued or any Contract,
including the negotiations and preparations undertaken in advance
of the commencement of the Bankruptcy Cases (including, without
limitation, the reasonable fees and expenses of counsel of
Travelers) and any amendment, waiver, or consent relating hereto
or thereto, including, but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the
Indemnitors under this Agreement, (B) of Travelers in connection
with the enforcement of this Agreement and any of the obligations
of the Indemnitors in connection with the issuance by Travelers
of any surety bond under this Agreement or issued or administered
by Travelers prior to the Closing Date (including, without
limitation, in connection with any such enforcement, the
reasonable fees and disbursements of counsel for the
Administrative Agent and each of the Lenders), and (C) the
representation of Travelers in connection with the Bankruptcy
Cases; and (ii) pay all reasonable out-of-pocket costs and
expenses of Travelers to monitor and audit the Indemnitors'
performance of its obligations hereunder and in connection with
any surety bond issued by Travelers hereunder or issued or
administered by Travelers prior to the Closing Date.
(f) Indemnification. The Borrower shall indemnify Travelers and its
officers, directors, employees, representatives, counsel, and agents from and
hold each of them harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising out of,
or in any way related to, or by reason of (A) any investigation, litigation or
other proceeding (whether or not Travelers is a party thereto) related to the
entering into and/or performance of any agreement or obligation hereunder, the
issuance of any Bond issued hereunder, or the consummation of any other
transactions contemplated hereunder; (B) the presence or Release of any
Materials of Environmental Concern at, under or from any Property owned,
operated or leased by the Borrower or any of its Subsidiaries, or the failure by
the Borrower or any of its Subsidiaries to comply with any Environmental Law
(but excluding, in the case of either of clause (A) or (B) above, any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of gross negligence or willful misconduct on the part of the Person to be
indemnified).
(g) Amendments, Waivers and Consents. No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Borrower or any
Indemnitor therefrom shall in any event be effective unless the same shall be in
writing and signed by Travelers, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
(i) Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
(j) Survival. All indemnities, representations, and warranties set forth
herein shall survive the execution and delivery of this Agreement, the issuance
of any Bond, and the satisfaction of any obligation owing hereunder.
(k) Governing Law; Submission to Jurisdiction; Venue.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND APPLICABLE
PROVISIONS OF FEDERAL LAW.
(b) Any legal action or proceeding with respect to this Agreement may
be brought in the courts of the State of New York in New York
County or for the Southern District of New York, and, by
execution and delivery of this Agreement, each of the Indemnitors
hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive
jurisdiction of such courts, provided that, with respect to any
Indemnitor for so long as such Indemnitor is a debtor in a
Bankruptcy Case, the proceeding shall be brought in the
Bankruptcy Court. Each of the Indemnitors
36
further irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set out for notices
hereunder, such service to become effective three (3) days after
such mailing. Nothing herein shall affect the right of Travelers
to serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against any
Indemnitor in any other jurisdiction.
(c) Each Indemnitor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection
with this Agreement brought in the courts referred to in
subsection (a) hereof and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought
in an inconvenient forum.
(d) TO THE EXTENT PERMITTED BY LAW, TRAVELERS, THE BORROWER AND THE
OTHER INDEMNITORS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
(l) Severability. If any provision of any of this Agreement is determined
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
(m) Entirety. This Agreement, together with any Exhibits and Schedules
hereto, represent the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings,
either oral or written, with respect to the subject matter hereof and thereof.
(n) Binding Effect; Termination.
(a) This Agreement shall become effective at such time on or after
the Closing Date when it shall have been executed by the
Borrower, the other Indemnitors, and Travelers, and thereafter
this Agreement shall be binding upon and inure to the benefit of
the Borrower, the Indemnitors, Travelers and their respective
successors and assigns.
(b) The term of this Agreement shall commence on the effective date
as provided herein and shall continue until no surety bonds or
any other obligations owing hereunder or under any surety bond
issued or administered by Travelers shall remain outstanding and
unsatisfied.
(o) Conflict. To the extent of any conflict or inconsistency between any
provision of this Agreement, any provision of any other Credit Facility, or the
DIP Financing Order, the provisions of the DIP Financing Order shall control.
[SIGNATURE PAGES FOLLOW]
37
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
RAILWORKS CORPORATION,
as Borrower and Indemnitor
By:
--------------------------------------------------------
Name:
Title:
BREAKING TECHNOLOGY & EQUIPMENT INC.,
as Indemnitor
By:
--------------------------------------------------------
Name:
Title:
HSQ TECHNOLOGY, A CORPORATION,
as Indemnitor
By:
--------------------------------------------------------
Name:
Title:
X.X. XXXXXXXX & COMPANY, INC.,
as Indemnitor
By:
--------------------------------------------------------
Name:
Title:
M-TRACK ENTERPRISES, INC.,
as Indemnitor
By:
--------------------------------------------------------
Name:
Title:
RAILWORKS TRANSIT, INC.,
as Indemnitor
By:
--------------------------------------------------------
Name:
Title:
RWKS CONSTRUCTION, INC.,
as Indemnitor
By:
--------------------------------------------------------
Name:
Title:
38
RAILWORKS TRANSIT SYSTEMS, INC.,
as Indemnitor
By:
--------------------------------------------------------
Name:
Title:
[TRAVELERS' SIGNATURE ON NEXT PAGE]
39
TRAVELERS CASUALTY & SURETY COMPANY OF AMERICA,
By:
--------------------------------------------------------
Name:
Title:
40
