Exhibit 10.2
INTERCREDITOR
AGREEMENT
THIS INTERCREDITOR AGREEMENT
made and entered into this 14th day of March, 2005, by and between
FEDERAL INSURANCE COMPANY, an Indiana corporation, and BANK OF
AMERICA, N.A., a national banking association, as Lender Agent on
behalf of the other Lender Parties. All capitalized terms will have
the meaning set forth in Section 1.
W I T N E S S E T H:
WHEREAS, Quanta Services, Inc.,
a Delaware corporation, is Borrower and certain of its Subsidiaries
and Affiliates are Guarantors of Borrower, under that certain
Credit Agreement dated as of December 19, 2003, as amended
from time to time, pursuant to which the Lender Parties agreed to
establish certain credit facilities described therein and provide
certain financial services for the benefit of certain
Indemnitors;
WHEREAS, the Indemnitors are
indebted and/or obligated to Surety as evidenced by the Surety
Credit Documents;
WHEREAS, the Indemnitors from
time to time have obtained and/or may in the future obtain Bonds
from Surety as Principals;
WHEREAS, as one of the
conditions to Surety agreeing to consider requests from Indemnitors
for the issuance of any Bond, this Agreement must be executed by
the parties hereto;
WHEREAS, Surety and Lender
Agent on behalf of the Lender Parties agree that the rights of
Surety with respect to the Surety Priority Collateral will be
senior to the rights of the Lender Parties with respect to the
Surety Priority Collateral, pursuant to the terms and provisions of
this Agreement; and
WHEREAS, Surety agrees that it
will have no rights with respect to the Lender Priority Collateral
except to the extent expressly provided in this Agreement;
NOW, THEREFORE, in
consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions .
For the purposes of this Agreement, the following terms will have
the meanings listed below:
“Accounts” means
and includes all of Indemnitors’ now owned or hereafter
acquired accounts (as defined in the UCC) and (whether included in
such definition) accounts receivable, and proceeds, including
without limitation, all insurance proceeds and proceeds of any
letter of credit on which any Indemnitor is a beneficiary, but only
to the extent such accounts, accounts
receivable, and proceeds
arise pursuant to a Bonded Contract, including, but not limited to
Retainage, and all forms of obligations whatsoever owing to any
Indemnitor under instruments and documents of title constituting
the foregoing or proceeds thereof; and all rights, securities, and
guarantees with respect to each of the foregoing. In no event,
shall “Accounts” or the proceeds thereof include
accounts, accounts receivable, contract rights, insurance proceeds
or proceeds of any letter of credit of which any Indemnitor is a
beneficiary to the extent such assets arise pursuant to contracts
other than “Bonded Contracts.”
“Affiliate” means,
with respect to any Person, any other person or group acting in
concert with respect of the Person that, directly or indirectly,
through one or more intermediaries, controls, or is controlled by,
or is under the common control with such Person. For purposes of
this definition, “control” (including, with correlative
meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person or
group of Persons, will mean the possession, directly or indirectly,
of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting
securities or by contract or otherwise. Principal and Indemnitors
are Affiliates of each other. None of Indemnitors is an Affiliate
of Surety, Lenders, or Lender Agent.
“Agreement” or
“this Agreement” means this Intercreditor Agreement
together with all amendments, modifications, and supplements
hereto.
“Bankruptcy Code”
means Title 11 of the United States Code entitled
“Bankruptcy,” as now and hereinafter in effect, or any
successor statute.
“Bonded Contract”
means any existing or future contract in respect of which any Bond
is issued on behalf of any Principal or on behalf of Island
Mechanical, Hawaii.
“Bonded Contract
Balances” means all payments made, or to be made, to or on
behalf of any Principal pursuant to or arising out of any Bonded
Contract, including, without limitation, whether earned and unpaid
or to be earned, Retainage, increases in contract amounts and
payments made, or to be made, as a result of affirmative claims,
including, but not limited to, claims against Obligees, design
professionals (including, but not limited to architects and
engineers), certified public accountants, subcontractors, laborers,
materialmen, and against any of their sureties, including, without
limitation, changed condition claims or wrongful termination
claims.
“Bonds” means any
surety agreements, undertakings, or instruments of guarantee signed
by Surety on behalf of any Principal, Island Mechanical, Hawaii, or
Foreign Subsidiary, whether executed before or after the execution
of this Agreement.
“Borrower” means
Quanta Services, Inc., a Delaware corporation.
“Default Rate” on
each day of its determination the prime rate reflected in the Money
Rates section of The Wall Street Journal plus two percent (2%).
2
“Domestic
Subsidiary” means any Subsidiary of Quanta Services, Inc.
that is organized under the laws of any political subdivision of
the United States.
“Equipment” means
all of Indemnitor’s now owned or hereafter acquired right,
title, and interest with respect to equipment (as defined in the
UCC) and (whether or not included in such definition) all tangible
property including all retail store, storage, office, computer, or
facility equipment and other retail, manufacturing, and research
items, computer hardware, all vehicles, goods, machinery, chattels,
tools, dies, machine tools, furniture, furnishing, fixtures, and
supplies, of every nature, wherever located, all additions,
accessories, and improvements thereto and substitutions therefore
and all accessories, parts, and equipment which may be attached to
or which are necessary for the operation and use of such personal
property or fixtures, whether or not the same will be deemed to be
affixed to, arise out of, or relate to any real property, together
with all accessions thereto. For avoidance of doubt,
“Equipment” is not intended to and does not include any
Licensed Property.
“Foreclosure
Action” means and includes any action, whether under the
Bankruptcy Code or other applicable law, to foreclose upon or
enforce a Lien against particular property, including commencing
judicial or non-judicial foreclosure proceedings or any other
remedy designed to or that has the effect of dispossessing the
Borrower, any Guarantor or Surety, as the case may be, of any
collateral.
“Foreign
Subsidiary” means any Subsidiary of Quanta Services, Inc.
that is not a Domestic Subsidiary.
“Guarantors” has
the meaning given in the definition of Lender Credit Documents.
“Identified
Equipment” means, whether owned or leased, any and all
(i) boom-mountable robotic arms and (ii) if one or more
Bonds is in effect for the benefit of H.L. Chapman Pipeline
Construction, Inc., such company’s following rock trenching
equipment: (a) Astec Model 3000SM surface miner (two units);
(b) Trencor Model 1860HD trencher (two units); and
(c) Trencor Model 1760HD trencher (two units).
“Indemnitors” means
Quanta Services, Inc., a Delaware corporation, and Principal. In
addition, any parent of Principal (exclusive of any Joint Venture)
and any other Person that owns an equity interest in Principal
(exclusive of any Joint Venture), their successors and assigns,
will be deemed to be an Indemnitor under this Agreement.
Thereafter, said parent of Principal (exclusive of any Joint
Venture) and any other Person that owns an equity interest in
Principal (exclusive of any Joint Venture), their successors and
assigns, will be deemed to be an Indemnitor hereunder as though
they were original signatories hereto. Notwithstanding the
foregoing or anything in this Agreement or any or any other Surety
Credit Document to the contrary, in no event will any parent,
shareholder, or other equity holder of any nature in Quanta
Services, Inc. be or be deemed to be an Indemnitor for any purpose
under this Agreement. The exclusion of any parent, shareholder, or
other equity holder of Quanta Services, Inc. as an Indemnitor for
the purposes of this Agreement will not limit the indemnity
obligations of any parent, shareholder, or other equity holder as
may be agreed by any such parent, shareholder, or other equity
holder in any agreement entered into by any such parent,
shareholder, or other
3
equity holder.
Notwithstanding the foregoing or anything in this Agreement or any
other Surety Credit Document (exclusive of any Surety Credit
Document executed by any Foreign Subsidiary or Joint Venture) to
the contrary, in no event will any Foreign Subsidiary or Joint
Venture be an Indemnitor. The exclusion of Foreign Subsidiaries and
Joint Ventures as Indemnitors for the purposes of this Agreement
will not limit the indemnity obligations of any Foreign Subsidiary
or any Joint Venture as may be agreed to by such Foreign Subsidiary
or such Joint Venture in any agreement entered into by such Foreign
Subsidiary or such Joint Venture.
“Inventory” means
and includes all of Indemnitors’ now owned and hereafter
acquired inventory, including, without limitation, goods,
merchandise, and other personal property furnished under any
contract of service, Bonded Contract, or intended for sale or
lease, all raw materials, work in process, finished goods and
materials, and supplies of any kind, nature, or description used or
consumed in Indemnitors’ business or are used in connection
with the manufacture, packaging, shipping, advertising, selling, or
finishing of such goods, merchandise, and other personal property,
all returned or repossessed goods now, or hereafter, in the
possession or under the control of Indemnitor or Surety, and all
documents of title or documents representing the same.
“Joint Venture”
means any Person in which (i) one or more other Persons of the
type described in clauses (i), (ii), (iii), or (iv) of the
definition of “Principal” has an equity or other
ownership or income participation interest equal to or greater than
twenty-five percent (25%) of the total such interest outstanding
and (ii) one or more other Persons which are not Affiliates of
the Persons described in clause (i) above have an equity or
other ownership or income participation interest.
“Lender Agent”
means Bank of America, N.A., a national banking association, as
administrative agent on behalf of the Lender Parties under the
Lender Credit Documents, or its successors or assigns under the
Lender Credit Documents.
“Lender Collateral”
means all present and future property of Borrower and Guarantors
(including the Indemnitors) under and as defined in the Lender
Credit Documents, real and personal, tangible and intangible, now
existing or after acquired, and all proceeds thereof, excluding
only those specific items delineated in the Lender Credit
Documents.
“Lender Credit
Documents” means and includes that certain Credit Agreement,
dated as of December 19, 2003, among Borrower, certain
Subsidiaries and Affiliates of Borrower as Guarantors, and the
Lender Parties, together with all other loan documents, agreements,
hedging agreements, bank product or treasury management agreements
and other instruments entered into or delivered in connection
therewith (including, without limitation, any and all security
agreements, pledge agreements, letters of credit, notes and other
collateral documents of any nature), as amended, modified,
supplemented and extended from time to time, and any renewals,
restatements or replacements of any of the foregoing.
“Lender Debt” means
and includes all indebtedness, liabilities, and obligations of
Borrower and the Guarantors to any Lender Parties under the Lender
Credit Documents whether now or hereafter created, incurred or
arising, and whether direct or indirect, absolute or
4
contingent, primary or
secondary, due or to become due, joint or several, now or at any
time or times hereafter owing to any Lender Party under any of the
Lender Credit Documents including obligations in respect of hedging
agreements and treasury management services provided by any of the
Lender Parties or any affiliate of any Lender Party.
“Lender Parties”
means Lender Agent, Lenders, and their successors and assigns.
“Lender Party” will mean any one of them.
“Lender Priority
Collateral” means all Lender Collateral other than Surety
Priority Collateral.
“Lenders” means the
lenders from time to time under the Lender Credit Documents.
“Licensed Property”
means all proprietary systems or software, or any other assets of a
similar nature which are employed by Principal in connection with
any and all contractual Work required by the Bonded Contracts
and/or the Bonds; any and all inventions, designs, patents, patent
applications, trademarks, trademark applications, trade names,
trade secrets, registrations, copyrights, licenses, franchises,
customer lists, and any associated goodwill that is required for
the completion of any Bonded Contract and/or the fulfillment of any
of Surety’s obligations under the Bonds.
“Lien” means any
mortgage, deed of trust, pledge, security interest, hypothecation,
assignment, deposit arrangement to assure payment of any debt,
encumbrance, lien (statutory or other), or preference, priority, or
other security agreement, or preferential arrangement to assure
payment of any debt, charge, or encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and
the filing of any financing statement under the UCC or comparable
law of any jurisdiction to evidence any of the foregoing). This
definition of “Lien” will include any grant of a
security interest in any Bonded Contract, Accounts, Bonded
Contracts Balances, and other items of Surety Priority Collateral
that may be governed or effected by the Contracts Dispute Act, 41
U.S.C. §601 et. seq. and/or any Federal Acquisition
Regulations.
“Obligee” means any
named party or parties appearing on the Bond(s) in whose favor the
Bond(s) are issued, or such parties’ successors and
assigns.
“Permitted Surety
Liens” has the meaning specified in Section 3(c).
“Person” means any
entity, whether an individual, trustee, corporation, partnership,
joint stock company, unincorporated organization, business
association or firm, joint venture, a government or any agent or
instrumentality or political subdivision thereof.
“Principal” means
(i) Quanta Services, Inc., a Delaware corporation,
(ii) those of its Domestic Subsidiaries listed on
Exhibit A , (iii) any other Domestic Subsidiaries
of Quanta Services, Inc. for whom Surety executes Bonds,
(iv) any new Principal added to the Underwriting Agreement by
rider as therein provided and (v) any Joint Ventures in which
one or
5
more of them are involved
(A) that is listed on Exhibit A , (B) for
which a Bond is outstanding or (C) for which a Bond is
requested by Indemnitors, in each case in their respective capacity
as a named principal under any Bond, but in all events excluding
any Foreign Subsidiaries; provided, however, that notwithstanding
anything herein to the contrary, Island Mechanical, Hawaii, a
Hawaii general partnership (“Island Mechanical,
Hawaii”), shall not be or be deemed to be a Principal.
“Records” means
correspondence, memoranda, tapes, books, discs, papers, magnetic
storage, and other documents or information of any type, whether
expressed in ordinary or machine language, any and all accounts,
computer software, other computer stored information, all progress
schedules, work in process schedules (including, but not limited
to, estimates of completion costs), accounts receivable ledgers,
accounts payable ledgers, and estimates of completion costs.
“Reserve” means a
sum of money that may be set aside by Surety to pay present and
future liabilities under Bonds as required by statute.
“Retainage” means
contract proceeds periodically withheld by an Obligee to provide
further security for Principal’s or Island Mechanical,
Hawaii’s performance of a Bonded Contract, and as such are
payable to Principal only upon a clear demonstration of compliance
with terms of the Bonded Contract.
“Subsidiaries”
means, with respect to any Person, any corporations, partnerships,
or other entities wherein such Person owns or acquires, directly or
indirectly, more than fifty percent (50%) of the issued and
outstanding voting stock, securities, or other equity interest of
such corporation, partnership, or other entity, or any other
corporation, partnership, or other entity the management of which
is otherwise controlled, directly or indirectly, through one or
more intermediaries, or both, by any Person.
“Surety” means
Federal Insurance Company, an Indiana corporation, its Affiliates
and Subsidiaries, and any other companies writing Bonds for which
the Underwriting Agreement is consideration (and other companies
from whom Surety procures Bonds for Principal), and their
co-sureties and reinsurors bound pursuant to Section 25, and
their respective successors and permitted assigns.
“Surety Credit
Documents” means: (i) this Agreement; (ii) each
Bond; (iii) the Underwriting Agreement; (iv) UCC
Financing Statements listing any of Indemnitors as debtor and
Surety as secured party; (v) any collateral agreement to be
entered into by Surety and any collateral agent named therein in
accordance with the Underwriting Agreement; (vi) any indemnity
agreement or other agreement executed by any Foreign Subsidiary
with respect to any Bond and/or for the benefit of Surety;
(vii) any confidentiality agreement entered into between
Surety or any Affiliate of Surety and an Indemnitor;
(viii) the Indemnity Agreement (as defined in the Underwriting
Agreement); and (ix) all amendments, modifications,
extensions, additions, substitutions, or other documents hereafter
executed or delivered by any of Indemnitors or any Foreign
Subsidiary, which relate to any of the foregoing documents.
6
“Surety Loss”
means, without duplication:
(a) all
damages, costs, reasonable attorney fees, and liabilities
(including all reasonable expenses incurred in connection
therewith) which Surety actually incurs by reason of executing or
procuring the execution of any surety agreements, undertakings, or
instrument of guarantee signed by Surety on behalf of (i) any
Principal or Island Mechanical, Hawaii and (ii) if requested
by any Indemnitor, any Affiliates and Subsidiaries of Quanta
Services, Inc., and/or Bonds, which may be already or hereafter
executed on behalf of any Principal and/or any Foreign Subsidiary,
or renewal or continuation thereof; or which Surety actually incurs
by reason of making any investigation on account thereof,
prosecuting or defending any action in connection therewith,
obtaining a release, recovering, or attempting to recover any
salvage in connection therewith or enforcing by litigation or
otherwise any of the provisions of this Agreement, including, but
not limited to:
(1) money
judgments, amounts paid in settlement or compromise, the full
amount of reasonable attorney and other professional fees incurred
or paid by Surety, including without limitation allocated costs (to
the extent reasonably documented) of in-house counsel, accountants,
and engineers, court costs and fees, and interest at the Default
Rate on all sums due it from the date of Surety’s demand for
said sums, (to the extent then due), if interest has been awarded
by a court;
(2) any
loss which Surety actually incurs as a result of any Bonded
Contract or any Bonds, whether that loss results from any activity
of any Principal, Island Mechanical, Hawaii and/or any Foreign
Subsidiary individually or as part of a joint venture, partnership,
or other entity which has been or may be formed in which Principal
or any Foreign Subsidiary is involved;
(3) any
loss which Surety actually incurs as a result of any actions taken
by Surety upon information provided by any Indemnitor, Island
Mechanical, Hawaii and/or any Foreign Subsidiary with respect to
the issuance of any Bonds;
(4) any
Bond premiums due from Principal, Island Mechanical, Hawaii and/or
any Foreign Subsidiary to Surety;
(5) any
amounts that have been paid to Surety to be applied to Surety Loss
that a court of competent jurisdiction determines constitute
“preferences,” within the meaning of Section 547
of the Bankruptcy Code, and by reason thereof Surety is required to
disgorge said amounts paid; and
(b) reasonable legal,
accounting, consulting, and related fees and expenses incurred
after January 15, 2005, in connection with the Bonds, the
Surety Credit Documents, and/or any application or submission by
any of Indemnitors and/or any Foreign Subsidiary for the issuance
of any Bond or renewal of any existing Bond, whether or not Surety
decides to issue said Bond. Notwithstanding the foregoing,
Indemnitors will be required to reimburse Surety for one hundred
percent (100%) of any filing fees and recording taxes incurred by
Surety to perfect and continue Surety’s security interest in
the Surety Priority Collateral regardless of when those fees are
incurred.
7
“Surety Priority
Collateral” means (i) all amounts that may be owing from
time to time by Surety to any Indemnitor in any capacity,
including, but without limitation, any balance or share belonging
to any Indemnitor of any deposit or other account with Surety (this
Lien and security interest will be independent of any right of
setoff which Surety may have); (ii) all rights of any
Principal to any distribution, right to distribution, or other
similar interest in connection with or on account of any Bond
signed by Surety on behalf of any Joint Venture; (iii) all of
any Indemnitor’s right, title, and interest in and to all
Bonded Contracts; (iv) Accounts; (v) all rights of any
Principal that is a Joint Venture to any distributions from any
Person that is a party to or has an interest in any Bonded Contract
with respect to such Bonded Contract (whether such Principal is the
named Principal in such Bonded Contract); (vi) all claims,
rights, and choses in action against any Obligee on any Bond or
against any other Person in either case on account of any Bond or
Bonded Contract; (vii) Bonded Contract Balances;
(viii) to the extent assignable (provided, that, any such
prohibition on assignment would not be rendered ineffective
pursuant to Article 9 of the UCC, including, without
limitation Section 9-406 and 9-408 of the UCC, or any
successor provisions and further provided, that, any such
prohibition on assignment has not otherwise been rendered
ineffective, lapsed, or terminated), all rights and actions that
any Indemnitor may have or acquire in any subcontract, purchase
order, or other agreement in connection with any Bonded Contract,
and against any subcontract, purchase order, or other agreement
with any Person furnishing or agreeing to furnish or supply
vehicles, labor, supplies, machinery, or other equipment in
connection with or on account of any Bonded Contract, and against
any surety or sureties of any such subcontractor, laborer, or other
Person in connection with such Bonded Contract; (ix) any and
all Equipment (exclusive of any Equipment owned by any Joint
Venture) which is specifically purchased for or prefabricated for
the Work that is the subject of any Bonded Contract and/or
delivered to the site of such Work to be incorporated into the Work
that is the subject of any Bonded Contract and/or that is required
pursuant to the terms of any Bonded Contract to be transferred to
any Obligee on any Bond (or any assignees of any such Obligee or
any other owner, or assignee of any owner, of the Work that is the
subject of the Bonded Contract) upon completion or termination of
the Work; (x) any and all Inventory which is specifically
purchased for or prefabricated for the Work that is the subject of
any Bonded Contract and/or delivered to the site of such Work to be
incorporated into the Work that is the subject of any Bonded
Contract and/or that is required pursuant to the terms of any
Bonded Contract to be transferred to any Obligee on any Bond or any
assignees of any such Obligee or any other owner, or assignee of
any owner, of the Work that is the subject of the Bonded Contract)
upon completion or termination of the Work that is the subject of
the Bonded Contract; (xi) any and all plans, specifications,
shop and as-built drawings utilized in or necessary to fully
perform all obligations and services required under the Bonded
Contracts; and (xii) any and all proceeds and products arising
with respect thereto. References to “Surety Priority
Collateral” includes the Bonded Contracts and any other of
the above-described assets that may be subject to the Contract
Disputes Act, 41 U.S.C. §§601, et . seq .
The Surety Priority Collateral does not and is not intended to
include any Licensed Property.
“UCC” means the
Uniform Commercial Code as in effect on the date hereof in New
York, as it may be amended from time-to-time provided that if by
reason of mandatory
8
provisions of law, the
perfection or the effect of perfection or non-perfection of a
security interest in any Surety Priority Collateral or Lender
Collateral is governed by any state other than New York,
“UCC” means the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or
non-perfection.
“Underwriting
Agreement” means that certain Underwriting, Continuing
Indemnity and Security Agreement of even date executed by and
between Principal and Surety.
“Work” means the
specialized contracting services, including but not limited to
design, construction, maintenance, installation and repair of
network infrastructures for electric power, telecommunications,
broadband cable and gas pipelines systems, as the case may be,
required of any Principal, Island Mechanical, Hawaii, or Indemnitor
by any Bonded Contract, whether completed or partially completed,
and includes all other labor, materials, equipment, and services
provided or to be provided by any Indemnitor, Island Mechanical,
Hawaii, or Principal to fulfill such Principal’s, Island
Mechanical, Hawaii’s, or Indemnitor’s obligations
pursuant to such Bonded Contract.
2. Security Interests
of Lender Parties and Surety . As security for the full
repayment of all Lender Debt, each of Borrower and the Guarantors
has assigned and granted to Lender Agent for the benefit of the
Lender Parties a security interest in and to the Lender Collateral.
As security for the full and timely payment of Surety Loss,
Indemnitors have assigned and granted to Surety a security interest
in and to the Surety Priority Collateral. Lender Agent on behalf of
Lender Parties hereby consents to the granting of a security
interest by Indemnitors to Surety in the Surety Priority
Collateral. As additional security for any and all Surety Loss,
Indemnitors have caused to be delivered to Surety and named Surety
as the beneficiary of that certain Letter of Credit
No. 3064365 dated July 14, 2004, issued by Lender Agent
in the face amount of Ten Million Dollars ($10,000,000). Surety
agrees that it has not obtained or perfected (and will not obtain
or perfect) a security interest in any of the Lender Priority
Collateral without the consent of Lender Agent, except to the
extent expressly permitted by Section 3(c) of this Agreement.
3. Priority of
Liens . Notwithstanding anything to the contrary arising from
any note, agreement, instrument, or document now or hereafter
executed and delivered by Surety, any Lender, any Lender Party, any
Indemnitors or any Foreign Subsidiary in connection with any Surety
Loss or Lender Debt, including without limitation, the terms and
conditions of the Lender Credit Documents, the Surety Credit
Documents, or any promissory note, security agreement, guaranty
agreement, or mortgage executed and delivered by Indemnitors, or
any instrument or document executed and delivered in connection
therewith, or otherwise, any prior perfection of a Lien, or the
prov
|
