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%).
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“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
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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
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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
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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.
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“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.
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“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
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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
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