PAMECO CORPORATION
SECURITIES PURCHASE AGREEMENT
Dated as of February 18, 2000
$20,000,000 Senior Subordinated Notes due March 31, 2005
TABLE OF CONTENTS PAGE
1. PURCHASE AND SALE OF SECURITIES................................................................. 1
1.1. Issue of Securities by the Company....................................................... 1
1.2. The Closing.............................................................................. 2
1.3. Original Issue Discount.................................................................. 3
2. WARRANTIES AND REPRESENTATIONS OF THE COMPANY................................................... 3
2.1. Organization and Qualification........................................................... 3
2.2. Power and Authority...................................................................... 3
2.3. Legal Sale; Legally Enforceable Agreement................................................ 3
2.4. Capital Structure........................................................................ 4
2.5. Corporate Names.......................................................................... 4
2.6. Business Locations; Agent for Process.................................................... 4
2.7. Title to Properties; Priority of Liens................................................... 4
2.8. Financial Statements; Debt; Projections; Fiscal Year..................................... 5
2.9. Full Disclosure.......................................................................... 6
2.10. Solvent Financial Condition.............................................................. 6
2.11. Surety Obligations....................................................................... 6
2.12. Taxes.................................................................................... 6
2.13. Brokers.................................................................................. 6
2.14. Intellectual Property.................................................................... 6
2.15. Governmental Approvals................................................................... 6
2.16. Compliance with Laws..................................................................... 7
2.17. Restrictions............................................................................. 7
2.18. Restrictions. Litigation................................................................. 7
2.19. No Defaults.............................................................................. 7
2.20. Leases................................................................................... 7
2.21. Pension Plans............................................................................ 8
2.22. Trade Relations.......................................................................... 8
2.23. Labor Relations.......................................................................... 8
2.24. Not a Regulated Entity................................................................... 8
2.25. Margin Stock............................................................................. 8
2.26. Private Offering of Notes and Warrants................................................... 8
2.27. Senior Credit Documents.................................................................. 9
2.28. Capitalization........................................................................... 9
2.29. Governmental Consent to Sale of Notes and Warrants....................................... 9
3. WARRANTIES AND REPRESENTATIONS OF THE PURCHASER................................................. 10
3.1. Purchase for Investment.................................................................. 10
4. CLOSING CONDITIONS.............................................................................. 10
4.1. Opinions of Counsel...................................................................... 10
4.2. Warranties and Representations True; Compliance with
Agreement and Financing Documents...................................................... 10
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4.3. Officers Certificates.................................................................... 11
4.4. Good Standing Certificates............................................................... 11
4.5. Warrant Agreement, Equity Investment, etc................................................ 11
4.6. Senior Credit Agreement.................................................................. 11
4.7. Subsidiary Guaranty...................................................................... 12
4.8. Evidence of Perfection and Priority of Liens............................................. 12
4.9. Solvency Certificates.................................................................... 12
4.10. No Labor Disputes........................................................................ 12
4.11. Compliance with Laws and Other Agreements................................................ 12
4.12. No Material Adverse Change............................................................... 12
4.13. No Defaults.............................................................................. 13
4.14. Fees and Expenses........................................................................ 13
4.15. SEC Filing............................................................................... 13
4.16. Supply Agreements........................................................................ 13
4.17. Other Purchasers......................................................................... 13
4.18. Proceedings Satisfactory................................................................. 13
5. INTERPRETATION OF THIS AGREEMENT................................................................ 13
5.1. Certain Terms Defined..................................................................... 13
5.2. Certain Terms Defined Elsewhere........................................................... 15
5.3. Directly or Indirectly.................................................................... 16
5.4. Section Headings and Table of Contents and Construction................................... 16
5.5. Governing Law............................................................................. 17
6. MISCELLANEOUS................................................................................... 17
6.1. Communications............................................................................ 17
6.2. Survival.................................................................................. 17
6.3. Successors and Assigns.................................................................... 18
6.4. Amendment and Waiver...................................................................... 18
6.5. Certain Expenses.......................................................................... 18
6.6. Waiver of Jury Trial; Consent to Jurisdiction; Etc........................................ 18
6.7. Entire Agreement.......................................................................... 19
6.8. Execution in Counterpart.................................................................. 19
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Annex 1 -- Information as to Purchaser
Annex 3 -- Information as to Company
Exhibit 1.1(a) -- Form of Note Agreement
Exhibit 4.3(a) -- Form of Officer's Certificate - Company
Exhibit 4.3(b) -- Form of Secretary's Certificate - Company
Exhibit 4.3(c) -- Form of Secretary's Certificate - Subsidiary Guarantor
Exhibit 4.7 -- Form of Subsidiary Guaranty
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PAMECO CORPORATION
Securities Purchase Agreement
$20,000,000 Senior Subordinated Notes due March 31, 2005
Dated as of February 18, 2000
Separately executed by each of the
Purchasers Listed on Annex 1 hereto
Ladies and Gentlemen:
PAMECO CORPORATION (together with any successors and assigns who become
such in accordance herewith, the "Company"), a Georgia corporation, hereby
agrees with you as set forth below.
1. PURCHASE AND SALE OF SECURITIES
1.1. Issue of Securities by the Company
(a) Issue of Notes. The Company will authorize the issue of
$20,000,000 in aggregate principal amount of its Senior Subordinated Notes
due March 31, 2005 (all such notes, whether initially issued, or issued in
exchange or substitution for, any such note, in each case in accordance
with the Note Agreement, collectively, the "Notes," whether such Notes
shall be PIK Notes (defined below) or Warrant Notes (defined below)). The
Notes shall be issued pursuant to a Note Agreement (as may be amended,
restated or otherwise modified from time to time, the "Note Agreement") in
the form of Exhibit 1.1(a). The Note Agreement shall specify whether each
purchaser of Notes at the Closing shall be purchasing notes in the form of
(i) Attachment A1 thereto (the "PIK Notes"), which shall provide for the
accrual of interest with respect to the principal thereof on a quarterly
basis, payable in arrears, at a rate of 12% per annum, as further set forth
therein, with a portion of such interest to be capitalized from time to
time on a quarterly basis, all as further set forth therein and in the Note
Agreement, or (ii) Attachment A2 thereto (the "Warrant Notes"), which shall
provide for the accrual of interest with respect to the principal thereof
on a quarterly basis, payable in arrears, at a rate of 12% per annum, as
further set forth therein, with a portion of such interest to be paid in
the form of Warrants (defined below), all as further set forth therein, in
the Note Agreement and in the Warrant Agreement.
(b) Authorization of Warrants. The Company will authorize the
issuance of up to an aggregate of the Warrant Authorization Amount of
warrants (the "Warrants") to purchase shares of Common Stock. The
certificates representing the Warrants (the "Warrant Certificates") shall
be in
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the form of Attachment A to the Warrant Agreement and the Warrants
shall have the terms provided in the Warrant Certificates. The Warrants
shall be issued to the holder of the Warrant Notes from time to time, all
as set forth herein, in the Note Agreement, in the Warrant Notes and in the
Warrant Agreement.
1.2. The Closing.
(a) Purchase and Sale of Purchased Securities. The Company hereby
agrees to sell to you and you hereby agree to purchase from the Company,
subject to Section 1.2(d), in accordance with the provisions hereof, the
aggregate principal amount of PIK Notes or Warrant Notes set forth below
your name on Annex 1, at an aggregate purchase price for such Notes and
Warrants equal to one hundred percent (100%) of the principal amount of
Notes to be purchased.
(b) The Closing. The closing (the "Closing") of the sale of the
Purchased Securities will be held at 10:00 a.m., local time, on February
28, 2000 or such other time and date as the Other Purchasers, the Company
and you shall agree (the "Closing Date"). At the Closing, the Company will
deliver to you one or more PIK Notes or Warrant Notes as set forth below
your name on Annex 1, in the denominations indicated on Annex 1, in the
aggregate principal amount of your purchase, dated the Closing Date and
registered in the name of the holder indicated on Annex 1, against payment
by federal funds wire transfer in immediately available funds of the
purchase price therefor, as directed by the Company in writing not later
than three (3) Business Days prior to the Closing Date, which shall be an
account at a bank located in the United States of America.
(c) Other Purchasers. Contemporaneously with the execution and
delivery hereof, the Company is entering into a separate Securities
Purchase Agreement identical (except for the name and signature of the
purchaser) to this Agreement (this Agreement and such other separate
Securities Purchase Agreements, each as from time to time amended or
modified, being herein sometimes referred to as the "Securities Purchase
Agreements") with each other purchaser (individually, an "Other Purchaser,"
and collectively, the "Other Purchasers") listed on Annex 1, providing for
the sale to each Other Purchaser of the Purchased Securities set forth
below its name on such Annex. The sales of the Purchased Securities to you
and to each Other Purchaser are separate sales.
(d) Election to Purchase Warrant Notes or PIK Notes. At any time
prior to the Closing Date, any Purchaser may, at its option, elect to
purchase,
(i) in lieu of any PIK Notes allocated to such holder on
Annex 1, a like principal amount of Warrant Notes or;
(ii) in lieu of any Warrant Notes allocated to such holder
on Annex 1, a like principal amount of PIK Notes;
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such election, in either case, to be made in writing delivered to the
Company pursuant to Section 6.1. Effective immediately upon the making of
any such election, Annex 1 shall be deemed to be amended to reflect such
election.
1.3. Original Issue Discount.
You and the Company agree that the amount of original issue discount
attributable, as a result of the delivery of the Warrants from time to time with
respect to the Warrant Notes in accordance with the terms and conditions of this
Agreement and the other Financing Documents is equal to Zero Dollars ($0).
2. WARRANTIES AND REPRESENTATIONS OF THE COMPANY
To induce you to enter into this Agreement and to purchase and pay for the
Purchased Securities to be delivered to you at the Closing, the Company warrants
and represents, as of the Closing Date, as follows:
2.1. Organization and Qualification. Each of the Company and its
Subsidiaries is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization. Each of the Company and
its Subsidiaries is duly qualified and is authorized to do business and is in
good standing as a foreign corporation in each state or jurisdiction listed on
Part 2.1 of Annex 3 hereto and in all other states and jurisdictions in which
the failure of the Company or any of such Subsidiaries to be so qualified would
have a Material Adverse Effect.
2.2. Power and Authority. Each of the Company and its Subsidiaries is duly
authorized and empowered to enter into, execute, deliver and perform this
Agreement, each Supply Agreement and each of the other Financing Documents to
which it is a party. The execution, delivery and performance of this Agreement,
each Supply Agreement and each of the other Financing Documents have been duly
authorized by all necessary action and do not and will not (i) require any
consent or approval of any of the holders of the Equity Interests of the Company
or any Subsidiary; (ii) contravene the Company's or any Subsidiary's
Organization Documents; (iii) violate, or cause the Company or any Subsidiary to
be in default under, any provision of any Applicable Law, order, writ, judgment,
injunction, decree, determination or award in effect having applicability to the
Company or any Subsidiary; (iv) result in a breach of or constitute a default
under any Material Contract; or (v) result in, or require, the creation or
imposition of any Lien (other than Permitted Liens) upon or with respect to any
of the Properties now owned or hereafter acquired by the Company or any
Subsidiary.
2.3. Legal Sale; Legally Enforceable Agreement. This Agreement is, each
Supply Agreement is, and each of the other Financing Documents when delivered
under this Agreement will be, a legal, valid and binding obligation of each of
the Company and its Subsidiaries signatories thereto enforceable against them in
accordance with the respective terms of such Financing Documents and Supply
Agreements, respectively, except as the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors' rights.
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2.4. Capital Structure. As of the date hereof, Part 2.4 of Annex 3 states
(i) the correct name of each Subsidiary, its jurisdiction of incorporation and
the percentage of its Equity Interests having voting powers owned by each
Person, (ii) the name of each of the Company's corporate Affiliates (excluding
Persons other than the Company and its Subsidiaries that are controlled by
Littlejohn or Quilvest American Equity, Ltd.) and the nature of the affiliation
and (iii) the number of authorized and issued Equity Interests (and treasury
shares) of the Company that are owned by Affiliates, directors or employees of
the Company and the number of authorized and issued Equity Interests (including
treasury shares) of each Subsidiary. The Company has good title to all of the
shares it purports to own of the Equity Interests of each of its Subsidiaries,
free and clear in each case of any Lien other than Permitted Liens. All such
Equity Interests have been duly issued and are fully paid and non-assessable.
Except as disclosed on Part 2.4 of Annex 3, since the date of the financial
statements of the Company referred to in Section 2.8 hereof, the Company has not
made, or obligated itself to make, any Distribution except those permitted
pursuant to Section 4.6 of the Note Agreement. Except at set forth on Part 2.4
of Annex 3, there are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell, or
any Equity Interests or obligations convertible into, or any powers of attorney
relating to, shares of the capital stock of the Company or any of its
Subsidiaries. Except as set forth on Part 2.4 of Annex 3, there are no
outstanding agreements or instruments binding upon the holders of any the
Company's Equity Interests relating to the ownership of its Equity Interests.
2.5. Corporate Names. During the 5-year period preceding the date of this
Agreement, neither the Company nor any Subsidiary has been known as or used any
corporate, fictitious or trade names except those listed on Part 2.5 of Annex 3
hereto. Except as set forth on Part 2.5 of Annex 3, neither the Company nor any
Subsidiary has been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person.
2.6. Business Locations; Agent for Process. As of the date hereof, the
chief executive office and other places of business of the Company and each
Subsidiary are as listed on Part 2.6 of Annex 3 hereto. Since July 1997, neither
the Company nor any Subsidiary has had an office, place of business or agent for
service of process other than as listed on Part 2.6 of Annex 3. Except as shown
on Part 2.6 of Annex 3, on the date hereof, no Inventory of the Company or any
Subsidiary is stored with a bailee, warehouseman or similar Person, nor is any
Inventory consigned to any Person. As of the date hereof, the Persons listed on
Part 2.6 of Annex 3 have consigned inventory to the Company in the amounts
referenced therein and at Agent's request, the Company shall certify to the
Agent from time to time on the next Compliance Certificate that is to be
delivered to the Agent by the Company under this Agreement after any such
request, the amount, type and name of the owner of any consigned inventory.
2.7. Title to Properties; Priority of Liens. The Company and each
Subsidiary has good and marketable title to and fee simple ownership of, or
valid and subsisting leasehold interests in, all of its real Property, and good
title to all of its personal Property, including all Property reflected in the
financial statements referred to in Section 2.8, in each case free and clear of
all Liens except Permitted Liens. The Company has paid or discharged, and has
caused each Subsidiary to pay and
4
discharge, all lawful claims which, if unpaid, might become a Lien against any
Properties of the Company or such Subsidiary that is not a Permitted Lien. The
Liens granted to Agent pursuant to this Agreement and the other Financing
Documents are Liens with priority only subject to those granted in favor of the
holders of Senior Debt and subject only to those other Permitted Liens which are
expressly permitted by the terms of the Note Agreement to have priority over the
Liens of Agent.
2.8. Financial Statements; Debt; Projections; Fiscal Year.
(a) Financial Statements. The Company has provided you with the
Consolidated financial statements of the Company and the Subsidiaries
described on Part 2.8(a) of Annex 3. Such Consolidated financial statements
have been prepared in accordance with GAAP, and present fairly the
financial positions of the Company and such Persons at such dates specified
therein and the results of the Company's operations for such periods
specified therein. Since September 30, 1999, there has been no material
change in the condition, financial or otherwise, of the Company and such
other Persons as shown on the Consolidated balance sheet as of such date
and no material change in the aggregate value of Equipment and real
Property owned by the Company or such other Persons, except as set forth in
Part 2.8(a) of Annex 3, none of which transactions or changes, individually
or in the aggregate has been materially adverse.
(b) Debt. Part 2.8(b) of Annex 3 lists all Debt for Money Borrowed
of the Obligors as of the Closing Date, after giving effect to the
transactions contemplated by the Financing Documents and the Senior Credit
Agreement, and provides the following information with respect to each item
of such Debt: the obligor, each guarantor thereof and each other Person
similarly liable in respect thereof, the holder thereof, the outstanding
amount, the current portion of the outstanding amount, the final maturity,
required sinking fund payments, and a description of the collateral
securing such Debt.
(c) Projections. The Company has delivered to you projected
financial statements of the Obligors described on Part 2.8(c) of Annex 3
(collectively, the "Projections"). The assumptions used in preparation of
the Projections were reasonable when made and continue to be reasonable.
Such Projections have been prepared by the executive and financial
personnel of the Company in light of the business of the Company. Such
Projections have been prepared in good faith, have a reasonable basis and
represent the good faith opinion of the Company as to the projected results
of the operations of the Obligors. No material facts have occurred since
the preparation of the Projections that would cause the Projections, taken
as a whole, not to be reasonably attainable, and the Obligors do not have,
on the Closing Date, any material obligations (whether accrued, matured,
absolute, actual, contingent or otherwise) that are not reflected in the
Projections.
(d) Fiscal Year. The fiscal year of the Company ends on the last day
of February in each year.
5
2.9. Full Disclosure. The financial statements referred to in Section 2.8
hereof do not contain any untrue statement of a material fact and neither this
Agreement nor any other written statement contains or omits any material fact
necessary to make the statements contained herein or therein not materially
misleading. There is no fact or circumstances in existence on the date hereof
which the Company has failed to disclose to Agent in writing that may reasonably
be expected to have a Material Adverse Effect.
2.10. Solvent Financial Condition. Each of the Company and its
Subsidiaries, after giving effect to the issuance of the Notes and the
consummation of the other transactions described in the Financing Documents is
Solvent.
2.11. Surety Obligations. Except as set forth on Part 2.11 of Annex 3
hereto, on the date hereof, neither the Company nor any of its Subsidiaries is
obligated as surety or indemnitor under any surety or similar bond or other
contract issued or entered into any agreement to assure payment, performance or
completion of performance of any undertaking or obligation of any Person.
2.12 Taxes. The FEIN of each of the Company and the Subsidiaries is as
shown on Part 2.12 of Annex 3 hereto. The Company and each Subsidiary has filed
all federal, state and local tax returns and other reports it is required by law
to file and has paid, or made provision for the payment of, all Taxes upon it,
its income and Properties as and when such Taxes are due and payable, except to
the extent being Properly Contested. The provision for Taxes on the books of the
Company and each Subsidiary are adequate for all years not closed by applicable
statutes, and for its current Fiscal Year.
2.13. Brokers. There are no claims against the Company for brokerage
commissions, finder's fees or investment banking fees in connection with the
transactions contemplated by this Agreement or any of the other Financing
Documents.
2.14. Intellectual Property. The Company and its Subsidiaries each owns or
has the lawful right to use all Intellectual Property necessary for the present
and planned future conduct of its business without any conflict with the rights
of others; there is no objection to, or pending (or, to the Company's knowledge,
threatened) Intellectual Property Claim with respect to, the Company's or any
Subsidiary's right to use any such Intellectual Property which could reasonably
be expected to have a Material Adverse Effect, and the Company is not aware of
any grounds for challenge or objection thereto; and, except as may be disclosed
on Part 2.14 of Annex 3, neither the Company nor any Subsidiary pays any royalty
or other compensation to any Person for the right to use any Intellectual
Property. All such patents, trademarks, service marks, tradenames, copyrights,
licenses and other similar rights are listed on Part 2.14 of Annex 3, to the
extent they are registered under any Applicable Law or are otherwise material to
the Company's or any Subsidiary's business.
2.15. Governmental Approvals. Each of the Company and its Subsidiaries
has, and is in good standing with respect to, Governmental Approval necessary to
continue to conduct its business as heretofore or proposed to be conducted by it
and to own or lease and operate its Properties as now owned or leased by it if
the failure to
6
obtain such Governmental Approval could reasonably be expected to have a
Material Adverse Effect.
2.16. Compliance with Laws. Each of the Company and its Subsidiaries has
duly complied with, and its Properties, business operations and leaseholds are
in compliance in all material respects with, the provisions of all Applicable
Law (except to the extent that any such noncompliance with Applicable Law could
not reasonably be expected to have a Material Adverse Effect) and there have
been no citations, notices or orders of noncompliance issued to the Company or
any of the Subsidiaries under any such law, rule or regulation. No Inventory has
been produced in violation of the Fair Labor Standards Act (29 U.S.C. (S) 201 et
seq.).
2.17. Restrictions. Neither the Company nor any of the Subsidiaries is a
party or subject to any contract, agreement, or charter or other corporate
restriction, which has or could be reasonably expected to have a Material
Adverse Effect. Neither the Company nor any of the Subsidiaries is a party or
subject to any Restrictive Agreements (including, without limitation, any
agreement or contract that restricts its right or ability to issue capital stock
or rights with respect thereto), except as set forth on Part 2.17 of Annex 3,
none of which prohibit the execution or delivery of any of the Financing
Documents by any Obligor or the performance by any Obligor of its obligations
under any of the Financing Documents to which it is a party, in accordance with
the terms of such Financing Documents.
2.18. Restrictions. Litigation. Except as set forth on Part 2.18 of Annex
3, there are no actions, suits, proceedings or investigations pending or, to the
knowledge of the Company, threatened on the date hereof against or affecting the
Company or any of the Subsidiaries, or the business, operations, Properties,
prospects, profits or condition of the Company or any of the Subsidiaries, (i)
which relate to any of the Financing Documents or any of the transactions
contemplated thereby or (ii) which, if determined adversely to the Company or
any Subsidiary, would reasonably be expected to have a Material Adverse Effect.
To the knowledge of the Company, neither the Company nor any of its Subsidiaries
is in default on the date hereof with respect to any order, writ, injunction,
judgment, decree or rule of any court, Governmental Authority or arbitration
board or tribunal.
2.19. No Defaults. No event has occurred and no condition exists which
would, upon or after the execution and delivery of this Agreement or the
Company's performance hereunder, constitute a Default or an Event of Default.
Neither the Company nor any of the Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes or which with the passage of
time or the giving of notice or both would constitute a default, under any
Material Contract or in the payment of any Debt in excess of $50,000
individually or $200,000 in the aggregate of the Company or a Subsidiary to any
Person for Money Borrowed.
2.20. Leases. Part 2.20 of Annex 3 is a complete listing of all material
capitalized and operating leases of the Company and its Subsidiaries on the date
hereof requiring payment in any year in excess of $300,000. Each of the Company
and its Subsidiaries is in substantial compliance with all of the terms of each
of its respective capitalized and operating leases and there is no basis upon
which the
7
lessors under any such leases could terminate same or declare the Company or
any of its Subsidiaries in default thereunder.
2.21. Pension Plans. Except as disclosed on Part 2.21 of Annex 3, neither
the Company nor any of the Subsidiaries has any Plan on the date hereof. The
Company and each of its Subsidiaries is in substantial compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that is reasonably likely to result in a
material adverse change in the financial condition of the Company or any of the
Subsidiaries exists in connection with any Plan. Except as disclosed on Part
2.21 of Annex 3, neither the Company nor any of its Subsidiaries has any
withdrawal liability in connection with a Multiemployer Plan.
2.22. Trade Relations. The Company has not received any written notice of
cancellation of the business relationship between the Company and any customer
or any group of customers whose purchases individually or in the aggregate are
material to the business of the Company, or with any material supplier or group
of suppliers.
2.23. Labor Relations. Except as described on Part 2.23 of Annex 3,
neither the Company nor any of the Subsidiaries is a party to any collective
bargaining agreement on the date hereof. On the date hereof, there are no
material grievances, disputes or controversies with any union or any other
organization of the Company's or any Subsidiary's employees, or, to the
Company's knowledge, any threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
2.24. Not a Regulated Entity. No Obligor is (i) an "investment company" or
a "person directly or indirectly controlled by or acting on behalf of an
investment company" within the meaning of the Investment Company Act of 1940;
(ii) a "holding company," or a "subsidiary company" of a "holding company," or
an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935;
or (iii) subject to regulation under the Federal Power Act, the Interstate
Commerce Act, any public utilities code or any other Applicable Law regarding
its authority to incur Debt.
2.25. Margin Stock. Neither the Company nor any of the Subsidiaries is
engaged, principally or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock. The
Company shall apply the proceeds from the sale of the Notes and Warrants as
specified on Part 2.25 of Annex 3.
2.26. Private Offering of Notes and Warrants.
(a) Number of Offerees. Neither the Company nor any Person acting on
behalf of the Company has offered any of the Notes or the Warrants or any
similar security of the Company for sale to, or solicited offers to buy any
thereof from, or otherwise approached or negotiated with respect thereto
with, any prospective purchaser, other than not more than ten "accredited
investors" (as defined in Regulation D under the Securities Act) (including
you).
8
(b) Conduct of Sale. Neither the Company nor any Person acting on
behalf of the Company as employee, agent, broker, dealer or otherwise in
connection with the transactions contemplated by the Note Agreements
(including, without limitation, the issuance of the Notes and Warrants) has
engaged in any conduct or entered into any agreements or understandings so
as to subject the transactions contemplated by the Financing Documents to
the registration provisions of section 5 of the Securities Act, the
provisions of the Trust Indenture Act of 1939, as amended, or to the
registration, qualification or other similar provisions of any securities
or "blue sky" law of any applicable state.
2.27. Senior Credit Documents.
The Company has provided to you true, correct and complete copies of the
Senior Credit Agreement and each of the other agreements and instruments
executed in connection therewith (collectively, the "Senior Credit Documents"),
and there is no agreement or understanding between or among the Company and the
other parties to the Senior Credit Documents except as set forth in the Senior
Credit Documents.
2.28. Capitalization.
(a) Pre-Emptive and Similar Rights. Except as specified on Part 2.28
of Annex 3, there are no preemptive rights, subscription rights, or other
contractual rights similar in nature to preemptive rights with respect to
any Capital Stock of the Company.
(b) Reservation of Common Stock. The Company has authorized, and has
reserved for issuance, a sufficient number of shares of Common Stock to
permit, after giving effect to the transactions contemplated by the
Financing Documents, the exercise of all of the Warrants and all other
options, warrants and rights exercisable or convertible into Common Stock.
Each share of Common Stock reserved for issuance upon exercise of the
Warrants, when issued, will be fully paid and nonassessable, free and clear
of any Lien and not subject to any preemptive rights.
(c) No Other Agreements. Other than the Warrant Agreement and the
Related Transaction Documents, there is no other agreement or understanding
between or among the holders of the Capital Stock of the Company or the
holders of rights to acquire such Capital Stock, regarding the Capital
Stock of the Company.
2.29. Governmental Consent to Sale of Notes and Warrants.
Neither the nature of the Company, or of any of its businesses or
Properties, nor any relationship between the Company and any other Person, nor
any circumstance in connection with the offer, issuance, sale or delivery of the
Notes or the Warrants, the execution and delivery of any Financing Document, the
performance of the obligations of the Company thereunder nor the transactions
contemplated thereby, is such as to require a consent, approval or authorization
of, or pre-filing, registration or qualification with, any Governmental
Authority on the part of the Company as a
9
condition thereto, except for such consents, approvals, authorizations, pre-
filings, registrations and qualifications described on Part 2.29 of Annex 3, all
of which have been obtained on or prior to the Closing Date.
3. WARRANTIES AND REPRESENTATIONS OF THE PURCHASER
3.1. Purchase for Investment.
You represent to the Company that you are a financially sophisticated
investor that is experienced in financial matters and you are purchasing the
Purchased Securities listed on Annex 1 below your name for your own account for
investment and with no present intention of, or view to, distributing such
Purchased Securities or any part thereof except in compliance with the
Securities Act, but without prejudice to your right at all times to:
(a) sell or otherwise dispose of all or any part of the Purchased
Securities under a registration statement filed under the Securities Act,
or in a transaction exempt from the registration requirements of such Act,
including a transaction pursuant to Rule 144A; and
(b) have control over the disposition of all of your assets to the
fullest extent required by any applicable law.
4. CLOSING CONDITIONS
Your obligations under this Agreement, including, without limitation, the
obligation to purchase and pay for the Notes at the Closing, are subject to the
following conditions precedent, and the failure by the Company to satisfy all
such conditions on or prior to March 15, 2000 shall relieve you, at your
election, of all such obligations; provided, however that the Company in all
cases shall remain liable in respect of its obligations under Section 6.5.
4.1. Opinions of Counsel.
You shall have received from
(a) Kilpatrick Stockton LLP, counsel for the Company; and
(b) Cadwalader Wickersham and Taft;
closing opinions, each dated as of the Closing Date, in form and substance
satisfactory to the Purchasers. This Section 4.1 shall constitute direction by
the Company to such counsel named in the immediately preceding subsection (a) to
deliver such closing opinion to you.
4.2. Warranties and Representations True; Compliance with Agreement and
Financing Documents.
(a) Warranties and Representations True. The warranties and
representations contained in Section 2 hereof shall be true on the Closing
Date with the same effect as though made on and as of that date.
10
(b) Compliance with this Agreement and Financing Documents. The
Company and each of the other Obligors shall have performed and complied
with all agreements and conditions contained herein and in the other
Financing Documents that are required to be performed or complied with by
the Company or such Obligor on or prior to the Closing Date, and such
performance and compliance shall remain in effect on the Closing Date.
4.3. Officers Certificates.
You shall have received:
(a) a certificate dated the Closing Date and signed on behalf of the
Company by a Senior Officer of the Company, substantially in the form of
Exhibit 4.3(a);
(b) a certificate dated the Closing Date and signed on behalf of the
Company by the Secretary or an Assistant Secretary of the Company,
substantially in the form of Exhibit 4.3(b); and
(c) a certificate dated the Closing Date and signed on behalf of each
Subsidiary Guarantor by the Secretary or an Assistant Secretary of such
Subsidiary Guarantor, substantially in the form of Exhibit 4.3(c).
4.4. Good Standing Certificates.
You shall have received good standing certificates for each Obligor, issued
by the Secretary of State or other appropriate official of such Obligor's
jurisdiction of organization and each jurisdiction where the conduct of such
Obligor's business activities or ownership of its Property necessitates
qualification.
4.5. Warrant Agreement, Equity Investment, etc.
(a) Warrant Agreement. The Company shall have executed and delivered
the Warrant Agreement to each Purchaser receiving Warrants Notes on the
Closing Date.
(b) Reservation of Shares. The shares of Common Stock issuable upon
exercise of each Warrant shall have been duly authorized and reserved for
issuance.
(c) Equity Investment. The Company shall have received not less than
$35,000,000 in the aggregate in cash pursuant to a sale of shares of
convertible preferred stock of the Company to Littlejohn and to Quilvest
American Equity, Ltd., and you shall have received evidence satisfactory to
you of such contribution.
4.6 Senior Credit Agreement.
(a) Senior Credit Agreement. The Company and the other parties
thereto shall have entered into the Senior Credit Agreement, which
agreement, and all documents and instruments executed and delivered in
connection therewith, shall be in form and substance satisfactory to you.
The Company
11
shall deliver to you a copy of a fully executed counterpart of the Senior
Credit Agreement and each other Senior Credit Document, certified as true
and correct by an officer of the Company. Pursuant to the Senior Credit
Agreement, the Company shall have received proceeds in an amount which is
sufficient, together with the proceeds of the Notes and the equity
investment referred to in Section 4.5(c), to repay the Debt and make the
other payments to be made at the Closing, from borrowings under the Senior
Credit Agreement.
(b) No Defaults; Satisfaction of Conditions Precedent. No event shall
have occurred and no condition shall exist that shall prohibit the Company
from borrowing under the Senior Credit Agreement and all conditions
precedent to closing specified in the Senior Credit Agreement shall have
been satisfied on or prior to the Closing Date and you shall have received
such evidence of the satisfaction of such conditions precedent as you shall
deem appropriate.
4.7. Subsidiary Guaranty.
Pameco Investments shall have executed and delivered to the Purchasers a
guaranty (as amended from time to time, the "Subsidiary Guaranty"),
substantially in the form of Exhibit 4.7, guarantying the obligations and
indebtedness of the Company under the Note Agreements, the Notes and the other
Financing Documents.
4.8. Evidence of Perfection and Priority of Liens.
You or the Agent on your behalf shall have received for filing any filing
or recordation necessary to perfect the Liens of Agent in the Collateral and
evidence in form satisfactory to the Purchasers that such Liens constitute valid
and perfected security interests and Liens, and that there are no other Liens
upon any Collateral except for Permitted Liens.
4.9. Solvency Certificates.
You shall have received certificates satisfactory to you from one or more
knowledgeable Senior Officers of the Company that, after giving effect to the
financing under this Agreement and the other Financing Documents, the Company is
Solvent.
4.10. No Labor Disputes.
You shall have received assurances satisfactory to you that there are no
threats of strikes or work stoppages by any employees, or organization of
employees, of any Obligor which you reasonably determine may have a Material
Adverse Effect.
4.11. Compliance with Laws and Other Agreements.
You shall have determined or received assurances satisfactory to you that
none of the Financing Documents or any of the transactions contemplated thereby
violate any Applicable Law, court order or agreement binding upon any Obligor.
4.12. No Material Adverse Change.
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No material adverse change in the financial condition of any Obligor or in
the quality, quantity or value of any Collateral shall have occurred since
November 30, 1999.
4.13. No Defaults.
No Default or Event of Default shall exist.
4.14. Fees and Expenses.
All fees and disbursements required to be paid pursuant to Section 6.5 and
pursuant to the separate commitment letters between the Purchasers and the
Company shall have been paid in full.
4.15. SEC Filing.
The Company shall have filed with the Securities and Exchange Commission
and mailed to its stockholders of record, at least 10 days prior to the closing
date, a Schedule 14f-1 relating to the appointment of representatives of
Littlejohn Fund II, L.P. to the board of directors of the Company.
4.16. Supply Agreements.
Each of the Purchasers shall have received a Supply Agreement (which shall
include an executed term sheet with respect to a supply agreement to be
formalized after the date of such term sheet) executed by the Company.
4.17. Other Purchasers.
None of the Other Purchasers shall have failed to execute and deliver a
Note Agreement or any other Financing Document to be executed and delivered by
it, or to accept delivery of or make payment for the Notes to be purchased by it
on the Closing Date.
4.18. Proceedings Satisfactory.
All proceedings taken in connection with the issuance and sale of the Notes
and all documents and papers relating thereto shall be satisfactory to you and
your special counsel. You and your special counsel shall have received copies
of such documents and papers as you or they may reasonably request in connection
therewith or in connection with your special counsel's closing opinion, all in
form and substance satisfactory to you and your special counsel.
5. INTERPRETATION OF THIS AGREEMENT
5.1. Certain Terms Defined.
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
13
Agreement, this - means this Securities Purchase Agreement, as it may be
amended, restated or otherwise modified from time to time.
Bankruptcy Code - title 11 of the United States Code, as amended and in
effect from time to time.
Capital Stock - means any class of preferred, common or other capital
stock, share capital or similar equity interest of a Person.
Closing - see Section 1.2(b).
Closing Date - see Section 1.2(b).
Common Stock - means the voting Class A Common Stock, par value $.01 per
share, of the Company.
Company - has the meaning specified in the introductory sentence hereof.
Margin Stock - shall have the meaning ascribed to it in Regulation U of the
Board of Governors of the Federal Reserve.
Note Agreement - see Section 1.1(a).
Notes - see Section 1.1(a).
Other Purchasers - see Section 1.2(c).
PIK Notes - see Section 1.2(a).
Projections - see Section 2.8(c).
Purchased Securities - means the Notes (including, without limitation, the
Warrants to be delivered from time to time in respect of the Warrant Notes) to
be purchased by the Purchasers pursuant to Section 1.2 of the Securities
Purchase Agreements.
Purchasers - means you and the Other Purchasers.
Related Transaction Documents -- means, collectively, the Securities
Purchase Agreement, of even date herewith, by and among the Company, Littlejohn
Fund II, L.P., and Quilvest America Equity, Ltd.; the Shareholders Agreement, of
even date herewith, by and among the Company, Littlejohn Fund II, L.P., Quilvest
America Equity, Ltd. and Willem F.P. deVogel; the several Voting Agreements by
and among the Company, Littlejohn Fund II, L.P. and the shareholders named
therein; and the Registration Rights Agreement, of even date herewith, by and
among the Company, Littlejohn Fund II, L.P., Quilvest America Equity, Ltd. and
International Comfort Products Corporation (USA).
Rule 144A - means Rule 144A promulgated under the Securities Act, 17 C.F.R.
(S)230.144A, as such rule may be amended from time to time.
14
Securities Act - means the Securities Act of 1933, as amended from time to
time.
Securities Purchase Agreement - see Section 1.2(c).
Security - means "security" as defined by section 2(1) of the Securities
Act.
Senior Credit Documents - see Section 2.27.
Solvent - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Debts (including contingent Debts), (ii) is able to pay all of its Debts as such
Debts mature, (iii) has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage,
and (iv) is not "insolvent" within the meaning of Section 101(32) of the
Bankruptcy Code.
Voting Stock - means capital stock (or other equity interests) of any class
or classes of a corporation, an association or another business entity the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote in the election of corporate directors (or Persons performing similar
functions).
Warrant Agreement - see Section 1.1(b).
Warrant Authorization Amount - means an amount equal to the product of (a)
666,934 multiplied by (b) a fraction, the numerator of which is the principal
amount of Warrant Notes issued at the Closing and the denominator of which is
20,000,000.
Warrant Certificates - see Section 1.1(b).
Warrant Notes - see Section 1.2(a).
Warrants - see Section 1.1(b).
5.2. Certain Terms Defined Elsewhere.
As used herein, the following terms have the respective meanings set forth
in the Note Agreement:
Affiliate
Applicable Law
Business Day
Collateral
Consolidated
Debt
Default
Distribution
Equity Interests
ERISA
Event of Default
FEIN
Financing Documents
15
Fiscal Year
Governmental Approvals
Governmental Authority
GAAP
Intellectual Property
Intellectual Property Claim
Inventory
Lien
Littlejohn
Material Adverse Effect
Material Contract
Money Borrowed
Multiemployer Plan
Obligor
Organization Documents
Pameco Investments
Permitted Lien
Person
Plan
Properly Contested
Property
Restrictive Agreements
Senior Credit Agreement
Senior Debt
Senior Officer
Subsidiary
Supply Agreement
Taxes
All terms used herein and not defined herein or otherwise provided for in
Section 5.1 or Section 5.2 have the respective meanings set forth in the Note
Agreement.
5.3. Directly or Indirectly.
Where any provision herein refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person, including
actions taken by or on behalf of any partnership in which such Person is a
general partner.
5.4. Section Headings and Table of Contents and Construction.
(a) Section Headings and Table of Contents, etc. The titles of the
Sections of this Agreement and the Table of Contents of this Agreement
appear as a matter of convenience only, do not constitute a part hereof and
shall not affect the construction hereof. The words "herein," "hereof,"
"hereunder" and "hereto" refer to this Agreement as a whole and not to any
particular Section or other subdivision. References to Sections are,
unless otherwise specified, references to Sections of this Agreement.
References to Annexes and Exhibits are, unless otherwise specified,
references to Annexes and Exhibits attached to this Agreement.
16
(b) Construction. Each covenant contained herein shall be construed
(absent an express contrary provision herein) as being independent of each
other covenant contained herein, and compliance with any one covenant shall
not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
5.5. Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
6. MISCELLANEOUS
6.1. Communications.
(a) Method; Address. All communications hereunder or under the Notes
shall be in writing and shall be delivered either by nationwide overnight
courier or by facsimile transmission (confirmed by delivery by nationwide
overnight courier sent on the day of the sending of such facsimile
transmission). Communications to the Company shall be addressed as set
forth on Annex 2 to the Note Agreement, or at such other address of which
the Company shall have notified each holder of Notes pursuant to the Note
Agreement. Communications to the holders of the Notes shall be addressed
as set forth on Annex 1 by such holder, or at such other address of which
such holder shall have notified the Company (and the Company shall record
such address in the register for the registration and transfer of Notes
maintained pursuant to the Note Agreement).
(b) When Given. Any communication addressed and delivered as herein
provided shall be deemed to be received when actually delivered to the
address of the addressee (whether or not delivery is accepted) or received
by the telecopy machine of the recipient. Any communication not so
addressed and delivered shall be ineffective.
6.2. Survival.
All warranties, representations, certifications and covenants made by the
Company or any Obligor herein or in any certificate or other instrument
delivered by the Company or the Obligor or on behalf of the Company or the
Obligor hereunder shall be considered to have been relied upon by you and shall
survive the delivery to you of the Notes regardless of any investigation made by
you or on your behalf. All statements in any certificate or other instrument
delivered by or on behalf of the Company pursuant to the terms hereof shall
constitute warranties and representations by the Company hereunder. All payment
obligations of the Company hereunder (other than payment of the Notes, but
including, without limitation, reimbursement obligations in respect of costs,
expenses and fees of or incurred by the holders of the Notes) shall survive the
payment of the Notes and the termination hereof.
17
6.3. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof are
intended to be for the benefit of all holders, from time to time, of Notes, and
shall be enforceable by any such holder whether or not an express assignment to
such holder of rights hereunder shall have been made by you or your successor or
assign. Anything contained in this Section 6.3 notwithstanding, the Company may
not assign any of its respective rights, duties or obligations hereunder or
under any of the other Financing Documents without the prior written consent of
all holders of Notes.
6.4. Amendment and Waiver.
This Agreement may be amended, and the observance of any term hereof may be
waived, with (and only with) the written consent of the Company and all of the
holders of Notes.
6.5. Certain Expenses.
Whether or not the Notes are sold, the Company shall pay, at the Closing
(if the Notes are sold, and otherwise upon receipt of any statement or invoice
therefor), all reasonable fees, expenses and costs incurred by you relating
hereto, including, without limitation, the statement presented at the Closing by
your special counsel for reasonable fees and disbursements incurred in
connection herewith, each additional statement for reasonable fees and
disbursements (promptly upon receipt thereof) of your special counsel rendered
after the Closing in connection with the issuance of the Notes and the Warrants,
and all expenses incurred by you or on your behalf or the Company's behalf in
complying with each of the conditions to closing set forth in Section 4 (limited
to the extent set forth in the separate commitment letters between each of the
Purchasers and the Company, each effect as of February 7, 2000, with respect to
the agreement to purchase the Notes and other matters).
6.6. Waiver of Jury Trial; Consent to Jurisdiction; Etc.
(a) Waiver of Jury Trial. THE PARTIES HERETO VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF
THE DOCUMENTS, AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY.
(b) Consent to Jurisdiction. ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, OR ANY OF THE DOCUMENTS, AGREEMENTS OR
TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION OR PROCEEDING TO EXECUTE OR
OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH UNDER THIS AGREEMENT OR
ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY MAY BE BROUGHT BY SUCH PARTY IN
ANY FEDERAL DISTRICT COURT LOCATED IN NEW YORK CITY, NEW YORK, OR ANY NEW YORK
STATE COURT LOCATED IN NEW YORK CITY, NEW YORK AS SUCH PARTY MAY IN ITS SOLE
DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
PARTIES HERETO
18
IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE NON-EXCLUSIVE IN PERSONAM
JURISDICTION OF EACH SUCH COURT, AND EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES AND AGREES NOT TO ASSERT IN ANY PROCEEDING BEFORE ANY TRIBUNAL, BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT TO THE IN
PERSONAM JURISDICTION OF ANY SUCH COURT. IN ADDITION, EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT,
AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY BROUGHT IN ANY SUCH COURT, AND
HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) Service of Process. EACH PARTY HERETO IRREVOCABLY AGREES THAT PROCESS
PERSONALLY SERVED OR SERVED BY U.S. REGISTERED MAIL AT THE ADDRESSES PROVIDED
HEREIN FOR NOTICES SHALL CONSTITUTE, TO THE EXTENT PERMITTED BY LAW, ADEQUATE
SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY DOCUMENT, AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY,
OR ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN
RESPECT OF ANY BREACH HEREUNDER OR UNDER ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY. RECEIPT OF PROCESS SO SERVED SHALL BE CONCLUSIVELY PRESUMED AS
EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED STATES POSTAL SERVICE OR
ANY COMMERCIAL DELIVERY SERVICE.
(d) Other Forums. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE
ABILITY OF ANY HOLDER OF NOTES TO SERVE ANY WRITS, PROCESS OR SUMMONSES IN ANY
MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER THE COMPANY IN
SUCH OTHER JURISDICTION, AND IN SUCH OTHER MANNER, AS MAY BE PERMITTED BY
APPLICABLE LAW.
6.7. Entire Agreement.
This Agreement constitutes the final written expression of all of the terms
hereof and is a complete and exclusive statement of those terms.
6.8. Execution in Counterpart.
This Agreement may be executed in one or more counterparts and shall be
effective when at least one counterpart shall have been executed by each party
hereto, and each set of counterparts that, collectively, show execution by each
party hereto shall constitute one duplicate original.
[Remainder of page intentionally blank. Next page is signature page.]
19
If this Agreement is satisfactory to you, please so indicate by signing the
acceptance at the foot of a counterpart hereof and returning such counterpart to
the Company, whereupon this Agreement shall become binding among us in
accordance with its terms.
Very truly yours,
PAMECO CORPORATION
By /s/ Richard Martin
---------------------------------
Name: Richard Martin
Title: Vice President
Accepted:
E.I. DU PONT DE NEMOURS AND COMPANY
By /s/ Thomas M. Connelley, Jr.
-------------------------------
Name: Thomas M. Connelley, Jr.
Title: Vice President & General Manager
DuPont Fluoroproducts
Accepted:
MUELLER INDUSTRIES, INC.
By /s/ Kent McKee
-------------------------------
Name: Kent McKee
Title: Vice President and CFO
Accepted:
INTERNATIONAL COMFORT PRODUCTS
CORPORATION (USA)
By /s/ Christopher J. Brogan
-------------------------------
Name: Christopher J. Brogan
Title: Assistant Secretary
Accepted:
EMERSON ELECTRIC CO.
By /s/ R. M. Cox, Jr.
-------------------------------
Name: R. M. Cox, Jr.
Title: Vice President--Acquisitions & Development
20