REVOLVING CREDIT AGREEMENT
dated as of April 19, 2002
among
WATSCO, INC.
as Borrower
THE LENDERS FROM TIME TO TIME PARTY HERETO
and
SUNTRUST BANK
as Administrative Agent
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SUNTRUST ROBINSON HUMPHREY CAPITAL MARKETS,
A DIVISION OF SUNTRUST CAPITAL MARKETS, INC.
as Lead Arranger and Book Manager
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; CONSTRUCTION...............................................................................1
Section 1.1 Definitions...................................................................................1
Section 1.2 Classifications of Loans and Borrowings......................................................17
Section 1.3 Accounting Terms and Determination...........................................................17
Section 1.4 Terms Generally..............................................................................17
ARTICLE II AMOUNT AND TERMS OF THE COMMITMENTS...................................................................17
Section 2.1 General Description of Facilities............................................................17
Section 2.2 Revolving Loans..............................................................................18
Section 2.3 Procedure for Revolving Borrowings...........................................................18
Section 2.4 Swingline Loans..............................................................................18
Section 2.5 Procedure for Swingline Borrowing; Etc.......................................................18
Section 2.6 Funding of Borrowings........................................................................19
Section 2.7 Interest Elections...........................................................................20
Section 2.8 Optional Reduction and Termination of Commitments; Extension of Commitments..................21
Section 2.9 Repayment of Loans...........................................................................21
Section 2.10 Evidence of Indebtedness.....................................................................22
Section 2.11 Prepayments..................................................................................22
Section 2.12 Interest on Loans............................................................................23
Section 2.13 Fees.........................................................................................23
Section 2.14 Computation of Interest and Fees.............................................................24
Section 2.15 Inability to Determine Interest Rates........................................................24
Section 2.16 Illegality...................................................................................24
Section 2.17 Increased Costs..............................................................................25
Section 2.18 Funding Indemnity............................................................................25
Section 2.19 Taxes........................................................................................26
Section 2.20 Payments Generally; Pro Rata Treatment; Sharing of Set-offs..................................27
Section 2.21 Mitigation of Obligations; Replacement of Lenders............................................28
Section 2.22 Letters of Credit............................................................................28
ARTICLE III CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT..................................................31
Section 3.1 Conditions To Effectiveness..................................................................31
Section 3.2 Each Credit Event............................................................................33
Section 3.3 Delivery of Documents........................................................................33
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................33
Section 4.1 Existence; Power.............................................................................33
Section 4.2 Organizational Power; Authorization..........................................................34
Section 4.3 Governmental Approvals; No Conflicts.........................................................34
Section 4.4 Financial Statements.........................................................................34
Section 4.5 Litigation and Environmental Matters.........................................................34
Section 4.6 Compliance with Laws and Agreements..........................................................35
Section 4.7 Investment Company Act, Etc..................................................................35
Section 4.8 Taxes........................................................................................35
Section 4.9 Margin Regulations...........................................................................35
Section 4.10 ERISA........................................................................................35
Section 4.11 Ownership of Property........................................................................35
Section 4.12 Disclosure...................................................................................35
Section 4.13 Labor Relations..............................................................................36
Section 4.14 Major Distribution Agreements................................................................36
Section 4.15 Principal Place of Business..................................................................36
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Section 4.16 Solvency.....................................................................................36
Section 4.17 Senior Debt. The Obligations constitute senior debt for purposes of all subordinated debt
facilities, if any..........................................................................................36
Section 4.18 Subsidiaries.................................................................................36
ARTICLE V AFFIRMATIVE COVENANTS..................................................................................36
Section 5.1 Financial Statements and Other Information...................................................36
Section 5.2 Notices of Material Events...................................................................37
Section 5.3 Existence; Conduct of Business...............................................................38
Section 5.4 Compliance with Laws, Etc....................................................................38
Section 5.5 Payment of Obligations.......................................................................38
Section 5.6 Books and Records............................................................................39
Section 5.7 Visitation, Inspection, Etc..................................................................39
Section 5.8 Maintenance of Properties; Insurance.........................................................39
Section 5.9 Use of Proceeds and Letters of Credit........................................................39
Section 5.10 Additional Subsidiaries......................................................................39
Section 5.11 Compliance with Major Distribution Agreements................................................39
ARTICLE VI FINANCIAL COVENANTS...................................................................................39
Section 6.1 Leverage Ratio...............................................................................40
Section 6.2 Interest Coverage Ratio......................................................................40
Section 6.3 Consolidated Net Worth.......................................................................40
Section 6.4 Consolidated Total Debt to Consolidated Total Capitalization Ratio...........................40
Section 6.5 Minimum Asset Coverage.......................................................................40
ARTICLE VII NEGATIVE COVENANTS...................................................................................40
Section 7.1 Indebtedness.................................................................................40
Section 7.2 Negative Pledge..............................................................................41
Section 7.3 Fundamental Changes..........................................................................42
Section 7.4 Investments, Loans, Capital Expenditures, Etc................................................42
Section 7.5 Restricted Payments..........................................................................43
Section 7.6 Sale of Assets...............................................................................44
Section 7.7 Transactions with Affiliates.................................................................44
Section 7.8 Restrictive Agreements.......................................................................44
Section 7.9 Sale and Leaseback Transactions..............................................................45
Section 7.10 Hedging Agreements...........................................................................45
Section 7.11 Amendment to Material Documents..............................................................45
Section 7.12 Accounting Changes...........................................................................45
ARTICLE VIII EVENTS OF DEFAULT...................................................................................45
Section 8.1 Events of Default............................................................................45
ARTICLE IX THE ADMINISTRATIVE AGENT..............................................................................47
Section 9.1 Appointment of Administrative Agent..........................................................47
Section 9.2 Nature of Duties of Administrative Agent.....................................................48
Section 9.3 Lack of Reliance on the Administrative Agent.................................................48
Section 9.4 Certain Rights of the Administrative Agent...................................................48
Section 9.5 Reliance by Administrative Agent.............................................................49
Section 9.6 The Administrative Agent in its Individual Capacity..........................................49
Section 9.7 Successor Administrative Agent...............................................................49
ARTICLE X MISCELLANEOUS..........................................................................................49
Section 10.1 Notices......................................................................................49
Section 10.2 Waiver; Amendments...........................................................................51
Section 10.3 Expenses; Indemnification....................................................................51
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Section 10.4 Successors and Assigns.......................................................................52
Section 10.5 Governing Law; Jurisdiction; Consent to Service of Process...................................54
Section 10.6 Waiver Of Jury Trial.........................................................................54
Section 10.7 Right of Setoff..............................................................................55
Section 10.8 Counterparts; Effectiveness of Agreement; Integration........................................55
Section 10.9 Survival.....................................................................................55
Section 10.10 Severability.................................................................................55
Section 10.11 Confidentiality..............................................................................55
Section 10.12 Interest Rate Limitation.....................................................................56
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REVOLVING CREDIT AGREEMENT
--------------------------
THIS REVOLVING CREDIT AGREEMENT (this "Agreement") is made and entered
into as of April 19, 2002, by and among WATSCO, INC., a Florida corporation (the
"Borrower"), the several banks and other financial institutions from time to
time party hereto (the "Lenders"), and SUNTRUST BANK, in its capacity as
Administrative Agent for the Lenders (the "Administrative Agent").
W I T N E S S E T H:
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WHEREAS, the Borrower has requested that the Lenders establish a
$225,000,000 senior revolving credit facility with a $15,000,000 swingline and a
$10,000,000 letter of credit sub-facility thereunder for the Borrower;
WHEREAS, subject to the terms and conditions of this Agreement, the
Lenders severally, to the extent of their respective Commitments, are willing to
establish the requested revolving credit facility for the Borrower.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Borrower, the Lenders and the Administrative
Agent agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
-------------------------
Section 1.1 Definitions. In addition to the other terms
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defined herein, the following terms used herein shall have the meanings herein
specified (to be equally applicable to both the singular and plural forms of the
terms defined):
"Adjusted LIBO Rate" shall mean, with respect to each Interest
Period for a Eurodollar Borrowing, the rate per annum obtained by dividing (a)
LIBOR for such Interest Period by (b) a percentage equal to 1.00 minus the
Eurodollar Reserve Percentage.
"Administrative Agent" shall have the meaning assigned to
such term in the opening paragraph hereof.
"Administrative Questionnaire" shall mean, with respect to
each Lender, an administrative questionnaire in the form prepared by the
Administrative Agent and submitted to the Administrative Agent duly completed by
such Lender.
"Affiliate" shall mean, as to any Person, any other Person
that directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such Person.
"Aggregate Revolving Commitments" shall mean the sum of the
Revolving Commitments of all Lenders at any time outstanding. On the Closing
Date, the Aggregate Revolving Commitments (including the Swingline Commitment)
equal $225,000,000.
"Applicable Lending Office" shall mean, for each Lender and
for each Type of Loan, the "Lending Office" of such Lender (or an Affiliate of
such Lender) designated for such Type of Loan in the Administrative
Questionnaire submitted by such Lender or such other office of such Lender (or
an Affiliate of such Lender) as such Lender may from time to time specify to the
Administrative Agent and the Borrower as the office by which its Loans of such
Type are to be made and maintained.
"Applicable Margin" shall mean, as of any date, with respect
to all Eurodollar Borrowings and Base Rate Borrowings outstanding on such date,
the percentage per annum designated in the "Pricing Grid" attached hereto as
Schedule I as applicable to Eurodollar Borrowings or Base Rate Borrowings, as
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the case may be, based on
the Borrower's Leverage Ratio. The Applicable Margin for Eurodollar Borrowings
shall initially be 1.25% and the Applicable Margin for Base Rate Borrowings
shall initially be 0.25%; provided, however, that upon delivery to the
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Administrative Agent of the financial statements required by Section 5.1(a) or
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(b) and the Compliance Certificate required by Section 5.1(c) for the fiscal
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quarter ended March 31, 2002 and for each fiscal quarter thereafter, the
Applicable Margin shall be reset to the percentage designated in Schedule I
----------
based on the Borrower's Leverage Ratio for the preceding four fiscal quarter
period then ending, measured quarterly, such Applicable Margin being effective
as of the second Business Day following the date that the Administrative Agent
receives such financial statements and certificate; provided further, however,
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that if at any time the Borrower shall have failed timely to deliver such
financial statements and Compliance Certificate, the Applicable Margin for
Eurodollar Borrowings shall be 1.375% and the Applicable Margin for Base Rate
Borrowings shall be 0.375% until such time as such financial statements and
Compliance Certificate are delivered, at which time the Applicable Margin shall
be determined as provided above. Notwithstanding the foregoing, if at any time
the Borrower's long-term senior unsecured debt is rated "BB+" or better by S&P
or "Ba1" or better by Moody's, then the Borrower may elect, by notice to the
Administrative Agent and the Lenders, to have the Applicable Margin determined
by reference to the percentage per annum designated in the "Pricing Grid"
attached hereto as Schedule II as applicable to Eurodollar Borrowings or Base
-----------
Rate Borrowings, as the case may be, based on the Borrower's Rating Category;
provided, however, in the event of a split rating, the higher rating shall apply
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for purposes of determining the Applicable Margin; provided further, however,
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the Applicable Margin shall be reset to the percentage designated in Schedule II
-----------
on the day which either S&P or Moody's changes its rating and shall continue
until the day prior to the day that a further change becomes effective.
"Applicable Percentage" shall mean, as of any date, with
respect to the commitment fee, the percentage per annum designated in the
"Pricing Grid" attached hereto as Schedule I based on the Borrower's Leverage
----------
Ratio. The Applicable Percentage shall initially be 0.25%; provided, however,
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that upon delivery to the Administrative Agent of the financial statements
required by Section 5.1(a) or (b) and the Compliance Certificate required by
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Section 5.1(c) for the fiscal quarter March 31, 2002 and for each fiscal quarter
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thereafter, the Applicable Percentage shall be reset to the percentage
designated in Schedule I based on the Borrower's Leverage Ratio for the
----------
preceding four fiscal quarter period then ending, measured quarterly, such
Applicable Percentage being effective as of the second Business Day following
the date that the Administrative Agent receives such financial statements and
certificate; provided further, however, that if at any time the Borrower shall
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have failed timely to deliver such financial statements and Compliance
Certificate, the Applicable Percentage shall be 0.30% until such time as such
financial statements and Compliance Certificate are delivered, at which time the
Applicable Percentage shall be determined as provided above. Notwithstanding the
foregoing, if at any time the Borrower's long-term senior unsecured debt is
rated "BB+" or better by S&P or "Ba1" or better by Moody's, then the Borrower
may elect, by notice to the Administrative Agent and the Lenders, to have the
Applicable Percentage determined by reference to the percentage per annum
designated in the "Pricing Grid" attached hereto as Schedule II based on the
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Borrower's Rating Category; provided, however, in the event of a split rating,
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the higher rating shall apply for purposes of determining the Applicable
Percentage; provided further, however, the Applicable Percentage shall be reset
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to the percentage designated in Schedule II on the day which either S&P or
-----------
Moody's changes its rating and shall continue until the day prior to the day
that a further change becomes effective.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee (with the consent of any
party whose consent is required by Section 10.4(b)) and accepted by the
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Administrative Agent, in the form of Exhibit C attached hereto or any other form
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approved by the Administrative Agent.
"Availability Period" shall mean (a) in case of Revolving
Borrowings, the period from the Closing Date to the Commitment Termination Date,
and (b) in case of Swingline Borrowings, the period from the Closing Date to the
Swingline Termination Date.
"Base Rate" shall mean the higher of (a) the per annum rate
which the Administrative Agent publicly announces from time to time to be its
prime lending rate, as in effect from time to time, and (b) the Federal Funds
Rate, as in effect from time to time, plus one-half of one percent (0.50%). The
Administrative Agent's prime lending rate is a reference rate and does not
necessarily represent the lowest or best rate charged to customers. The
Administrative Agent may make commercial loans or other loans at rates of
interest at, above or below the Administrative Agent's prime lending rate. Each
change in the Administrative Agent's prime lending rate shall be effective from
and including the date such change is publicly announced as being effective.
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"Borrower" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"Borrowing" shall mean a borrowing consisting of (a) Loans of
the same Class and Type, made, converted or continued on the same date and, in
case of Eurodollar Loans, as to which a single Interest Period is in effect, or
(b) a Swingline Loan.
"Business Day" shall mean (a) any day other than a Saturday,
Sunday or other day on which commercial banks in Atlanta, Georgia are authorized
or required by law to close and (b) if such day relates to a Borrowing of, a
payment or prepayment of principal or interest on, a conversion of or into, or
an Interest Period for, a Eurodollar Loan or a notice with respect to any of the
foregoing, any day on which dealings in Dollars are carried on in the London
interbank market.
"Capital Expenditures" shall mean for any period, without
duplication, (a) the additions to property, plant and equipment and other
capital expenditures of the Borrower and its Subsidiaries that are (or would be)
set forth on a consolidated statement of cash flows of the Borrower and its
Subsidiaries for such period prepared in accordance with GAAP and (b) Capital
Lease Obligations incurred by the Borrower and its Subsidiaries during such
period.
"Capital Lease Obligations" of any Person shall mean all
obligations of such Person to pay rent or other amounts under any lease (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" shall mean (a) in the case of a corporation,
capital stock, (b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (c) in the case of a partnership, partnership
interests (whether general or limited), (d) in the case of a limited liability
company, membership interests and (e) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Change in Control" shall mean, at any time:
(a) With respect to the Borrower,
(i) any "person" or "group" (each as used in Sections
13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934)
other than Albert Nahmad and Alna Capital Associates (each an
"Existing Control Group") either (A) becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Securities Exchange
Act of 1934), directly or indirectly, of Voting Stock of the
Borrower (or securities convertible into or exchangeable for
such Voting Stock) representing twenty-five percent (25%) or
more of the combined voting power of all Voting Stock of the
Borrower (on a fully diluted basis) or (B) otherwise has the
ability, directly or indirectly, to elect a majority of the
board of directors of the Borrower (provided, that if an event
described in this clause (i) shall occur solely by reason of
the death of one or more members of the Existing Control
Group, then a "Change of Control" shall not be deemed to have
occurred so long as the Voting Stock of the decedent is owned
of record by the estate or immediate family of such decedent);
(ii) during any period of up to twenty-four (24)
consecutive months, commencing on the Closing Date,
individuals who at the beginning of such twenty-four
(24)-month period were directors of the Borrower shall cease
for any reason (other than the death, disability or retirement
of a director or of an officer of the Borrower that is serving
as a director at such time so long as another officer of the
Borrower replaces such Person as a director) to constitute a
majority of the board of directors of the Borrower; or
(iii) any Person or two or more Persons acting in
concert other than the Existing Control Group shall have
acquired by contract or otherwise, or shall have consummated a
contract or
3
arrangement that results in its or their acquisition of the
power to exercise, directly or indirectly, a controlling
influence on the management or policies of the Borrower; or
(b) with respect to any Major Subsidiary,
(i) the Borrower shall cease to own, directly or
indirectly, at least 100% of the Voting Stock of each
currently existing Major Subsidiary or any other Subsidiary
that is or becomes a Major Subsidiary after the date hereof;
or
(ii) any Person or two or more Persons acting in
concert other than the Borrower shall have acquired by
contract or otherwise, or shall have consummated a contract or
arrangement that results in its or their acquisition of the
power to exercise, directly or indirectly, a controlling
influence on the management or policies of such Major
Subsidiary.
"Change in Law" shall mean (a) the adoption of any applicable
law, rule or regulation after the date of this Agreement, (b) any change in any
applicable law, rule or regulation, or any change in the interpretation or
application thereof, by any Governmental Authority after the date of this
Agreement, or (c) compliance by any Lender (or its Applicable Lending Office) or
the Issuing Bank (or for purposes of Section 2.17(b), by such Lender's or the
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Issuing Bank's holding company, if applicable) with any request, guideline or
directive (whether or not having the force of law) of any Governmental Authority
made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
Revolving Loans or Swingline Loans and when used in reference to any Commitment,
refers to whether such Commitment is a Revolving Commitment or a Swingline
Commitment.
"Closing Date" shall mean the date on which the conditions
precedent set forth in Section 3.1 and Section 3.2 have been satisfied or waived
----------- -----------
in accordance with Section 10.2.
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"Coastline" shall mean Coastline Distribution, Inc., a
Delaware corporation.
"Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect from time to time.
"Commitment" shall mean a Revolving Commitment or a Swingline
Commitment or any combination thereof (as the context shall permit or require).
"Commitment Termination Date" shall mean the earliest of (a)
the Scheduled Commitment Termination Date, (b) the date on which the Revolving
Commitments are terminated pursuant to Section 2.8 or (c) the date on which all
-----------
amounts outstanding under this Agreement have been declared or have
automatically become due and payable (whether by acceleration or otherwise).
"Compliance Certificate" shall have the meaning assigned to
such term in Section 5.1(c).
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"Confidential Memorandum" shall mean the Confidential
Memorandum dated February, 2002 relating to the Borrower and the transactions
contemplated by this Agreement and the other Loan Documents.
"Consolidated Current Assets" shall mean, as of any date, the
sum of (a) cash and cash equivalents that would be reflected on the Borrower's
consolidated balance sheet as of such date prepared in accordance with GAAP, (b)
accounts receivable (including the current portion of any notes receivable) that
would be reflected on the Borrower's consolidated balance sheet as of such date
prepared in accordance with GAAP, and (c) inventory that would be reflected on
the Borrower's consolidated balance sheet as of such date prepared in accordance
with GAAP.
"Consolidated EBIT" shall mean, for the Borrower and its
Subsidiaries for any period ending on the date of computation thereof, an amount
equal to the sum of (a) Consolidated Net Income for such period plus (b)
4
to the extent deducted in determining Consolidated Net Income for such period,
(i) Consolidated Interest Expense, (ii) income tax expense, (iii) for the period
ended September 30, 2001 only, a one-time restructuring charge in the amount of
$6,022,000, and (iv) for any period ending on or prior to June 30, 2002, any
non-cash charges resulting from the implementation of FAS 142, determined on a
consolidated basis in accordance with GAAP in each case for such period;
provided, however, that with respect to an acquisition that is accounted for as
- -------- -------
a "purchase", for the period of four full consecutive fiscal quarters of the
Borrower ending next following the date of such acquisition, "Consolidated EBIT"
shall include the results of operations of the Person or assets so acquired,
which amounts shall be determined on a historical pro forma basis as if such
acquisition had been consummated as a "pooling of interests".
"Consolidated EBITDA" shall mean, for the Borrower and its
Subsidiaries for any period ending on the date of computation thereof, an amount
equal to the sum of (a) Consolidated Net Income for such period plus (b) to the
extent deducted in determining Consolidated Net Income for such period, (i)
Consolidated Interest Expense, (ii) income tax expense, (iii) depreciation and
amortization and (iv) for the period ended September 30, 2001 only, a one-time
restructuring charge in the amount of $6,022,000, and (iv) for any period ending
on or prior to June 30, 2002, any non-cash charges resulting from the
implementation of FAS 142, determined on a consolidated basis in accordance with
GAAP in each case for such period; provided, however, that with respect to an
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acquisition that is accounted for as a "purchase", for the period of four full
consecutive fiscal quarters of the Borrower ending next following the date of
such acquisition, "Consolidated EBITDA" shall include the results of operations
of the Person or assets so acquired, which amounts shall be determined on a
historical pro forma basis as if such acquisition had been consummated as a
"pooling of interests".
"Consolidated Interest Expense" shall mean, for the Borrower
and its Subsidiaries for any period ending on the date of computation thereof,
determined on a consolidated basis in accordance with GAAP, the sum of (a) total
cash interest expense, including without limitation, the interest component of
any payments in respect of Capital Lease Obligations during such period (whether
or not actually paid during such period) plus (b) the net amount payable (or
minus the net amount receivable) under Hedging Agreements during such period
(whether or not actually paid or received during such period).
"Consolidated Net Income" shall mean, for any period, the net
income (or loss) of the Borrower and its Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP, but excluding therefrom (to the
extent otherwise included therein) (a) any extraordinary gains or losses, (b)
any gains attributable to write-ups of assets, (c) any equity interest of the
Borrower or any Subsidiary in the unremitted earnings of any Person that is not
a Subsidiary and (d) any income (or loss) of any Person accrued prior to the
date it becomes a Subsidiary or is merged into or consolidated with the Borrower
or any Subsidiary on the date that such Person's assets are acquired by the
Borrower or any Subsidiary.
"Consolidated Net Worth" shall mean, as of any date, (a) the
total assets of the Borrower and its Subsidiaries that would be reflected on the
Borrower's consolidated balance sheet as of such date prepared in accordance
with GAAP, after eliminating (i) all amounts properly attributable to minority
interests, if any, in the stock and surplus of Subsidiaries and (ii) any
non-cash asset impairment charges taken by Borrower solely as a result of the
application to Borrower's financial statements of FAS 142, minus (b) the total
liabilities of the Borrower and its Subsidiaries that would be reflected on the
Borrower's consolidated balance sheet as of such date prepared in accordance
with GAAP.
"Consolidated Total Assets" shall mean, for the Borrower and
its Subsidiaries for any period ending on the date of computation thereof,
determined on a consolidated basis in accordance with GAAP, the aggregate book
value of the assets of the Borrower and its Subsidiaries for such period.
"Consolidated Total Capitalization" shall mean, at any time,
the sum of: (a) Consolidated Total Debt plus (b) Consolidated Net Worth.
"Consolidated Total Debt" shall mean, as of any date of
determination, without duplication, all Indebtedness of the Borrower and its
Subsidiaries (other than as described in subsection (k) under the definition of
"Indebtedness" herein), determined on a consolidated basis in accordance with
GAAP, including, but not limited to, all of the Obligations. For purposes of
determining "Consolidated Total Debt," the principal amount of any
5
Synthetic Lease Obligation shall be deemed to be the amount that would be
reflected on the balance sheet of the Borrower and its Subsidiaries if such
Synthetic Lease Obligation were characterized as a capital lease rather than an
operating lease.
"Consolidated Total Revenues" shall mean, for the Borrower and
its Subsidiaries for any period ending on the date of computation thereof,
determined on a consolidated basis in accordance with GAAP, the total revenues
of the Borrower and its Subsidiaries for such period.
"Control" shall mean the power, directly or indirectly, either
to (a) vote five percent (5%) or more of securities having ordinary voting power
for the election of directors (or persons performing similar functions) of a
Person or (b) direct or cause the direction of the management and policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. The terms "Controlling", "Controlled by", and "under common Control
with" have meanings correlative thereto.
"Default" shall mean any condition or event that, with the
giving of notice or the lapse of time or both, would constitute an Event of
Default.
"Default Interest" shall have the meaning assigned to such
term in Section 2.12(c).
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"Dollar(s)" and the sign "$" shall mean lawful money of the
United States of America.
"Dunhill" shall mean Dunhill Staffing Systems, Inc., a
Delaware corporation and a Subsidiary as of the Closing Date.
"Environmental Laws" shall mean all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, Release or threatened Release of any
Hazardous Material or to health and safety matters.
"Environmental Liability" shall mean any liability, contingent
or otherwise (including any liability for damages, costs of environmental
investigation and remediation, costs of administrative oversight, fines, natural
resource damages, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) any actual or alleged
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
any actual or alleged exposure to any Hazardous Materials, (d) the Release or
threatened Release of any Hazardous Materials or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"Equity Issuance" shall mean any issuance by any Loan Party to
any Person which is not a Loan Party of (a) shares of its Capital Stock, (b) any
shares of its Capital Stock pursuant to the exercise of options or warrants or
(c) any shares of its Capital Stock pursuant to the conversion of any debt
securities to equity (excluding in the case of clauses (a) and (b) hereof the
issuance of any such shares by the Borrower under or in connection with its
employee stock purchase plan or pursuant to the exercise of employee or director
stock options).
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated), which, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for the purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued thereunder with
respect to a Plan (other than an event for which the 30-day notice period is
waived); (b) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in
6
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator appointed by the PBGC of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar" when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, bears
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Eurodollar Reserve Percentage" shall mean the aggregate of
the maximum reserve percentages (including, without limitation, any emergency,
supplemental, special or other marginal reserves) expressed as a decimal
(rounded upwards to the next 1/100th of 1%) in effect on any day to which the
Administrative Agent is subject with respect to the Adjusted LIBO Rate pursuant
to regulations issued by the Board of Governors of the Federal Reserve System
(or any Governmental Authority succeeding to any of its principal functions)
with respect to eurocurrency funding (currently referred to as "eurocurrency
liabilities" under Regulation D). Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under Regulation D. The Eurodollar Reserve
Percentage shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.
"Event of Default" shall have the meaning assigned to such
term in Article VIII.
------------
"Excluded Taxes" shall mean with respect to the Administrative
Agent, any Lender, the Issuing Bank or any other recipient of any payment to be
made by or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located, and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.21(b)), any withholding tax that is imposed on amounts
------------ -
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender's failure to comply with Section 2.19(e), except to the
------------ -
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.19(a).
------------ -
"Existing Letter of Credit" shall mean each outstanding letter
of credit issued prior to the date hereof by Bank of America, N.A. for the
account of the Borrower as set forth on Schedule 2.22 and continued by Bank of
-------------
America, N.A., as an Issuing Bank hereunder, after the date hereof pursuant to
Section 2.22. Each "Existing Letter of Credit" shall be a "Letter of Credit" for
- ------------
purposes of this Agreement and deemed to have been issued hereunder.
"FAS" shall mean the Statements of Financial Accounting
Standards issued by the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants, as amended from time to time.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the next 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
member banks of the Federal Reserve System arranged by Federal funds brokers, as
published by the Federal Reserve Bank of New York on the next succeeding
Business Day or if such rate is not so published for any Business Day, the
Federal Funds Rate for such day shall be the average rounded upwards, if
necessary, to the
7
next 1/100th of 1% of the quotations for such day on such transactions received
by the Administrative Agent from three Federal funds brokers of recognized
standing selected by the Administrative Agent.
"Foreign Lender" shall mean any Lender that is organized under
the laws of a jurisdiction other than that of the Borrower. For purposes of this
definition, the United States of America or any State thereof or the District of
Columbia shall constitute one jurisdiction.
"GAAP" shall mean generally accepted accounting principles in
the United States applied on a consistent basis and subject to the terms of
Section 1.3.
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"Gemaire" shall mean Gemaire Distributors, Inc., a Florida
corporation.
"Governmental Authority" shall mean the government of the
United States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") shall mean
any obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly and including any obligation, direct or indirect, of the guarantor
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness of other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued in support of
such Indebtedness or obligation; provided, that the term "Guarantee" shall not
--------
include endorsements for collection of deposits in the ordinary course of
business. The amount of any Guarantee shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
Guarantee is made or, if not so stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith. The term
"Guarantee" used as a verb has a corresponding meaning.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Hedging Agreements" shall mean interest rate swap, cap or
collar agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts, foreign exchange agreements,
commodity agreements and other similar agreements or arrangements designed to
protect against fluctuations in interest rates, currency values or commodity
values.
"Indebtedness" of any Person shall mean, without duplication
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all obligations of such Person in respect of the deferred purchase price of
property or services (other than trade payables incurred in the ordinary course
of business; provided, that trade payables overdue by more than one hundred
--------
twenty (120) days shall be included in this definition except to the extent that
any of such trade payables are being disputed in good faith and by appropriate
measures), (d) all obligations of such Person under any conditional sale or
other title retention agreement(s) relating to property acquired by such Person,
(e) all Capital Lease Obligations of such Person, (f) all obligations,
contingent or otherwise, of such Person in respect of letters of credit,
acceptances or similar extensions of credit, (g) all Guarantees of such Person
of the type of Indebtedness described in clauses (a) through (f) above, (h) all
Indebtedness of a third party secured by any Lien on property owned by such
Person, whether or not such Indebtedness has been assumed by such Person, (i)
all obligations of such Person, contingent or otherwise, to purchase, redeem,
retire or otherwise acquire for value any common stock of such Person, (j)
Off-Balance Sheet Liabilities, (k) obligations under any Hedging Agreements, and
(l) all
8
Securitization Transactions of such Person. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person's ownership interest in or other relationship with
such entity, except to the extent the terms of such Indebtedness provide that
such Person is not liable therefor.
"Indemnified Taxes" shall mean Taxes other than Excluded
Taxes.
"Indemnity and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit E, among the Borrower, the Subsidiary Loan Parties and the
- ---------
Administrative Agent.
"Interest Coverage Ratio" shall mean as of any date of
determination with respect to the Borrower, the ratio of (a) Consolidated EBIT
as of such date to (b) Consolidated Interest Expense as of such date.
"Interest Period" shall mean (a) with respect to any
Eurodollar Borrowing, a period of one, two, three or six months, selected by the
Borrower pursuant to Section 2.3 and subject to customary adjustments in
-----------
duration; and (b) with respect to a Swingline Loan, a period of such duration
not to exceed 5 days, as the Borrower may request and the Swingline Lender may
agree in accordance with Section 2.5; provided, that:
----------- --------
(i) the initial Interest Period for such Borrowing shall
commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of another Type) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the
day on which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise end on a day
other than a Business Day, such Interest Period shall be extended to
the next succeeding Business Day, unless, in the case of a Eurodollar
Borrowing, such Business Day falls in another calendar month, in which
case such Interest Period would end on the next preceding Business Day;
(iii) any Interest Period in respect of a Eurodollar
Borrowing which begins on the last Business Day of a calendar month or
on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period shall end on the last
Business Day of such calendar month;
(iv) no Interest Period may extend beyond the Commitment
Termination Date or the Swingline Termination Date, as the case may be;
and
(v) the initial Interest Periods for the separate
Eurodollar Borrowings made on the Closing Date in the principal amount
of $30,000,000 and in the principal amount of $20,000,000 will end on
July 8, 2002 and July 10, 2002, respectively.
"Issuing Bank" shall mean SunTrust Bank or any other Lender
(including without limitation, Bank of America, N.A. as the issuer of the
Existing Letters of Credit), each in its capacity as an issuer of Letters of
Credit pursuant to Section 2.22.
------------
"LC Commitment" shall mean that portion of the Aggregate
Revolving Commitments that may be used by the Borrower for the issuance of
Letters of Credit in an aggregate face amount not to exceed $10,000,000.
"LC Disbursement" shall mean a payment made by the Issuing
Bank pursuant to a Letter of Credit.
"LC Documents" shall mean the Letters of Credit and all
applications, agreements and instruments relating to the Letters of Credit.
9
"LC Exposure" shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at such time, plus
(b) the aggregate amount of all LC Disbursements that have not been reimbursed
by or on behalf of the Borrower at such time. The LC Exposure of any Lender
shall be its Pro Rata Share of the total LC Exposure at such time.
"Lenders" shall have the meaning assigned to such term in the
opening paragraph of this Agreement and shall include, where appropriate, the
Swingline Lender.
"Letter of Credit" shall mean each Existing Letter of Credit
and any other letter of credit hereafter issued pursuant to Section 2.22 by the
------------
Issuing Bank for the account of the Borrower pursuant to the LC Commitment.
"Leverage Ratio" shall mean as of any date of determination
with respect to the Borrower, the ratio of (a) Consolidated Total Debt as of
such date to (b) Consolidated EBITDA as of such date.
"LIBOR" shall mean, for any applicable Interest Period with
respect to any Eurodollar Loan, the rate per annum for deposits in Dollars for a
period equal to such Interest Period appearing on the display designated as Page
3750 on the Dow Jones Markets Service (or such other page on that service or
such other service designated by the British Banker's Association for the
display of such Association's Interest Settlement Rates for Dollar deposits) as
of 11:00 a.m. (London, England time) on the day that is two (2) Business Days
prior to the first day of the Interest Period or if such Page 3750 is
unavailable for any reason at such time, the rate which appears on the Reuters
Screen ISDA Page as of such date and such time; provided, that if the
--------
Administrative Agent determines that the relevant foregoing sources are
unavailable for the relevant Interest Period, LIBOR shall mean the rate of
interest determined by the Administrative Agent to be the average (rounded
upward, if necessary, to the nearest 1/100th of 1%) of the rates per annum at
which deposits in Dollars are offered to the Administrative Agent two (2)
Business Days preceding the first day of such Interest Period by leading banks
in the London interbank market as of 10:00 a.m. for delivery on the first day of
such Interest Period, for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Loan of the Administrative Agent.
"Lien" shall mean any mortgage, pledge, security interest,
lien (statutory or otherwise), charge, encumbrance, hypothecation, assignment,
deposit arrangement, or other arrangement having the practical effect of the
foregoing or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any capital lease having
the same economic effect as any of the foregoing).
"Loan Documents" shall mean, collectively, this Agreement, the
Notes (if any), the LC Documents, all Notices of Borrowing, the Subsidiary
Guarantee Agreement, the Indemnity and Contribution Agreement, and any and all
other instruments, agreements, documents and writings executed in connection
with any of the foregoing.
"Loan Parties" shall mean the Borrower and the Subsidiary Loan
Parties.
"Loans" shall mean all Revolving Loans and Swingline Loans in
the aggregate or any of them, as the context shall require.
"Major Distribution Agreements" shall mean those agreements
identified on Schedule 4.14.
-------------
"Major Subsidiary" shall mean, collectively, (a) Air
Systems Distributors, Inc., a Florida corporation, Atlantic Service & Supply,
Inc., a Delaware corporation, Baker Distributing Company, a Florida corporation,
CAD Watsco, Inc., a Florida corporation, Coastline Distribution, Inc., a
Delaware corporation, Comfort Supply, Inc., a Delaware corporation, CP
Distributors, Inc., a Florida corporation, Gemaire Distributors, Inc., a Florida
corporation, H.B. Adams Distributors, Inc., a Florida corporation, Heat,
Incorporated, a New Hampshire corporation, Heating & Cooling Supply, Inc., a
California corporation, Homans Associates Inc., a Massachusetts corporation,
Three States Supply, Inc., a Tennessee corporation, and Weathertrol Supply
Company, a North Carolina corporation, and (b) any other direct or indirect
Subsidiary of the Borrower having at any time: (i) assets in
10
an amount equal to at least 5% of the Consolidated Total Assets of the Borrower
and its Subsidiaries determined as of the last day of the most recent fiscal
quarter of the Borrower as reflected in the Borrower's most recent financial
statements required by Section 5.1(a) or (b); or (ii) revenues or net income in
----------- -
an amount equal to at least 5% of the Consolidated Total Revenues or
Consolidated Net Income of the Borrower and its Subsidiaries for the 12-month
period ending on the last day of the most recent fiscal quarter of the Borrower
as reflected in the Borrower's most recent financial statements required by
Section 5.1(a) or (b).
- ----------- - -
"Material Adverse Effect" shall mean, with respect to any
event, act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences whether or not
related, a material adverse change in, or a material adverse effect on, (a) the
business, results of operations, financial condition, assets, liabilities or
prospects of the Borrower and of the Borrower and its Subsidiaries taken as a
whole, (b) the ability of the Loan Parties to perform any of their respective
obligations under the Loan Documents, (c) the rights and remedies of the
Administrative Agent, the Issuing Bank and the Lenders under any of the Loan
Documents or (d) the legality, validity or enforceability of any of the Loan
Documents.
"Material Indebtedness" shall mean Indebtedness (other than
the Loans and Letters of Credit) or obligations in respect of one or more
Hedging Agreements, to a single Person and such Person's Affiliates of an
aggregate principal amount exceeding $1,000,000. For purposes of determining
"Material Indebtedness," the "principal amount" of the obligations of the
Borrower or any Subsidiary in respect to any Hedging Agreement at any time shall
be the maximum aggregate amount (giving effect to any netting agreements) that
the Borrower or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.
"Moody's" shall mean Moody's Investors Service, Inc., or any
successor.
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean the aggregate cash proceeds
received by the Borrower or any Subsidiary in respect of any Equity Issuance or
Securitization Transaction, net of (a) direct costs (including, without
limitation, legal, accounting and investment banking fees and sales
commissions), and (b) taxes paid or payable as a result thereof; it being
understood that "Net Cash Proceeds" shall include, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration
received by the Borrower or any Subsidiary in any Equity Issuance or
Securitization Transaction.
"Notes" shall mean, collectively, the Revolving Credit Notes
and the Swingline Note.
"Notices of Borrowing" shall mean, collectively, the Notices
of Revolving Borrowing and the Notices of Swingline Borrowing.
"Notice of Conversion/Continuation" shall mean the notice
given by the Borrower to the Administrative Agent in respect of the conversion
or continuation of an outstanding Borrowing as provided in Section 2.7(b)
----------- -
hereof.
"Notice of Revolving Borrowing" shall have the meaning
assigned to such term in Section 2.3.
-----------
"Notice of Swingline Borrowing" shall have the meaning
assigned to such term in Section 2.5.
-----------
"Obligations" shall mean (a) all amounts owing by the Borrower
or any Subsidiary to the Administrative Agent, the Issuing Bank or any Lender
(including the Swingline Lender) pursuant to or in connection with this
Agreement or any other Loan Document, including without limitation, all
principal, interest (including any interest accruing after the filing of any
petition in bankruptcy or the commencement of any insolvency, reorganization or
like proceeding relating to the Borrower, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding), all reimbursement
obligations, fees, expenses, indemnification and reimbursement payments, costs
and expenses (including all fees and expenses of counsel to the Administrative
11
Agent and any Lender (including the Swingline Lender) incurred pursuant to this
Agreement or any other Loan Document), whether direct or indirect, absolute or
contingent, liquidated or unliquidated, now existing or hereafter arising
hereunder or thereunder, together with all renewals, extensions, modifications
or refinancings thereof, and (b) all obligations of the Borrower or any
Subsidiary, monetary or otherwise, under each interest rate Hedging Agreement
relating to Obligations referred to in the preceding clause (a) entered into
with any counterparty that was a Lender (or an Affiliate thereof) at the time
such Hedging Agreement was entered into.
"Off-Balance Sheet Liabilities" of any Person shall mean (a)
any repurchase obligation or liability of such Person with respect to accounts
or notes receivable sold by such Person, (b) any liability of such Person under
any sale and leaseback transactions which do not create a liability on the
balance sheet of such Person, (c) any Synthetic Lease Obligation or (d) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheet of such Person.
"Other Taxes" shall mean any and all present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Participant" shall have the meaning set forth in Section
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10.4(c).
- ---- -
"Payment Office" shall mean the office of the Administrative
Agent located at 303 Peachtree Street, N.E., Atlanta, Georgia 30308, or such
other location as to which the Administrative Agent shall have given written
notice to the Borrower and the other Lenders.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA, and any successor entity performing similar
functions.
"Permitted Encumbrances" shall mean:
(a) Liens imposed by law for taxes, governmental
assessments or similar governmental charges not yet due or which are
being contested in good faith by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance
with GAAP;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained in
accordance with GAAP;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(e) judgment and attachment liens not giving rise to an
Event of Default or Liens created by or existing from any litigation or
legal proceeding that are currently being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are
being maintained in accordance with GAAP;
(f) easements, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations
and do not materially detract from the value of the affected property
or materially interfere with the ordinary conduct of business of the
Borrower and its Subsidiaries taken as a whole; and
12
(g) bank liens with respect to collection of deposits in
the ordinary course of business;
provided, that the term "Permitted Encumbrances" shall not include any Lien
- --------
securing Indebtedness.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by, the United
States (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States), in each case
maturing within one (1) year from the date of acquisition thereof;
(b) commercial paper having the highest rating, at the
time of acquisition thereof, of S&P or Moody's and in either case
maturing within six (6) months from the date of acquisition thereof;
(c) certificates of deposit, bankers' acceptances and
time deposits maturing within one-hundred eighty (180) days of the date
of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office
of any commercial bank organized under the laws of the United States or
any state thereof which has a combined capital and surplus and
undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a
term of not more than thirty (30) days for securities described in
clause (a) above and entered into with a financial institution
satisfying the criteria described in clause (c) above;
(e) mutual funds investing solely in any one or more of
the Permitted Investments described in clauses (a) through (d) above;
and
(f) subject to the restriction set forth in Section 4.9,
-----------
equity or debt securities which are listed on a national securities
exchange or freely traded in the over-the-counter market so long as the
fair market value of such securities do not exceed in the aggregate
$5,000,000.
"Person" shall mean any individual, partnership, firm,
corporation, association, joint venture, limited liability company, trust or
other entity, or any Governmental Authority.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Private Placement Debt" shall mean unsecured Indebtedness for
borrowed money issued by the Borrower in a private placement transaction;
provided, that all of the following conditions shall be satisfied:
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(a) no portion of principal thereof shall be payable or
required to be purchased (whether by scheduled installment, mandatory
prepayment or redemption, or the exercise of any put right) prior to
the Scheduled Commitment Termination Date;
(b) the instruments and agreements evidencing such
Indebtedness, and any agreement under which such Indebtedness, and any
agreement under which such Indebtedness is created, shall provide that
the right to payment of the holders or owners of Private Placement Debt
(including any trustee or agent action on behalf of such holders or
owners, collectively "Private Placement Debt Holders") shall either be
subordinate to or rank pari passu in all respects with the rights of
the Lenders and the Administrative Agent to payment and performance of
the Obligations on terms reasonably acceptable to the Agent;
(c) both immediately prior to and immediately after
giving effect to the issuance of such Indebtedness, there shall not
have occurred and be continuing any Default or Event of Default;
13
(d) the Borrower shall furnish to the Administrative
Agent, not later than the earliest date of delivery thereof to any
actual or prospective Private Placement Debt Holder, copies of (i) all
preliminary placement memoranda and final placement memoranda relating
to such Indebtedness and (ii) drafts of all documents and agreements
under which such Indebtedness is to be created or governed; and
(e) not later than ten (10) days prior to the issuance of
such Indebtedness, the Borrower shall deliver to the Agent a
certificate in the form of Exhibit 5.1(c), executed by a Responsible
--------------
Officer and containing calculations giving historical pro forma effect
to the issuance of such Indebtedness as of and for the four consecutive
fiscal quarter period ending at the end of most recent fiscal quarter
of the Borrower preceding the date of such issuance (assuming for such
purpose that the initial rate or rates of interest provided for therein
(and giving effect to any increase in rates of interest therein
provided) remained in effect for such four fiscal quarter period),
which certificate shall demonstrate that the issuance of such
Indebtedness does not cause, create or result in a Default or Event of
Default on a historical pro forma basis.
"Pro Rata Share" shall mean, with respect to any Lender at any
time, a percentage, the numerator of which shall be such Lender's Revolving
Commitment and the denominator of which shall be the sum of all Lenders'
Revolving Commitments; or if the Revolving Commitments have been terminated or
expired or if the Loans have been declared to be due and payable, a percentage,
the numerator of which shall be the sum of such Lender's Revolving Credit
Exposure and the denominator of which shall be the sum of the aggregate
Revolving Credit Exposure of all Lenders.
"Receivables" shall mean accounts receivable (including,
without limitation, all rights to payment created or arising from the sales of
goods, leases of goods or the rendition of services, no matter how evidenced and
whether or not earned by performance).
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be in effect from time
to time, and any successor regulations.
"Related Parties" shall mean, with respect to any specified
Person, such Person's Affiliates and the respective directors, officers,
employees, agents and advisors of such Person and such Person's Affiliates.
"Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching
or migration into the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.
"Required Lenders" shall mean, at any time, Lenders holding
fifty-one percent (51%) or more of the aggregate outstanding Revolving Credit
Exposures at such time or if the Lenders have no Revolving Credit Exposure
outstanding, then Lenders holding fifty-one percent (51%) or more of the
Aggregate Revolving Commitments.
"Responsible Officer" shall mean any of the president, the
chief executive officer, the chief operating officer, the chief financial
officer, the treasurer or a vice president of the Borrower or such other
representative of the Borrower as may be designated in writing by any one of the
foregoing with the consent of the Administrative Agent; and, with respect to the
financial covenants only, the chief financial officer or the treasurer of the
Borrower.
"Restricted Payment" shall have the meaning assigned to such
term in Section 7.5.
-----------
"Revolving Commitment" shall mean, with respect to each
Lender, the obligation of such Lender to make Revolving Loans to the Borrower
and to participate in Letters of Credit and Swingline Loans in an aggregate
principal amount not exceeding the amount set forth with respect to such Lender
on the signature pages to this Agreement, or in the case of a Person becoming a
Lender after the Closing Date, the amount of the assigned "Revolving Commitment"
as provided in the Assignment and Acceptance Agreement executed by such Person
as an assignee, as the same may be changed pursuant to terms hereof.
14
"Revolving Credit Exposure" shall mean, with respect to any
Lender at any time, the sum of the outstanding principal amount of such Lender's
Revolving Loans, such Lender's LC Exposure and such Lender's Swingline Exposure.
"Revolving Credit Note" shall mean a promissory note of the
Borrower payable to the order of a requesting Lender in the principal amount of
such Lender's Revolving Commitment, in substantially the form of Exhibit A.
---------
"Revolving Loan" shall mean a loan made by a Lender (other
than the Swingline Lender) to the Borrower under its Revolving Commitment, which
may either be a Base Rate Loan or a Eurodollar Loan.
"S&P" shall mean Standard & Poor's.
"Scheduled Commitment Termination Date" shall mean April 19,
2005.
"Securitization Transaction" shall mean (a) any transfer by
the Borrower or any Subsidiary of Receivables or interests therein and all
collateral securing such Receivables, all contracts and contract rights and all
guarantees or other obligations in respect of such Receivables, all other assets
that are customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving such Receivables and all proceeds of any of the foregoing (i) to a
trust, partnership, corporation or other entity (other than the Borrower or a
Subsidiary other than a SPE Subsidiary), which transfer is funded in whole or in
part, directly or indirectly, by the incurrence or issuance by the transferee or
any successor transferee of indebtedness or other securities that are to receive
payments from, or that represent interests in, the cash flow derived from such
Receivables or interests in Receivables, or (ii) directly to one or more
investors or other purchasers (other than the Borrower or any Subsidiary), or
(b) any transaction in which the Borrower or a Subsidiary incurs Indebtedness or
other obligations secured by Liens on Receivables. The "amount" or "principal
amount" of any Securitization Transaction shall be deemed at any time to be (x)
in the case of a transaction described in clause (a) of the preceding sentence,
the aggregate principal or stated amount of the Indebtedness or other securities
referred to in such clause or, if there shall be no such principal or stated
amount, the uncollected amount of the Receivables transferred pursuant to such
Securitization Transaction net of any such Receivables that have been written
off as uncollectible, and (y) in the case of a transaction described in clause
(b) of the preceding sentence, the aggregate outstanding principal amount of the
Indebtedness secured by Liens on the subject Receivables.
"Solvent" or "Solvency" shall mean, with respect to any Person
as of a particular date, that on such date (a) such Person is able to realize
upon its assets and pay its debts and other liabilities, contingent obligations
and other commitments as they mature in the normal course of business, (b) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature in their ordinary course, (c) such Person is not engaged in a business or
a transaction, and is not about to engage in a business or a transaction, for
which such Person's properties and assets would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage, (d) the fair value of
the properties and assets of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities, of such
Person and (e) the present fair saleable value of the properties and assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured. In computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount that, in light of
all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
"SPE Subsidiary" shall mean any Subsidiary formed solely for
the purpose of, and that engages only in, one or more Securitization
Transactions.
"Subsidiary" shall mean, with respect to any Person (the
"parent"), any corporation, partnership, joint venture, limited liability
company, association or other entity the accounts of which would be consolidated
with those of the parent in the parent's consolidated financial statements if
such financial statements were prepared in accordance with GAAP as of such date,
as well as any other corporation, partnership, joint venture, limited liability
company, association or other entity (a) of which securities or other ownership
interests representing more
15
than fifty percent (50%) of the equity or more than fifty percent (50%) of the
ordinary voting power, or in the case of a partnership, more than fifty percent
(50%) of the general partnership interests are, as of such date, owned,
Controlled or held, or (b) that is, as of such date, otherwise Controlled, by
the parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent. Unless otherwise indicated, all references to
"Subsidiary" hereunder shall mean a Subsidiary of the Borrower.
"Subsidiary Guarantee Agreement" shall mean the Subsidiary
Guarantee Agreement, substantially in the form of Exhibit D, made by the
---------
Subsidiary Loan Parties in favor of the Administrative Agent for the benefit of
the Lenders.
"Subsidiary Loan Party" shall mean any direct or indirect
Subsidiary.
"Swingline Commitment" shall mean the commitment of the
Swingline Lender to make Swingline Loans in an aggregate principal amount at any
time outstanding not to exceed $15,000,000.
"Swingline Exposure" shall mean, with respect to each Lender,
the principal amount of the Swingline Loans in which such Lender is legally
obligated either to make a Base Rate Loan or to purchase a participation in
accordance with Section 2.5, which shall equal such Lender's Pro Rata Share of
-----------
all outstanding Swingline Loans.
"Swingline Lender" shall mean SunTrust Bank, or any other
Lender that may agree to make Swingline Loans hereunder.
"Swingline Loan" shall mean a loan made to the Borrower by the
Swingline Lender under the Swingline Commitment.
"Swingline Note" shall mean the promissory note of the
Borrower payable to the order of the Swingline Lender in the principal amount of
the Swingline Commitment, in substantially the form of Exhibit B.
---------
"Swingline Rate" shall mean, for any Interest Period, the rate
as offered by the Administrative Agent and accepted by the Borrower. The
Borrower is under no obligation to accept this rate and the Administrative Agent
is under no obligation to provide it.
"Swingline Termination Date" shall mean the date that is five
(5) Business Days prior to the Commitment Termination Date.
"Synthetic Lease" shall mean a lease transaction under which
the parties intend that (a) the lease will be treated as an "operating lease" by
the lessee pursuant to Statement of Financial Accounting Standards No. 13, as
amended, and (b) the lessee will be entitled to various tax and other benefits
ordinarily available to owners (as opposed to lessees) of like property.
"Synthetic Lease Obligations" shall mean, with respect to any
Person, the sum of (a) all remaining rental obligations of such Person as lessee
under Synthetic Leases that are attributable to principal and, without
duplication, (b) all rental and purchase price payment obligations of such
Person under such Synthetic Leases assuming such Person exercises the option to
purchase the lease property at the end of the lease term.
"Taxes" shall mean any and all present or future taxes,
levies, imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"Type", when used in reference to a Loan or Borrowing, refers
to whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Base
Rate.
"Voting Stock" shall mean, with respect to any Person, Capital
Stock issued by such Person the holders of which are ordinarily, in the absence
of contingencies, entitled to vote for the election of directors (or
16
persons performing similar functions) of such Person, even though the right to
vote has been suspended by the happening of such a contingency.
"Withdrawal Liability" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.2 Classifications of Loans and Borrowings.
-------------------------------------------
For purposes of this Agreement, Loans may be classified and referred to by Class
(e.g. a "Revolving Loan" or "Swingline Loan") or by Type (e.g. a "Eurodollar
Loan" or "Base Rate Loan") or by Class and Type (e.g. "Revolving Eurodollar
Loan"). Borrowings also may be classified and referred to by Class (e.g.
"Revolving Borrowing") or by Type (e.g. "Eurodollar Borrowing") or by Class and
Type (e.g. " Revolving Eurodollar Borrowing").
Section 1.3 Accounting Terms and Determination. Unless
----------------------------------
otherwise defined or specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with GAAP as in effect from time to time, applied on a basis
consistent (except for such changes approved by the Borrower's independent
public accountants) with the most recent audited consolidated financial
statement of the Borrower delivered pursuant to Section 5.1(a); provided, that
----------- - --------
if the Borrower notifies the Administrative Agent that the Borrower wishes to
amend any covenant in Article VI to eliminate the effect of any change in GAAP
----------
on the operation of such covenant (or if the Administrative Agent notifies the
Borrower that the Required Lenders wish to amend Article VI for such purpose),
----------
then the Borrower's compliance with such covenant shall be determined on the
basis of GAAP in effect immediately before the relevant change in GAAP became
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to the Borrower and the Required Lenders.
Section 1.4 Terms Generally. The definitions of terms
---------------
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include',
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". The word "will" shall be construed to have the same meaning and
effect as the word "shall". In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and the word "to" means "to but excluding". Unless the context
requires otherwise (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as it was originally executed or as it
may from time to time be amended, supplemented or otherwise modified (subject to
any restrictions on such amendments, supplements or modifications set forth
herein), (ii) any reference herein to any Person shall be construed to include
such Person's successors and permitted assigns, (iii) the words "hereof",
"herein" and "hereunder" and words of similar import shall be construed to refer
to this Agreement as a whole and not to any particular provision hereof, (iv)
all references to Articles, Sections, Exhibits and Schedules shall be construed
to refer to Articles, Sections, Exhibits and Schedules to this Agreement and (v)
all references to a specific time shall be construed to refer to the time in the
city and state of the Administrative Agent's principal office, unless otherwise
indicated.
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENTS
Section 2.1 General Description of Facilities. Subject
---------------------------------
to and upon the terms and conditions herein set forth, (a) the Lenders hereby
establish in favor of the Borrower a revolving credit facility pursuant to which
the Lenders severally agree (to the extent of each Lender's Pro Rata Share up to
such Lender's Revolving Commitment) to make Revolving Loans to the Borrower in
accordance with Section 2.2, (b) the Issuing Bank agrees to issue Letters of
-----------
Credit in accordance with Section 2.22, (c) the Swingline Lender agrees to make
------------
Swingline Loans in accordance with Section 2.4, and (d) each Lender agrees to
-----------
purchase a participation interest in the Letters of Credit and the Swingline
Loans pursuant to the terms and conditions hereof; provided, that in no event
--------
shall the sum of the aggregate outstanding Revolving Credit Exposures of all
Lenders exceed at any time the Aggregate Revolving Commitments then in effect.
17
Section 2.2 Revolving Loans. Subject to the terms and
---------------
conditions set forth herein, each Lender severally agrees to make Revolving
Loans to the Borrower, from time to time during the Availability Period, in an
aggregate principal amount outstanding at any time that will not result in (a)
such Lender's Revolving Credit Exposure exceeding such Lender's Revolving
Commitment or (b) the sum of the aggregate Revolving Credit Exposures of all
Lenders exceeding the Aggregate Revolving Commitments. During the Availability
Period, the Borrower shall be entitled to borrow, prepay and reborrow Revolving
Loans in accordance with the terms and conditions of this Agreement; provided,
--------
that the Borrower may not borrow or reborrow should there exist a Default or
Event of Default.
Section 2.3 Procedure for Revolving Borrowings. The
----------------------------------
Borrower shall give the Administrative Agent written notice (or telephonic
notice promptly confirmed in writing) of each Revolving Borrowing, substantially
in the form of Exhibit 2.3 attached hereto (a "Notice of Revolving Borrowing"),
-----------
(a) prior to 11:00 a.m. on the requested date of each Base Rate Borrowing and
(b) prior to 11:00 a.m. three (3) Business Days prior to the requested date of
each Eurodollar Borrowing. Each Notice of Revolving Borrowing shall be
irrevocable and shall specify: (i) the aggregate principal amount of such
Borrowing, (ii) the date of such Borrowing (which shall be a Business Day),
(iii) the Type of such Revolving Loan comprising such Borrowing and (iv) in the
case of a Eurodollar Borrowing, the duration of the initial Interest Period
applicable thereto (subject to the provisions of the definition of Interest
Period). Each Revolving Borrowing shall consist entirely of Base Rate Loans or
Eurodollar Loans, as the Borrower may request. The aggregate principal amount of
each Eurodollar Borrowing shall be not less than $5,000,000 or a larger multiple
of $1,000,000, and the aggregate principal amount of each Base Rate Borrowing
shall not be less than $1,000,000 or a larger multiple of $100,000; provided,
--------
that Base Rate Loans made pursuant to Section 2.5 or Section 2.22(d) may be made
----------- ------------ -
in lesser amounts as provided therein. At no time shall the total number of
Eurodollar Borrowings outstanding at any time exceed six (6). Promptly following
the receipt of a Notice of Revolving Borrowing in accordance herewith, the
Administrative Agent shall advise each Lender of the details thereof and the
amount of such Lender's Revolving Loan to be made as part of the requested
Revolving Borrowing.
Section 2.4 Swingline Loans. Subject to the terms and
---------------
conditions set forth herein, the Swingline Lender agrees to make Swingline Loans
to the Borrower, from time to time from the Closing Date to the Swingline
Termination Date, in an aggregate principal amount outstanding at any time not
to exceed the lesser of (a) the Swingline Commitment then in effect and (b) the
difference between the Aggregate Revolving Commitments and the aggregate
outstanding Revolving Credit Exposures of all Lenders; provided, that the
--------
Swingline Lender shall not be required to make a Swingline Loan to refinance an
outstanding Swingline Loan. The Borrower shall be entitled to borrow, repay and
reborrow Swingline Loans in accordance with the terms and conditions of this
Agreement.
Section 2.5 Procedure for Swingline Borrowing; Etc.
---------------------------------------
(a) The Borrower shall give the Administrative Agent
written notice (or telephonic notice promptly confirmed in writing) of each
Swingline Borrowing ("Notice of Swingline Borrowing") prior to 11:00 a.m. on the
requested date of each Swingline Borrowing. Each Notice of Swingline Borrowing
shall be irrevocable and shall specify: (i) the principal amount of such
Swingline Loan, (ii) the date of such Swingline Loan (which shall be a Business
Day) and (iii) the account of the Borrower to which the proceeds of such
Swingline Loan should be credited. The Administrative Agent will promptly advise
the Swingline Lender of each Notice of Swingline Borrowing. Each Swingline Loan
shall accrue interest at the rate specified in Section 2.12(b) and shall have an
------------ -
Interest Period (subject to the definition thereof) as agreed between the
Borrower and the Swingline Lender. The aggregate principal amount of each
Swingline Loan shall be not less than $100,000 or a larger multiple of $50,000,
or such other minimum amounts agreed to by the Swingline Lender and the
Borrower. The Swingline Lender will make the proceeds of each Swingline Loan
available to the Borrower in Dollars in immediately available funds at the
account specified by the Borrower in the applicable Notice of Swingline
Borrowing not later than 1:00 p.m. on the requested date of such Swingline Loan.
The Administrative Agent will notify the Lenders on a quarterly basis if any
Swingline Loans occurred during such quarter.
(b) The Swingline Lender, at any time and from time to
time in its sole discretion, may, on behalf of the Borrower (which hereby
irrevocably authorizes and directs the Swingline Lender to act on its behalf),
give a Notice of Revolving Borrowing to the Administrative Agent requesting the
Lenders (including the Swingline
18
Lender) to make Base Rate Loans in an amount equal to the unpaid principal
amount of any Swingline Loan. Each Lender will make the proceeds of its Base
Rate Loan included in such Borrowing available to the Administrative Agent for
the account of the Swingline Lender in accordance with Section 2.6, which will
-----------
be used solely for the repayment of such Swingline Loan.
(c) If for any reason a Base Rate Borrowing may not be
(as determined in the sole discretion of the Administrative Agent), or is not,
made in accordance with the foregoing provisions, then each Lender (other than
the Swingline Lender) shall purchase an undivided participating interest in such
Swingline Loan in an amount equal to its Pro Rata Share thereof on the date that
such Base Rate Borrowing should have occurred. On the date of such required
purchase, each Lender shall promptly transfer, in immediately available funds,
the amount of its participating interest to the Administrative Agent for the
account of the Swingline Lender. If such Swingline Loan bears interest at a rate
other than the Base Rate, such Swingline Loan shall automatically become a Base
Rate Loan on the effective date of any such participation and interest shall
become payable on demand.
(d) Each Lender's obligation to make a Base Rate Loan
pursuant to Section 2.5(b) or to purchase the participating interests pursuant
----------- -
to Section 2.5(c) shall be absolute and unconditional and shall not be affected
----------- -
by any circumstance, including without limitation (i) any setoff, counterclaim,
recoupment, defense or other right that such Lender or any other Person may have
or claim against the Swingline Lender, the Borrower or any other Person for any
reason whatsoever, (ii) the existence of a Default or an Event of Default (other
than an Event of Default in existence at the time of the making of any Swingline
Loan by the Swingline Lender of which the Swingline Lender had actual knowledge)
or the termination of any Lender's Revolving Commitment, (iii) the existence (or
alleged existence) of any event or condition which has had or could reasonably
be expected to have a Material Adverse Effect, (iv) any breach of this Agreement
or any other Loan Document by the Borrower, the Administrative Agent or any
Lender or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing. If such amount is not in fact made
available to the Swingline Lender by any Lender, the Swingline Lender shall be
entitled to recover such amount on demand from such Lender, together with
accrued interest thereon for each day from the date of demand thereof at the
Federal Funds Rate. Until such time as such Lender makes its required payment,
the Swingline Lender shall be deemed to continue to have outstanding Swingline
Loans in the amount of the unpaid participation for all purposes of the Loan
Documents. In addition, such Lender shall be deemed to have assigned any and all
payments made of principal and interest on its Loans and any other amounts due
to it hereunder, to the Swingline Lender to fund the amount of such Lender's
participation interest in such Swingline Loans that such Lender failed to fund
pursuant to this Section 2.5, until such amount has been purchased in full.
-----------
Section 2.6 Funding of Borrowings.
---------------------
(a) Each Lender will make available each Loan to be made
by it hereunder on the proposed date thereof by wire transfer in immediately
available funds by 1:00 p.m. to the Administrative Agent at the Payment Office;
provided, that the Swingline Loans will be made as set forth in Section 2.5. The
- -------- -----------
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts that it receives, in like funds by the close of business
on such proposed date, to an account maintained by the Borrower with the
Administrative Agent or at the Borrower's option, by effecting a wire transfer
of such amounts to an account designated by the Borrower to the Administrative
Agent.
(b) Unless the Administrative Agent shall have been
notified by any Lender prior to 5:00 p.m. one (1) Business Day prior to the date
of a Borrowing in which such Lender is participating that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent on such date, and the
Administrative Agent, in reliance on such assumption, may make available to the
Borrower on such date a corresponding amount. If such corresponding amount is
not in fact made available to the Administrative Agent by such Lender on the
date of such Borrowing, the Administrative Agent shall be entitled to recover
such corresponding amount on demand from such Lender together with interest at
the Federal Funds Rate for up to two (2) days and thereafter at the rate
specified for such Borrowing. If the Administrative Agent has made available to
the Borrower any Lender's share of such Borrowing and such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent shall promptly notify the Borrower, and the
Borrower shall immediately pay such corresponding amount to the Administrative
Agent together
19
with interest at the rate specified for such Borrowing. Nothing in this
subsection shall be deemed to relieve any Lender from its obligation to fund its
Pro Rata Share of any Borrowing hereunder or to prejudice any rights which the
Borrower may have against any Lender as a result of any default by such Lender
hereunder.
(c) All Revolving Borrowings shall be made by the Lenders
on the basis of their respective Pro Rata Shares. No Lender shall be responsible
for any default by any other Lender in its obligations hereunder, and each
Lender shall be obligated to make its Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to make its Loans hereunder.
Section 2.7 Interest Elections.
------------------
(a) Each Borrowing initially shall be of the Type
specified in the applicable Notice of Borrowing, and in the case of a Eurodollar
Borrowing, shall have an initial Interest Period as specified in such Notice of
Borrowing. Thereafter, the Borrower may elect to convert such Borrowing into a
different Type or to continue such Borrowing, and in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this Section
-------
2.7. The Borrower may elect different options with respect to different portions
- ---
of the affected Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing. This
Section 2.7 shall not apply to Swingline Borrowings, which may not be converted
- -----------
or continued.
(b) To make an election pursuant to this Section 2.7, the
-----------
Borrower shall give the Administrative Agent prior written notice (or telephonic
notice promptly confirmed in writing) of each Borrowing (a "Notice of
Conversion/Continuation") that is to be converted or continued, as the case may
be, (x) prior to 11:00 a.m. on the Business Day of the requested date of a
conversion into a Base Rate Borrowing and (y) prior to 11:00 a.m. three (3)
Business Days prior to a continuation of or conversion into a Eurodollar
Borrowing. Each such Notice of Conversion/Continuation shall be irrevocable and
shall specify (i) the Borrowing to which such Notice of Continuation/Conversion
applies and if different options are being elected with respect to different
portions thereof, the portions thereof that are to be allocated to each
resulting Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) shall be specified for each resulting Borrowing); (ii)
the effective date of the election made pursuant to such Notice of
Continuation/Conversion, which shall be a Business Day, (iii) whether the
resulting Borrowing is to be a Base Rate Borrowing or a Eurodollar Borrowing;
and (iv) if the resulting Borrowing is to be a Eurodollar Borrowing, the
Interest Period applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of "Interest Period". If any
such Notice of Continuation/Conversion requests a Eurodollar Borrowing but does
not specify an Interest Period, the Borrower shall be deemed to have selected an
Interest Period of one month. The principal amount of any resulting Borrowing
shall satisfy the minimum borrowing amount for Eurodollar Borrowings and Base
Rate Borrowings set forth in Section 2.3.
-----------
(c) If, on the expiration of any Interest Period in
respect of any Eurodollar Borrowing, the Borrower shall have failed to deliver a
Notice of Conversion/Continuation, then, unless such Borrowing is repaid as
provided herein, the Borrower shall be deemed to have elected to convert such
Borrowing to a Base Rate Borrowing. No Borrowing may be converted into, or
continued as, a Eurodollar Borrowing if a Default or an Event of Default exists,
unless the Administrative Agent and each of the Lenders shall have otherwise
consented in writing. No conversion of any Eurodollar Loans shall be permitted
except on the last day of the Interest Period in respect thereof.
(d) Upon receipt of any Notice of
Conversion/Continuation, the Administrative Agent shall promptly notify each
Lender of the details thereof and of such Lender's portion of each resulting
Borrowing.
20
Section 2.8 Optional Reduction and Termination of
-------------------------------------
Commitments; Extension of Commitments.
- -------------------------------------
(a) Unless previously terminated, all Revolving
Commitments shall terminate on the Commitment Termination Date, except that the
Swingline Commitment shall terminate on the Swingline Termination Date.
(b) Upon at least three (3) Business Days' prior written
notice (or telephonic notice promptly confirmed in writing) to the
Administrative Agent (which notice shall be irrevocable), the Borrower may
reduce the Aggregate Revolving Commitments in part or terminate the Aggregate
Revolving Commitments in whole; provided, that (i) any partial reduction shall
--------
apply to reduce proportionately and permanently the Revolving Commitment of each
Lender, (ii) any partial reduction pursuant to this Section 2.8(b) shall be in
----------- -
an amount of at least $5,000,000 and any larger multiple of $1,000,000, and
(iii) no such reduction shall be permitted which would reduce the Aggregate
Revolving Commitments to an amount less than the sum of the aggregate
outstanding Revolving Credit Exposures of all Lenders. Any such reduction in the
Aggregate Revolving Commitments shall result in a proportionate and permanent
reduction (rounded to the next lowest integral multiple of $100,000) in the
Swingline Commitment and the LC Commitment.
(c) At least 60 but not more than 90 days prior to the
Scheduled Termination Date, the Borrower, by delivering a written request to the
Administrative Agent (such request being irrevocable), may request that the
Scheduled Commitment Termination Date be extended for an additional one-year
period, commencing on such Scheduled Commitment Termination Date. Upon receipt
of such notice, the Administrative Agent shall promptly communicate such request
to the Lenders.
(d) No earlier than 60 days prior, and no later than 45
days prior, to the Scheduled Commitment Termination Date, the Lenders shall
indicate to the Administrative Agent whether the Borrower's request to so extend
such Scheduled Commitment Termination Date is acceptable to the Lenders, it
being understood that the determination by each Lender will be in its sole and
absolute discretion and that the failure of any Lender to so respond within such
period shall be deemed to constitute a refusal by such Lender to consent to such
request, with the result being that such request is denied (any Lender refusing
or deemed to refuse any such request, a "Non-Consenting Lender"). The
Administrative Agent shall notify the Borrower, in writing, of the Lenders'
decisions no later than 30 days prior to the end of the Scheduled Commitment
Termination Date.
(e) Subject to the satisfaction of the conditions set
forth in Section 3.2, in the event that the sum of the Revolving Commitments of
-----------
the Lenders that have consented to the Borrower's request to extend the
Scheduled Commitment Termination Date (the "Consenting Lenders") plus the
Revolving Commitments of Non-Consenting Lenders with respect to such request
that have been assigned pursuant to Section 10.4(b) shall constitute at least
------------ -
80% of the aggregate Revolving Commitments, the Scheduled Commitment Termination
Date shall be extended for an additional one-year period with respect to the
Revolving Commitments of such Consenting Lenders. The Revolving Commitments of
Non-Consenting Lenders with respect to such request shall automatically
terminate on the last day of the Scheduled Commitment Termination Date (and the
principal amount of all Revolving Loans made by such Non-Consenting Lenders,
together with accrued interest and fees to such date, shall be repaid), unless
assigned pursuant to Section 10.4(b); provided, that before the Borrower may
------------ - --------
solicit any institution other than the Consenting Lenders to purchase any
Non-Consenting Lender's Revolving Commitment pursuant to Section 10.4(b), the
------------ -
Consenting Lenders, at least 15 days before the Scheduled Commitment Termination
Date, shall determine whether to purchase by assignment the Revolving
Commitments of such Non-Consenting Lenders.
Section 2.9 Repayment of Loans.
------------------
(a) The outstanding principal amount of all Revolving
Loans shall be due and payable on the Commitment Termination Date. Interest on
all Revolving Loans shall be payable as set forth in Section 2.12(d).
------------ -
(b) The principal amount of each Swingline Loan shall be
due and payable on the earlier of (i) the last day of the Interest Period
applicable to such Borrowing and (ii) the Swingline Termination Date. Interest
on all Swingline Loans shall be payable as set forth in Section 2.12(d).
------------ -
21
Section 2.10 Evidence of Indebtedness.
------------------------
(a) Each Lender shall maintain in accordance with its
usual practice appropriate records evidencing the indebtedness of the Borrower
to such Lender resulting from each Loan made by such Lender from time to time,
including the amounts of principal and interest payable thereon and paid to such
Lender from time to time under this Agreement. The Administrative Agent shall
maintain appropriate records in which shall be recorded (i) the Revolving
Commitment of each Lender, (ii) the amount of each Loan made hereunder by each
Lender, the Class and Type thereof and the Interest Period applicable thereto,
(iii) the date of each continuation thereof pursuant to Section 2.7, (iv) the
-----------
date of each conversion of all or a portion thereof to another Type pursuant to
Section 2.7, (v) the date and amount of any principal or interest due and
- -----------
payable or to become due and payable from the Borrower to each Lender hereunder
in respect of such Loans and (vi) both the date and amount of any sum received
by the Administrative Agent hereunder from the Borrower in respect of the Loans
and each Lender's Pro Rata Share thereof. The entries made in such records shall
be prima facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded; provided, that the failure or delay of any Lender or
--------
the Administrative Agent in maintaining or making entries into any such record
or any error therein shall not in any manner affect the obligation of the
Borrower to repay the Loans (both principal and unpaid accrued interest) of such
Lender in accordance with the terms of this Agreement.
(b) At the request of any Lender (including the Swingline
Lender) at any time, the Borrower agrees that it will execute and deliver to
such Lender a Revolving Credit Note, and, in the case of the Swingline Lender
only, a Swingline Note, payable to the order of such Lender. At the request of
the Borrower, any such Revolving Credit Note or Swingline Note may be executed
and delivered by the Borrower outside of the State of Florida in such location
within the continental United States as may reasonably be acceptable to the
Administrative Agent.
Section 2.11 Prepayments.
-----------
(a) Mandatory Prepayments. The Borrower shall be required
to make mandatory principal prepayments to the Administrative Agent without the
Administrative Agent's further demand therefor (i) if, as of any fiscal quarter
end of the Borrower, the sum of the aggregate outstanding Revolving Credit
Exposures of all Lenders exceed the aggregate amount that the Borrower would
then have been entitled to borrow or retain under the applicable provisions of
Section 2.1 and (ii) if, and to the extent, required by Section 7.6(c). Such
- ----------- ----------- -
mandatory principal prepayment under clause (i) above shall be in the amount
necessary to reduce the sum of the aggregate outstanding Revolving Credit
Exposures of all Lenders to the maximum amount that the Borrower then would be
entitled to borrow or retain hereunder and shall be made, in any event, within
ten (10) days after the end of the applicable fiscal quarter end of Borrower.
Further, such mandatory principal prepayment under clause (ii) above shall be
made promptly following receipt by Borrower of the Net Cash Proceeds pursuant to
Section 7.6(c).
- ----------- -
(b) Optional Prepayments. The Borrower shall have the
right at any time and from time to time to prepay any Borrowing, in whole or in
part, without premium or penalty, by giving irrevocable written notice (or
telephonic notice promptly confirmed in writing) to the Administrative Agent no
later than 11:00 a.m. (i) in the case of prepayment of any Eurodollar Borrowing,
not less than three (3) Business Days prior to any such prepayment, (ii) in the
case of any prepayment of any Base Rate Borrowing, on the Business Day of such
prepayment, and (iii) in the case of Swingline Borrowings, on the date of such
prepayment. Each such notice shall be irrevocable and shall specify the proposed
date of such prepayment and the principal amount of each Borrowing or portion
thereof to be prepaid. Upon receipt of any such notice, the Administrative Agent
shall promptly notify each affected Lender of the contents thereof and of such
Lender's Pro Rata Share of any such prepayment. If such notice is given, the
aggregate amount specified in such notice shall be due and payable on the date
designated in such notice, together with accrued interest to such date on the
amount so prepaid in accordance with Section 2.12(d); provided, that if a
------------ - --------
Eurodollar Borrowing is prepaid on a date other than the last day of an Interest
Period applicable thereto, the Borrower shall also pay all amounts required
pursuant to Section 2.18. Each partial prepayment of any Loan (other than a
------------
Swingline Loan) shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type pursuant to Section 2.3 or in
-----------
the case of a Swingline Loan pursuant to Section 2.5. Each prepayment of a
-----------
Borrowing shall be applied ratably to the Loans comprising such Borrowing.
22
Section 2.12 Interest on Loans.
-----------------
(a) The Borrower shall pay interest on each Base Rate Loan
at the Base Rate in effect from time to time and on each Eurodollar Loan at the
Adjusted LIBO Rate for the applicable Interest Period in effect for such Loan,
plus, in each case, the Applicable Margin in effect from time to time but, in no
event, to exceed the Maximum Rate.
(b) The Borrower shall pay interest on each Swingline Loan
at the Swingline Rate in effect from time to time but, in no event, to exceed
the Maximum Rate.
(c) While an Event of Default exists or after
acceleration, at the option of the Required Lenders, the Borrower shall pay
interest ("Default Interest") with respect to all Eurodollar Loans at the rate
otherwise applicable for the then-current Interest Period plus an additional two
percent (2%) per annum until the last day of such Interest Period, and
thereafter, and with respect to all Base Rate Loans (including all Swingline
Loans) and all other Obligations hereunder (other than Loans), at an all-in rate
in effect for Base Rate Loans (i.e., including Applicable Margin), plus an
additional 2% per annum.
(d) Interest on the principal amount of all Loans shall
accrue from and including the date such Loans are made to but excluding the date
of any repayment thereof. Interest on all outstanding Base Rate Loans shall be
payable quarterly in arrears on the last day of each fiscal quarter of the
Borrower and on the Commitment Termination Date. Interest on all outstanding
Eurodollar Loans shall be payable on the last day of each Interest Period
applicable thereto, and, in the case of any Eurodollar Loans having an Interest
Period in excess of three months, on each day which occurs every three months
after the initial date of such Interest Period, and on the Commitment
Termination Date. Interest on each Swingline Loan shall be payable quarterly in
arrears on the last day of each fiscal quarter of the Borrower and on the
Swingline Termination Date. Interest on any Loan which is converted into a Loan
of another Type or which is repaid or prepaid shall be payable on the date of
such conversion or on the date of any such repayment or prepayment (on the
amount repaid or prepaid) thereof. All Default Interest shall be payable on
demand.
(e) The Administrative Agent shall determine each interest
rate applicable to the Loans hereunder and shall promptly notify the Borrower
and the Lenders of such rate in writing (or by telephone, promptly confirmed in
writing). Any such determination shall be conclusive and binding for all
purposes, absent manifest error.
Section 2.13 Fees.
----
(a) Administrative Agent Fees. The Borrower shall pay to
the Administrative Agent for its own account fees in the amounts and at the
times previously agreed upon the Borrower and the Administrative Agent.
(b) Commitment Fees. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Percentage (determined quarterly in accordance
with Schedule I or Schedule II, as applicable) on the average daily amount of
---------- -----------
the unused Revolving Commitment of such Lender during the Availability Period;
provided, that if such Lender continues to have any Revolving Credit Exposure
- --------
after the Commitment Termination Date, then the commitment fee shall continue to
accrue on the average daily amount of such Lender's unused Revolving Commitment
from and after the Commitment Termination Date to the date that all of such
Lender's Revolving Credit Exposure has been paid in full. The Applicable
Percentage shall initially be 0.25%, but shall be reset from time to time as
provided in the definition of "Applicable Percentage" herein. Accrued commitment
fees shall be payable in arrears on the last day of each fiscal quarter of the
Borrower and on the Commitment Termination Date, commencing on the first such
date after the Closing Date; provided that any commitment fees accruing after
--------
the Commitment Termination Date shall be payable on demand. For purposes of
computing commitment fees with respect to the Revolving Commitments, the
Revolving Commitment of each Lender shall be deemed used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender (but outstanding
Swingline Loans shall not be deemed usage of the Revolving Commitment of each
Lender).
23
(c) Letter of Credit Fees. The Borrower agrees to pay (i)
to the Administrative Agent, for the account of each Lender, a letter of credit
fee with respect to its participation in each Letter of Credit, which shall
accrue at the Applicable Margin then in effect for Eurodollar Borrowings on the
average daily amount of such Lender's LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) attributable to such Letter of
Credit during the period from and including the date of issuance of such Letter
of Credit to but excluding the date on which such Letter expires or is drawn in
full (including without limitation any LC Exposure that remains outstanding
after the Commitment Termination Date) and (ii) to the Issuing Bank for its own
account a fronting fee, which shall accrue at the rate of 0.125% per annum on
the average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the Availability Period
(or until the date that such Letter of Credit is irrevocably cancelled,
whichever is later), as well as the Issuing Bank's standard fees with respect to
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder.
(d) Payments. Accrued fees shall be payable quarterly in
arrears on the last day of each fiscal quarter of the Borrower, commencing on
June 30, 2002 and on the Commitment Termination Date (and if later, the date the
Loans and LC Exposure shall be repaid in their entirety).
Section 2.14 Computation of Interest and Fees. All
--------------------------------
computations of interest and fees hereunder shall be made on the basis of a year
of 360 days for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest or fees are
payable (to the extent computed on the basis of days elapsed). Each
determination by the Administrative Agent of an interest amount or fee hereunder
shall be made in good faith and, except for manifest error, shall be final,
conclusive and binding for all purposes.
Section 2.15 Inability to Determine Interest Rates. If
-------------------------------------
prior to the commencement of any Interest Period for any Eurodollar Borrowing,
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant interbank market, adequate means do not
exist for ascertaining LIBOR for such Interest Period, or
(b) the Administrative Agent shall have received notice
from the Required Lenders that the Adjusted LIBO Rate does not adequately and
fairly reflect the cost to such Lenders (or Lender, as the case may be) of
making, funding or maintaining their (or its, as the case may be) Eurodollar
Loans for such Interest Period,
the Administrative Agent shall give written notice (or telephonic notice,
promptly confirmed in writing) to the Borrower and to the Lenders as soon as
practicable thereafter. In the case of Eurodollar Loans, until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) the obligations of
the Lenders to make Eurodollar Revolving Loans or to continue or convert
outstanding Loans as or into Eurodollar Loans shall be suspended and (ii) all
such affected Loans shall be converted into Base Rate Loans on the last day of
the then current Interest Period applicable thereto unless the Borrower prepays
such Loans in accordance with this Agreement. Unless the Borrower notifies the
Administrative Agent at least one (1) Business Day before the date of any
Eurodollar Revolving Borrowing for which a Notice of Revolving Borrowing has
previously been given that it elects not to borrow on such date, then such
Revolving Borrowing shall be made as a Base Rate Borrowing.
Section 2.16 Illegality. If any Change in Law shall make
----------
it unlawful or impossible for any Lender to make, maintain or fund any
Eurodollar Loan and such Lender shall so notify the Administrative Agent, the
Administrative Agent shall promptly give notice thereof to the Borrower and the
other Lenders, whereupon until such Lender notifies the Administrative Agent and
the Borrower that the circumstances giving rise to such suspension no longer
exist, the obligation of such Lender to make Eurodollar Revolving Loans, or to
continue or convert outstanding Loans as or into Eurodollar Loans, shall be
suspended. In the case of the making of a Eurodollar Revolving Borrowing, such
Lender's Revolving Loan shall be made as a Base Rate Loan as part of the same
Revolving Borrowing for the same Interest Period and if the affected Eurodollar
Loan is then outstanding, such Loan shall be converted to a Base Rate Loan
either (a) on the last day of the then current Interest Period applicable to
such Eurodollar Loan if such Lender may lawfully continue to maintain such Loan
to such date or (b) immediately if such Lender shall determine that it may not
lawfully continue to maintain such Eurodollar Loan
24
to such date. Notwithstanding the foregoing, the affected Lender shall, prior to
giving such notice to the Administrative Agent, designate a different Applicable
Lending Office if such designation would avoid the need for giving such notice
and if such designation would not otherwise be disadvantageous to such Lender in
the good faith exercise of its discretion.
Section 2.17 Increased Costs.
---------------
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirement that is not otherwise
included in the determination of the Adjusted LIBO Rate
hereunder against assets of, deposits with or for the account
of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or the
Issuing Bank; or
(ii) impose on any Lender or on the Issuing Bank or
the eurodollar interbank market any other condition affecting
this Agreement or any Eurodollar Loans made by such Lender or
any Letter of Credit or any participation therein;
and the result of the foregoing is to increase the cost to such Lender of
making, converting into, continuing or maintaining a Eurodollar Loan or to
increase the cost to such Lender or the Issuing Bank of participating in or
issuing any Letter of Credit or to reduce the amount received or receivable by
such Lender or the Issuing Bank hereunder (whether of principal, interest or any
other amount), then the Borrower shall promptly pay, upon written notice from
and demand by such Lender on the Borrower (with a copy of such notice and demand
to the Administrative Agent), to the Administrative Agent for the account of
such Lender, within five (5) Business Days after the date of such notice and
demand, additional amount or amounts sufficient to compensate such Lender or the
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
(b) If any Lender or the Issuing Bank shall have
determined that on or after the date of this Agreement any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or the Issuing Bank's capital (or on the capital of
such Lender's or the Issuing Bank's parent corporation) as a consequence of its
obligations hereunder or under or in respect of any Letter of Credit to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's parent corporation could have achieved but for such Change in Law, then,
from time to time, within five (5) Business Days after receipt by the Borrower
of written demand by such Lender (with a copy thereof to the Administrative
Agent), the Borrower shall pay to such Lender such additional amounts as will
compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's parent corporation for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender or the Issuing
Bank or such Lender's or the Issuing Bank's parent corporation, as the case may
be, specified in paragraph (a) or (b) of this Section 2.17 shall be delivered to
------------
the Borrower (with a copy to the Administrative Agent) and shall be conclusive,
absent manifest error. The Borrower shall pay any such Lender or the Issuing
Bank, as the case may be, such amount or amounts within ten (10) days after
receipt thereof.
(d) Failure or delay on the part of any Lender or the
Issuing Bank to demand compensation pursuant to this Section 2.17 shall not
------------
constitute a waiver of such Lender's or the Issuing Bank's right to demand such
compensation.
Section 2.18 Funding Indemnity. In the event of (a) the
-----------------
payment of any principal of a Eurodollar Loan other than on the last day of the
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion or continuation of a Eurodollar Loan other than on
the last day of the Interest Period applicable thereto, or (c) the failure by
the Borrower to borrow, prepay, convert or continue any Eurodollar Loan on the
date specified in any applicable notice (regardless of whether such notice is
withdrawn or revoked), then, in any such event, the Borrower shall compensate
each Lender, within five (5) Business Days after written demand from such
Lender, for any loss, cost or expense attributable to such event. In the case of
a Eurodollar Loan, such loss, cost or expense shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (i) the
25
amount of interest that would have accrued on the principal amount of such
Eurodollar Loan if such event had not occurred at the Adjusted LIBO Rate
applicable to such Eurodollar Loan for the period from the date of such event to
the last day of the then current Interest Period therefor (or in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Eurodollar Loan) over (ii) the amount of interest that
would accrue on the principal amount of such Eurodollar Loan for the same period
if the Adjusted LIBO Rate were set on the date such Eurodollar Loan was prepaid
or converted or the date on which the Borrower failed to borrow, convert or
continue such Eurodollar Loan. A certificate as to any additional amount payable
under this Section 2.18 submitted to the Borrower by any Lender shall be
------------
conclusive, absent manifest error.
Section 2.19 Taxes.
-----
(a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided, that if the
--------
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.19) the Administrative Agent, any
------------
Lender or the Issuing Bank (as the case may be) shall receive an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent,
each Lender and the Issuing Bank, within five (5) Business Days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by the Administrative Agent, such Lender or the Issuing Bank, as the case
may be, on or with respect to any payment by or on account of any obligation of
the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 2.19) and any
------------
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive
absent manifest error.
(d) As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate. Without limiting
the generality of the foregoing, each Foreign Lender agrees that it will deliver
to the Administrative Agent and the Borrower (or in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
(i) two (2) duly completed copies of Internal Revenue Service Form 1001 or 4224,
or any successor form thereto, as the case may be, certifying in each case that
such Foreign Lender is entitled to receive payments made by the Borrower
hereunder and under the Notes payable to it, without deduction or withholding of
any United States federal income taxes and (ii) a duly completed Internal
Revenue Service Form W-8 or W-9, or any successor form thereto, as the case may
be, to establish an exemption from United State backup withholding tax. Each
such Foreign Lender shall deliver to the Borrower and the Administrative Agent
such forms on or before the date that it becomes a party to this Agreement (or
in the case of a Participant, on or before the date such Participant purchases
the related participation). In addition, each such Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Lender. Each such Lender shall promptly notify the Borrower
and the Administrative Agent at any time that it
26
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose).
Section 2.20 Payments Generally; Pro Rata Treatment;
---------------------------------------
Sharing of Set-offs.
- -------------------
(a) The Borrower shall make each payment required to be
made by it hereunder (whether of principal, interest, fees or reimbursement of
LC Disbursements, or of amounts payable under Section 2.17, 2.18, 2.19, or
------------ ---- ----
10.3, or otherwise) and each optional prepayment permitted by Section 2.11(b)
- ---- ------------ -
prior to 12:00 noon, on the date when due, in immediately available funds,
without set-off or counterclaim. Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at
the Payment Office, except payments to be made directly to the Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.17, 2.18, 2.19 and 10.3 shall be made directly to the Persons
------------- ---- ---- ----
entitled thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be made payable for the period of such extension. All
payments hereunder shall be made in Dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such funds
shall be applied (i) first, towards payment of interest and fees then due
-----
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
------
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-of
or counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans or participations in LC Disbursements or
Swingline Loans that would result in such Lender receiving payment of a greater
proportion of the aggregate amount of its Revolving Loans and participations in
LC Disbursements and Swingline Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans and participations in LC Disbursements and Swingline Loans of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans and
participations in LC Disbursements and Swingline Loans; provided, that (i) if
--------
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements or Swingline Loans to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative Agent
may assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
the Issuing Bank, as the case may be, the amount or amounts due. In such event,
if the Borrower has not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but
27
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required
to be made by it pursuant to Sections 2.5(b), 2.6(b), 2.20(d), 2.22(d) or (e) or
------------ - --- - ---- - ---- - -
10.3(d), then the Administrative Agent may, in its discretion (notwithstanding
- ---- -
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.
Section 2.21 Mitigation of Obligations; Replacement of
-----------------------------------------
Lenders.
- -------
(a) If any Lender requests compensation under
Section 2.17, or if the Borrower is required to pay any additional amount to any
- ------------
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.19, then such Lender shall use reasonable efforts to designate a
- ------------
different lending office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the sole judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable under Section 2.17 or
------------
Section 2.19, as the case may be, in the future and (ii) would not subject such
- ------------
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all costs and
expenses incurred by any Lender in connection with such designation or
assignment.
(b) If any Lender requests compensation under
Section 2.17, or if the Borrower is required to pay any additional amount to any
- ------------
Lender or any Governmental Authority of the account of any Lender pursuant to
Section 2.19, or if any Lender defaults in its obligation to fund Loans
- ------------
hereunder, then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
set forth in Section 10.4(b) all its interests, rights and obligations under
------------ -
this Agreement to an assignee that shall assume such obligations (which assignee
may be another Lender); provided, that (i) the Borrower shall have received the
--------
prior written consent of the Administrative Agent, which consent shall not be
unreasonably withheld, (ii) such Lender shall have received payment of an amount
equal to the outstanding principal amount of all Loans owed to it, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (in the case of such outstanding principal and accrued
interest) and from the Borrower (in the case of all other amounts) and (iii) in
the case of a claim for compensation under Section 2.17 or payments required to
------------
be made pursuant to Section 2.19, such assignment will result in a reduction in
------------
such compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.
Section 2.22 Letters of Credit.
-----------------
(a) On the Closing Date, Bank of America, N.A., as the
Issuing Bank under the Existing Letters of Credit, in reliance upon the
agreements of the other Lenders pursuant to Section 2.22(d), agrees to continue
------------ -
the prior issuance of such Existing Letters of Credit on the terms and
conditions set forth therein. Thereafter during the Availability Period, the
Issuing Bank, in reliance upon said agreements of the other Lenders pursuant to
Section 2.22(d), agrees to issue, at the request of the Borrower, Letters of
- ------------ -
Credit for the account of the Borrower on the terms and conditions hereinafter
set forth; provided, that (i) each Letter of Credit shall expire on the earlier
--------
of (A) the date one year after the date of issuance of such Letter of Credit (or
in the case of any renewal or extension thereof, one year after such renewal or
extension) and (B) the date that is five (5) Business Days prior to the
Commitment Termination Date; (ii) each Letter of Credit may be in any stated
amount subject, however, to the provisions of clause (iii) hereof; and (iii) the
------- -------
Borrower may not request any Letter of Credit, if, after giving effect to such
issuance (A) the aggregate LC Exposure would exceed the LC Commitment or (B) the
sum of the aggregate outstanding Revolving Credit Exposures of all Lenders would
exceed the Aggregate Revolving Commitments. Upon the issuance of each Letter of
Credit (which, as set forth in the definition thereof, includes each Existing
Letter of Credit), each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Bank without recourse a
participation in such Letter of Credit equal to such Lender's Pro Rata Share of
the aggregate amount available to be drawn under such Letter of Credit. Each
issuance of a Letter of Credit shall be
28
deemed to utilize the Revolving Commitment of each Lender by an amount equal to
the amount of such participation.
(b) To request the issuance of a Letter of Credit (or any
amendment, renewal or extension of an outstanding Letter of Credit), the
Borrower shall give the Issuing Bank and the Administrative Agent irrevocable
written notice at least three (3) Business Days prior to the requested date of
such issuance specifying the date (which shall be a Business Day) such Letter of
Credit is to be issued (or amended, extended or renewed, as the case may be),
the expiration date of such Letter of Credit, the amount of such Letter of
Credit , the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. In addition to the satisfaction of the conditions in Article III, the
-----------
issuance of such Letter of Credit (or any amendment which increases the amount
of such Letter of Credit) will be subject to the further conditions that such
Letter of Credit shall be in such form and contain such terms as the Issuing
Bank shall approve and that the Borrower shall have executed and delivered any
additional applications, agreements and instruments relating to such Letter of
Credit as the Issuing Bank shall reasonably require; provided, that in the event
--------
of any conflict between such applications, agreements or instruments and this
Agreement, the terms of this Agreement shall control.
(c) At least two (2) Business Days prior to the issuance
of any Letter of Credit, the Issuing Bank will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has received
such notice and if not, the Issuing Bank will provide the Administrative Agent
with a copy thereof. Unless the Issuing Bank has received notice from the
Administrative Agent on or before the Business Day immediately preceding the
date the Issuing Bank is to issue the requested Letter of Credit directing the
Issuing Bank not to issue the Letter of Credit because such issuance is not then
permitted hereunder because of the limitations set forth in Section 2.22(a) or
------------ -
that one or more conditions specified in Article III are not then satisfied,
-----------
then, subject to the terms and conditions hereof, the Issuing Bank shall, on the
requested date, issue such Letter of Credit in accordance with the Issuing
Bank's usual and customary business practices.
(d) The Issuing Bank shall examine all documents purporting to
represent a demand for payment under a Letter of Credit promptly following its
receipt thereof. The Issuing Bank shall notify the Borrower and the
Administrative Agent of such demand for payment and whether the Issuing Bank has
made or will make a LC Disbursement thereunder; provided, that any failure to
--------
give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the Lenders with respect to such LC
Disbursement. The Borrower shall be irrevocably and unconditionally obligated to
reimburse the Issuing Bank for any LC Disbursements paid by the Issuing Bank in
respect of such drawing, without presentment, demand or other formalities of any
kind. Unless the Borrower shall have notified the Issuing Bank and the
Administrative Agent prior to 11:00 a.m. on the Business Day immediately prior
to the date on which such drawing is honored that the Borrower intends to
reimburse the Issuing Bank for the amount of such drawing in funds other than
from the proceeds of Revolving Loans, the Borrower shall be deemed to have
timely given a Notice of Revolving Borrowing to the Administrative Agent
requesting the Lenders to make a Base Rate Borrowing on the date on which such
drawing is honored in an exact amount due to the Issuing Bank; provided, that
--------
for purposes solely of such Borrowing, the conditions precedents set forth in
Section 3.2 hereof shall not be applicable. The Administrative Agent shall
- -----------
notify the Lenders of such Borrowing in accordance with Section 2.3, and each
-----------
Lender shall make the proceeds of its Base Rate Loan included in such Borrowing
available to the Administrative Agent for the account of the Issuing Bank in
accordance with Section 2.6. The proceeds of such Borrowing shall be applied
-----------
directly by the Administrative Agent to reimburse the Issuing Bank for such LC
Disbursement.
(e) If for any reason a Base Rate Borrowing may not be (as
determined in the sole discretion of the Administrative Agent), or is not, made
in accordance with the foregoing provisions, then each Lender (other than the
Issuing Bank) shall be obligated to fund the participation that such Lender
purchased pursuant to subsection (a) in an amount equal to its Pro Rata Share of
such LC Disbursement on and as of the date which such Base Rate Borrowing should
have occurred. Each Lender's obligation to fund its participation shall be
absolute and unconditional and shall not be affected by any circumstance,
including without limitation (i) any setoff, counterclaim, recoupment, defense
or other right that such Lender or any other Person may have against the Issuing
Bank or any other Person for any reason whatsoever, (ii) the existence of a
Default or an Event of Default (other than an Event of Default in existence at
the time of the issuance of any Letter of Credit by the Issuing Bank of which
the Issuing Bank had actual knowledge) or the termination of the Aggregate
Revolving Commitments, (iii) any adverse change in the condition (financial or
otherwise) of the Borrower or any of its Subsidiaries, (iv) any breach
29
of this Agreement by the Borrower or any other Lender, (v) any amendment,
renewal or extension of any Letter of Credit or (vi) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
On the date that such participation is required to be funded, each Lender shall
promptly transfer, in immediately available funds, the amount of its
participation to the Administrative Agent for the account of the Issuing Bank.
Whenever, at any time after the Issuing Bank has received from any such Lender
the funds for its participation in a LC Disbursement, the Issuing Bank (or the
Administrative Agent on its behalf) receives any payment on account thereof, the
Administrative Agent or the Issuing Bank, as the case may be, will distribute to
such Lender its Pro Rata Share of such payment; provided, that if such payment
--------
is required to be returned for any reason to the Borrower or to a trustee,
receiver, liquidator, custodian or similar official in any bankruptcy
proceeding, such Lender will return to the Administrative Agent or the Issuing
Bank any portion thereof previously distributed by the Administrative Agent or
the Issuing Bank to it.
(f) To the extent that any Lender shall fail to pay any
amount required to be paid pursuant to paragraph (d) of this Section 2.22 on the
------------
due date therefor, such Lender shall pay interest to the Issuing Bank (through
the Administrative Agent) on such amount from such due date to the date such
payment is made at a rate per annum equal to the Federal Funds Rate; provided,
--------
that if such Lender shall fail to make such payment to the Issuing Bank within
three (3) Business Days of such due date, then, retroactively to the due date,
such Lender shall be obligated to pay interest on such amount at the Default
Rate.
(g) If any Event of Default shall occur and be continuing,
on the Business Day that the Borrower receives notice from the Administrative
Agent or the Required Lenders demanding the deposit of cash collateral pursuant
to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon; provided, that the obligation
--------
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or notice of
any kind, upon the occurrence of any Event of Default with respect to the
Borrower described in clause (g) or (h) of Section 8.1. Such deposit shall be
-----------
held by the Administrative Agent as collateral for the payment and performance
of the obligations of the Borrower under this Agreement. The Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. At the request of the Borrower, the
Administrative Agent shall hold such deposit in an interest-bearing money market
demand deposit account at the Borrower's risk and expense; otherwise, such
deposit shall not bear interest. Interest and profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall
applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it had not been reimbursed and to the extent so applied,
shall be held for the satisfaction of the reimbursement obligations of the
Borrower for the LC Exposure at such time or, if the maturity of the Loans has
been accelerated, with the consent of the Required Lenders, be applied to
satisfy other obligations of the Borrower under this Agreement. If the Borrower
is required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not so applied as
aforesaid) shall be returned to the Borrower with three (3) Business Days after
all Events of Default have been cured or waived.
(h) Promptly following the end of each fiscal quarter, the
Issuing Bank shall deliver (through the Administrative Agent) to each Lender and
the Borrower a report describing the aggregate Letters of Credit outstanding at
the end of such fiscal quarter. Upon the request of any Lender from time to
time, the Issuing Bank shall deliver to such Lender any other information
reasonably requested by such Lender with respect to each Letter of Credit then
outstanding.
(i) The Borrower's obligation to reimburse LC
Disbursements hereunder shall be absolute, unconditional and irrevocable and
shall be performed strictly in accordance with the terms of this Agreement under
all circumstances whatsoever and irrespective of any of the following
circumstances:
(i) Any lack of validity or enforceability of any Letter
of Credit or this Agreement;
(ii) The existence of any claim, set-off, defense or other
right which the Borrower or any Subsidiary or Affiliate of the Borrower
may have at any time against a beneficiary or any transferee of any
Letter of Credit (or any Persons or entities for whom any such
beneficiary or transferee may be acting), any
30
Lender (including the Issuing Bank) or any other Person, whether in
connection with this Agreement or the Letter of Credit or any document
related hereto or thereto or any unrelated transaction;
(iii) Any draft or other document presented under a Letter
of Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate in any respect;
(iv) Payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or other document to the Issuing Bank
that does not comply with the terms of such Letter of Credit;
(v) Any other event or circumstance whatsoever, whether or
not similar to any of the foregoing, that might, but for the provisions
of this Section 2.22, constitute a legal or equitable discharge of, or
------------
provide a right of setoff against, the Borrower's obligations
hereunder; or
(vi) The existence of a Default or an Event of Default.
Neither the Administrative Agent, the Issuing Bank, the Lenders nor any Related
Party of any of the foregoing shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to above), or any error, omission, interruption, loss
or delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of the Issuing Bank;
provided, that the foregoing shall not be construed to excuse the Issuing Bank
- --------
from liability to the Borrower to the extent of any direct damages (as opposed
to consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by the Issuing Bank's failure to exercise care when determining
whether drafts or other documents presented under a Letter of Credit comply with
the terms thereof. The parties hereto expressly agree, that in the absence of
gross negligence or willful misconduct on the part of the Issuing Bank (as
finally determined by a court of competent jurisdiction), the Issuing Bank shall
be deemed to have exercised care in each such determination. In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented that appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(j) Each Letter of Credit shall be subject to the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No.500, as the same may be amended from time to
time, and, to the extent not inconsistent therewith, the governing law of this
Agreement set forth in Section 10.5.
------------
ARTICLE III
CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT
Section 3.1 Conditions To Effectiveness. The obligations
---------------------------
of the Lenders (including the Swingline Lender) initially to make Loans and the
obligation of the Issuing Bank initially to issue any Letter of Credit hereunder
shall not become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 10.2).
------------
(a) The Administrative Agent shall have received all fees
and other amounts due and payable on or prior to the Closing Date, including
reimbursement or payment of all out-of-pocket expenses (including reasonable
fees, charges and disbursements of counsel to the Administrative Agent) required
to be reimbursed or paid by the Borrower hereunder, under any other Loan
Document and under any agreement with the Administrative Agent or SunTrust
Robinson Humphrey Capital Markets, a division of SunTrust Capital Markets, Inc.,
as Arranger.
31
(b) The Administrative Agent (or its counsel) shall have
received the following:
(i) a counterpart of this Agreement signed by or
on behalf of each party thereto or written evidence
satisfactory to the Administrative Agent (which may include
telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this
Agreement;
(ii) if requested by any Lender, duly executed
Notes payable to such Lender;
(iii) a duly executed Subsidiary Guarantee Agreement
and Indemnity and Contribution Agreement;
(iv) a certificate of the Secretary or Assistant
Secretary of each Loan Party, attaching and certifying copies
of its bylaws and of the resolutions of its boards of
directors, authorizing the execution, delivery and performance
of the Loan Documents to which it is a party and certifying
the name, title and true signature of each officer of such
Loan Party executing the Loan Documents to which it is a
party;
(v) certified copies of the articles of
incorporation or other charter documents of each Loan Party,
together with certificates of good standing or existence, as
may be available from the Secretary of State of the
jurisdiction of incorporation of such Loan Party and each
other jurisdiction where such Loan Party is required to be
qualified to do business as a foreign corporation;
(vi) a favorable written opinion of Moore & Van
Allen PLLC, counsel to the Loan Parties, addressed to the
Administrative Agent and each of the Lenders, and covering
such matters relating to the Loan Parties, the Loan Documents
and the transactions contemplated therein as the
Administrative Agent or the Required Lenders shall reasonably
request;
(vii) a certificate, dated the Closing Date and
signed by a Responsible Officer, confirming compliance with
the conditions set forth in paragraphs (a), (b) and (c) of
Section 3.2 and, further, demonstrating compliance with
-----------
Sections 6.1, 6.2, 6.3, 6.4 and 6.5 as of the most recent
------------ --- --- --- ---
fiscal quarter ended;
(viii) certified copies of all consents, approvals,
authorizations, registrations or filings required to be made
or obtained by each Loan Party in connection with the Loans
and any transaction being financed with the proceeds of the
Loans;
(ix) duly executed payoff letters, in form and
substance satisfactory to the Administrative Agent, executed
by each lender holding Indebtedness to be refinanced at
closing;
(x) UCC, judgment and tax lien searches in the
jurisdiction of the chief executive office and jurisdiction of
incorporation or organization of each Loan Party, together
with copies of all financing statements on file in such
jurisdictions (with all attachments) and evidence that no
Liens exist on any assets or properties of any such Loan Party
(other than Liens permitted by Section 7.2);
-----------
(xi) a certificate of insurance issued on behalf of
insurers of each Loan Party, describing in reasonable detail
the types and amounts of insurance (property and liability)
maintained by such Loan Party, naming the Administrative Agent
as additional insured under all liability insurance;
(xii) a certificate of a Responsible Officer
certifying with respect to all Major Distribution Agreements
that: (i) the Borrower or such Subsidiary, as applicable, is
in material
32
compliance with all terms and conditions of such agreement,
(ii) such agreement is in full force and effect and (iii) no
default exists thereunder;
(xiii) duly executed Notices of Borrowing, if
applicable, accompanied by a Borrowing Availability
Certificate as of the end of the most current fiscal quarter
preceding the effective date hereof; and
(xiv) a duly executed funds disbursement agreement.
Section 3.2 Each Credit Event. The obligation of each
-----------------
Lender to make a Loan on the occasion of any Borrowing and of the Issuing Bank
to issue, amend, renew or extend any Letter of Credit, and the agreement of any
Lender to extend the Stated Commitment Termination Date pursuant to Section 2.8
-----------
is, in each case subject to the satisfaction of the following conditions:
(a) at the time of and immediately after giving effect to
such Borrowing, the issuance, amendment, renewal or extension of such Letter of
Credit or the extension of the Scheduled Commitment Termination Date, as
applicable, no Default or Event of Default shall exist;
(b) all representations and warranties of each Loan Party
set forth in the Loan Documents shall be true and correct in all material
respects on and as of the date of such Borrowing, the date of issuance,
amendment, extension or renewal of such Letter of Credit or the date of
extension of the Scheduled Termination Date, as applicable, in each case before
and after giving effect thereto;
(c) since the date of the most recent financial statements
of the Borrower described in Section 5.1(a), there shall have been no change
----------- -
which has had or could reasonably be expected to have a Material Adverse Effect;
(d) the Borrower shall have paid all fees payable under
this Agreement to the extent then due and payable; and
(e) the Administrative Agent shall have received such
other documents, certificates, information or legal opinions as the
Administrative Agent or the Required Lenders may reasonably request, all in form
and substance reasonably satisfactory to the Administrative Agent or the
Required Lenders.
Each Borrowing, each issuance, amendment, extension or renewal
of any Letter of Credit and any extension of the Scheduled Commitment
Termination Date shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a),
(b) and (c) of this Section 3.2.
-----------
Section 3.3 Delivery of Documents. All of the Loan
---------------------
Documents, certificates, legal opinions and other documents and papers referred
to in this Article III, unless otherwise specified, shall be delivered to the
-----------
Administrative Agent for the account of each of the Lenders and, except for the
Notes, in sufficient counterparts or copies for each of the Lenders and shall be
in form and substance satisfactory in all respects to the Administrative Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative
Agent and each Lender as follows:
Section 4.1 Existence; Power. The Borrower and each of
----------------
its Subsidiaries (i) is duly organized, validly existing and in good standing as
a corporation or other legally organized entity under the laws of the
jurisdiction of its organization, (ii) has all requisite power and authority to
carry on its business as now
33
conducted, and (iii) is duly qualified to do business, and is in good standing,
in each jurisdiction where such qualification is required, except where a
failure to be so qualified could not reasonably be expected to result in a
Material Adverse Effect.
Section 4.2 Organizational Power; Authorization. The
-----------------------------------
execution, delivery and performance by each Loan Party of the Loan Documents to
which it is a party are within such Loan Party's organizational powers and have
been duly authorized by all necessary organizational, and if required,
stockholder or other equity owner, action. This Agreement has been duly executed
and delivered by the Borrower, and constitutes, and each other Loan Document to
which any Loan Party is a party, when executed and delivered by such Loan Party,
will constitute, valid and binding obligations of the Borrower or such Loan
Party (as the case may be), enforceable against it in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
Section 4.3 Governmental Approvals; No Conflicts. The
------------------------------------
execution, delivery and performance by the Borrower of this Agreement, and by
each Loan Party of the other Loan Documents to which it is a party (a) do not
require any consent or approval of, registration or filing with, or any action
by, any Governmental Authority, except those as have been obtained or made and
are in full force and effect or where the failure to do so, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect, (b) will not violate any applicable law or regulation or the charter,
by-laws or other organizational documents of the Borrower or any of its
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, material agreement or other material
instrument binding on the Borrower or any of its Subsidiaries (including without
limitation, any Major Distribution Agreement) or any of its assets or give rise
to a right thereunder to require any payment to be made by the Borrower or any
of its Subsidiaries and (d) will not result in the creation or imposition of any
Lien on any asset of the Borrower or any of its Subsidiaries, except Liens (if
any) created under the Loan Documents.
Section 4.4 Financial Statements. The Borrower has
--------------------
furnished to each Lender the audited consolidated balance sheet of the Borrower
and its Subsidiaries as of December 31, 2001 and the related consolidated
statements of income, shareholders' equity and comprehensive income and cash
flows for the fiscal year then ended reported on by Arthur Andersen, LLP,
independent certified public accountants. Such financial statements fairly
present the consolidated financial condition of the Borrower and its
Subsidiaries as of such date and the consolidated results of operations for such
period in conformity with GAAP consistently applied. Since December 31, 2001,
there have been no changes with respect to the Borrower and its Subsidiaries
which have had or could reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect.
Section 4.5 Litigation and Environmental Matters.
------------------------------------
(a) Schedule 4.5(a) sets forth certain litigation which is
pending against Borrower as of the Closing Date (the "Pending Litigation"). No
litigation (including the Pending Litigation), investigation or proceeding of or
before any arbitrators or Governmental Authorities is pending against or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
of its Subsidiaries (i) as to which there is a reasonable possibility of an
adverse determination that could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect or (ii) which in any
manner draws into question the validity or enforceability of this Loan Agreement
or any other Loan Document.
(b) Except for the matters set forth on Schedule 4.5(b),
------------ -
neither the Borrower nor any of its Subsidiaries (i) has failed to comply with
any Environmental Law or to obtain, maintain or comply with any permit, license
or other approval required under any Environmental Law that could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, (ii) has become subject to any Environmental Liability that could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, (iii) has received notice of any claim with respect to
any Environmental Liability that could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect or (iv) knows of any
basis for any Environmental Liability that could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
34
Section 4.6 Compliance with Laws and Agreements. The
-----------------------------------
Borrower and each Subsidiary is in compliance with (a) all applicable laws,
rules, regulations and orders of any Governmental Authority, and (b) all
indentures, agreements or other instruments binding upon it or its properties,
except where non-compliance, either singly or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
Section 4.7 Investment Company Act, Etc. Neither the
---------------------------
Borrower nor any of its Subsidiaries is (a) an "investment company", as defined
in, or subject to regulation under, the Investment Company Act of 1940, as
amended, (b) a "holding company" as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935, as amended or (c) otherwise
subject to any other regulatory scheme limiting its ability to incur debt.
Section 4.8 Taxes. The Borrower and its Subsidiaries and
-----
each other Person for whose taxes the Borrower or any Subsidiary could become
liable have timely filed or caused to be filed all Federal income tax returns
and all other material tax returns that are required to be filed by them, and
have paid all taxes shown to be due and payable on such returns or on any
assessments made against it or its property and all other taxes, fees or other
charges imposed on it or any of its property by any Governmental Authority,
except (i) to the extent the failure to do so would not have a Material Adverse
Effect or (ii) where the same are currently being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as the
case may be, has set aside on its books adequate reserves. The charges, accruals
and reserves on the books of the Borrower and its Subsidiaries in respect of
such taxes are adequate, and no tax liabilities that could be materially in
excess of the amount so provided are anticipated.
Section 4.9 Margin Regulations. None of the proceeds of
------------------
any of the Loans or Letters of Credit will be used for "purchasing" or
"carrying" any "margin stock" with the respective meanings of each of such terms
under Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of the applicable Margin Regulations.
Section 4.10 ERISA. No ERISA Event has occurred or is
-----
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $1,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $1,000,000 the fair market value of
the assets of all such underfunded Plans.
Section 4.11 Ownership of Property.
---------------------
(a) Each of the Borrower and its Subsidiaries has good
title to, or valid leasehold interests in, all of its real and personal property
material to the operation of its business.
(b) Each of the Borrower and its Subsidiaries owns, or is
licensed, or otherwise has the right, to use, all patents, trademarks, service
marks, trade names, copyrights and other intellectual property material to its
business, and the use thereof by the Borrower and its Subsidiaries does not
infringe on the rights of any other Person, except for any such infringements
that, individually or in the aggregate, would not have a Material Adverse
Effect.
Section 4.12 Disclosure. The Borrower has disclosed to the
----------
Lenders all agreements, instruments, and corporate or other restrictions to
which the Borrower or any of its Subsidiaries is subject, and all other matters
known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither the Confidential
Memorandum nor any of the reports (including without limitation all reports that
the Borrower is required to file with the Securities and Exchange Commission),
financial statements, certificates or other information furnished by or on
behalf of the Borrower to the Administrative Agent or any Lender in connection
with the negotiation or syndication of this Agreement or any other Loan Document
or delivered hereunder or thereunder (as modified or supplemented by any other
information so furnished) contains any
35
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, taken as a whole, in light of the circumstances
under which they were made, not misleading.
Section 4.13 Labor Relations. There are no strikes,
---------------
lockouts or other material labor disputes or grievances against the Borrower or
any of its Subsidiaries, or, to the Borrower's knowledge, threatened against or
affecting the Borrower or any of its Subsidiaries, and no significant unfair
labor practice, charges or grievances are pending against the Borrower or any of
its Subsidiaries, or to the Borrower's knowledge, threatened against any of them
before any Governmental Authority. All payments due from the Borrower or any of
its Subsidiaries pursuant to the provisions of any collective bargaining
agreement have been paid or accrued as a liability on the books of the Borrower
or any such Subsidiary, except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.
Section 4.14 Major Distribution Agreements. Schedule 4.14
----------------------------- -------------
sets forth a complete and accurate list of all Major Distribution Agreements of
the Borrower and its Subsidiaries in effect as of the Closing Date. Other than
as set forth in Schedule 4.14, each such Major Distribution Agreement is, and
-------------
after giving effect to the transactions contemplated by the Loan Documents will
be, in full force and effect in accordance with the terms thereof, and no
default has occurred that could reasonably be expected to have a Material
Adverse Effect, and after giving effect to the transactions contemplated by the
Loan Documents will occur, thereunder. If requested by the Administrative Agent,
the Borrower and its Subsidiaries have delivered to the Administrative Agent a
true and complete copy of each Major Distribution Agreement so requested.
Section 4.15 Principal Place of Business. Schedule 4.15
--------------------------- -------------
sets forth the chief executive office and principal place of business of each of
the Borrower and its Subsidiaries.
Section 4.16 Solvency. Each of the Loan Parties is Solvent
--------
and, in executing the Loan Documents and consummating the transactions
contemplated thereby, none of the Loan Parties intends to hinder, delay or
defraud either present or future creditors or other Persons to which one or more
of the Loan Parties is or will become indebted.
Section 4.17 Senior Debt. The Obligations constitute
-----------
senior debt for purposes of all subordinated debt facilities, if any.
Section 4.18 Subsidiaries. Schedule 4.18 sets forth the
------------ -------------
name of, the ownership interest of the Borrower in, the jurisdiction of
organization of, and the type of, each Subsidiary, in each case as of the
Closing Date
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as any Lender
has a Commitment hereunder or the principal of and interest on any Loan or any
fee or any LC Disbursement remains unpaid or any Letter of Credit remains
outstanding:
Section 5.1 Financial Statements and Other Information.
------------------------------------------
The Borrower will deliver to the Administrative Agent:
(a) as soon as available and in any event within ninety
(90) days after the end of each fiscal year of Borrower, a copy of the annual
audited report for such fiscal year for the Borrower and its Subsidiaries,
containing a consolidated balance sheet of the Borrower and its Subsidiaries as
of the end of such fiscal year and the related consolidated statements of
income, stockholders' equity and cash flows (together with all footnotes
thereto) of the Borrower and its Subsidiaries for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and reported on by independent public accountants of
nationally recognized standing (without a "going concern" or like qualification
or exception, and without any qualification or
36
exception not acceptable to Lenders in their sole discretion) to the effect that
such financial statements present fairly in all material respects the financial
condition and the results of operations of the Borrower and its Subsidiaries for
such fiscal year on a consolidated basis in accordance with GAAP and that the
examination by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards;
(b) as soon as available and in any event within
forty-five (45) days after the end of each of the first three (3) fiscal
quarters of each fiscal year of the Borrower, an unaudited consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of such fiscal quarter
and the related unaudited consolidated statements of income and cash flows of
the Borrower and its Subsidiaries for such fiscal quarter and the then elapsed
portion of such fiscal year, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of
Borrower's previous fiscal year, all certified by the chief financial officer or
treasurer of the Borrower as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal
year-end audit adjustments and the absence of footnotes;
(c) concurrently with the delivery of the financial
statements referred to in clauses (a) and (b) above, (i) a certificate of a
Responsible Officer, (A) certifying as to whether there exists a Default or
Event of Default on the date of such certificate, and if a Default or an Event
of Default then exists, specifying the details thereof and the action which the
Borrower has taken or proposes to take with respect thereto and (B) stating
whether any change in GAAP or the application thereof has occurred since the
date of the Borrower's audited financial statements referred to in Section 4.4
-----------
and, if any change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate, and (ii) a certificate of a
Responsible Officer in the form of Exhibit 5.1(c) (the "Compliance Certificate")
----------- -
setting forth in reasonable detail calculations demonstrating compliance with
Article VI;
- ----------
(d) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements and other materials
filed with the Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all functions of said Commission, or with any national
securities exchange, or distributed by the Borrower to its shareholders
generally, as the case may be; and
(e) promptly following any request therefor, such other
information regarding the results of operations, business affairs and financial
condition of the Borrower or any Subsidiary as the Administrative Agent or any
Lender may reasonably request.
Section 5.2 Notices of Material Events. The Borrower will
--------------------------
furnish to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against or, to
the knowledge of the Borrower, affecting the Borrower or any Subsidiary which,
if adversely determined, could reasonably be expected to result in a Material
Adverse Effect;
(c) the occurrence of any event or any other development
by which the Borrower or any of its Subsidiaries (i) fails to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) becomes subject to any
Environmental Liability, (iii) receives notice of any claim with respect to any
Environmental Liability, or (iv) becomes aware of any basis for any
Environmental Liability and in each of the preceding clauses (i) through (iv),
which individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect;
(d) the occurrence of any ERISA Event that alone, or
together with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Borrower and its Subsidiaries in an
aggregate amount exceeding $1,000,000;
37
(e) any change in the fiscal year of the Borrower or any
Subsidiary, except to change the fiscal year of a Subsidiary to conform its
fiscal year to that of the Borrower;
(f) the occurrence of each of the following:
(i) any request for a material amendment,
modification or waiver of any of the terms contained in any
Major Distribution Agreement which, if granted, would result
in, or could reasonably be expected to result in, a Material
Adverse Effect, which notice shall be accompanied by a copy
(if available) or summary of the terms of the proposed
amendment, modification or waiver;
(ii) written notice from the manufacturer or
supplier under any Major Distribution Agreement of any default
or event of default, or the assertion by any party thereto of
the occurrence of a default or event of default, under any
such Major Distribution Agreement that results in, or could
reasonably be expected to result in, a Material Adverse
Effect, which notice shall be accompanied by a copy of any
summary of the circumstances relating thereto, and an
explanation of what action, if any, the applicable Loan Party
intends to take with respect thereto; and
(iii) the assertion by any Person, whether in a
proceeding before a Governmental Authority or otherwise, that
any Major Distribution Agreement is void, invalid,
unenforceable or subject to rejection, avoidance, rescission
or reformation in any material respect which, if successful,
would result in, could reasonably be expected to result in, a
Material Adverse Effect, which notice shall be accompanied by
a summary of the circumstances relating to such assertion
together, if applicable, with copies of any pleadings or other
submissions made to any Governmental Authority relating to
such assertion; and
(g) any other development that results in, or could
reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 5.2 shall be
-----------
accompanied by a written statement of a Responsible Officer setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
Section 5.3 Existence; Conduct of Business. The Borrower
------------------------------
will, and will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and maintain in full force and effect its
legal existence and its respective rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business and will continue to engage in the same business as
presently conducted or such other businesses that are reasonably related
thereto; provided, that nothing in this Section 5.3 shall prohibit any merger,
-------- -----------
consolidation, liquidation or dissolution permitted under Section 7.3.
-----------
Section 5.4 Compliance with Laws, Etc. The Borrower will,
-------------------------
and will cause each of its Subsidiaries to, comply with all laws, rules,
regulations and requirements of any Governmental Authority applicable to its
properties, except where the failure to do so, either individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
Section 5.5 Payment of Obligations. The Borrower will,
----------------------
and will cause each of its Subsidiaries to, pay and discharge at or before
maturity, all of its obligations and liabilities (including without limitation
all tax liabilities and claims that could result in a statutory Lien) before the
same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
38
Section 5.6 Books and Records. The Borrower will, and will
-----------------
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities to the extent necessary
to prepare the consolidated financial statements of Borrower in conformity with
GAAP.
Section 5.7 Visitation, Inspection, Etc. The Borrower
---------------------------
will, and will cause each of its Subsidiaries to, permit any representative of
the Administrative Agent or any Lender, to visit and inspect its properties, to
examine its books and records and to make copies and take extracts therefrom,
and to discuss its affairs, finances and accounts with any of its officers and
with its independent certified public accountants, all at such reasonable times
and as often as the Administrative Agent or any Lender may reasonably request
after reasonable prior notice to the Borrower.
Section 5.8 Maintenance of Properties; Insurance. The
------------------------------------
Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain
all property material to the conduct of its business in good working order and
condition, ordinary wear and tear except where the failure to do so, either
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect and (b) maintain with financially sound and reputable
insurance companies, insurance with respect to its properties and business, and
the properties and business of its Subsidiaries, in amounts and against loss or
damage of the kinds customarily insured against by companies in the same or
similar businesses operating in the same or similar locations, in each instance,
reasonably acceptable to the Administrative Agent.
Section 5.9 Use of Proceeds and Letters of Credit. The
-------------------------------------
Borrower will use the proceeds of all Loans to refinance existing Indebtedness
on the Closing Date and thereafter to finance working capital needs, Capital
Expenditures, acquisitions and for other general corporate purposes of the
Borrower and its Subsidiaries. No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that would violate any
rule or regulation of the Board of Governors of the Federal Reserve System,
including Regulations T, U or X. All Letters of Credit will be used for general
corporate purposes.
Section 5.10 Additional Subsidiaries. If any additional
-----------------------
Subsidiary is acquired or formed after the Closing Date, the Borrower will,
within fifteen (15) Business Days after such Subsidiary is acquired or formed,
notify the Administrative Agent and the Lenders thereof and will cause such
Subsidiary to become a Subsidiary Loan Party by executing agreements in the form
of Annex I to Exhibit D and Annex I to Exhibit E in form and substance
------- --------- ------- ---------
satisfactory to the Administrative Agent and the Required Lenders and will cause
such Subsidiary to deliver simultaneously therewith similar documents applicable
to such Subsidiary required under Section 3.1 as reasonably requested by the
-----------
Administrative Agent.
Section 5.11 Compliance with Major Distribution Agreements.
---------------------------------------------
The Borrower and each applicable Subsidiary (a) will strictly comply with all of
the terms and provisions of all Major Distribution Agreements, (b) will not make
or permit to be made any material modification or amendment to any such Major
Distribution Agreement without the prior written consent of the Administrative
Agent, and (c) will maintain each such Major Distribution Agreement in full
force and effect and free of default thereunder at all times during of the term
of this Agreement, provided, in the case of each of clauses (a), (b) and (c)
--------
hereof, such failure to do so would result in, or could reasonably be expected
to result in, a Material Adverse Effect.
ARTICLE VI
FINANCIAL COVENANTS
The Borrower covenants and agrees that so long as any Lender
has a Commitment hereunder or the principal of or interest on or any Loan
remains unpaid or any fee or any LC Disbursement remains unpaid or any Letter of
Credit remains outstanding:
39
Section 6.1 Leverage Ratio. The Borrower and its
--------------
Subsidiaries will have, as of the end of each fiscal quarter of the Borrower,
commencing with the fiscal quarter ending March 31, 2002, a Leverage Ratio of
not greater than 3.00:1.00, calculated on a rolling four-quarter basis.
Section 6.2 Interest Coverage Ratio. The Borrower and it
-----------------------
Subsidiaries will have, as of the end of each fiscal quarter of the Borrower,
commencing with the fiscal quarter ending March 31, 2002, an Interest Coverage
Ratio of not less than 3.00:1.00, calculated on a rolling four-quarter basis.
Section 6.3 Consolidated Net Worth. The Borrower and it
----------------------
Subsidiaries will have, as of the end of each fiscal quarter of the Borrower,
commencing with the fiscal quarter ending March 31, 2002, a Consolidated Net
Worth in an amount not less than (a) $290,178,000 and (b) as at the last day of
each succeeding fiscal quarter of the Borrower and until (but excluding) the
last day of the next following fiscal quarter of the Borrower, the sum of (i)
the amount of Consolidated Net Worth required to be maintained pursuant to this
covenant as at the end of the immediately preceding fiscal quarter, plus (ii)
fifty percent (50%) of Consolidated Net Income (with no reduction for net losses
during any period) for the fiscal quarter of the Borrower ending on such day
(adjusting the computation of Consolidated Net Income for certain items, as
provided for in the definition of "Consolidated Net Income"), plus (iii) one
hundred percent (100%) of the aggregate Net Cash Proceeds of any Equity Issuance
and net proceeds of other capital investments, in each case calculated quarterly
on the last day of each fiscal quarter.
Section 6.4 Consolidated Total Debt to Consolidated Total
---------------------------------------------
Capitalization Ratio. The Borrowers and its Subsidiaries will have, as of the
- --------------------
end of each fiscal quarter of the Borrower, commencing with the fiscal quarter
ending March 31, 2002, a ratio of Consolidated Total Debt to Consolidated Total
Capitalization of not greater than 0.50:1.00, calculated on a rolling
four-quarter basis.
Section 6.5 Minimum Asset Coverage. The Borrower and its
----------------------
Subsidiaries will have, as of the end of each fiscal quarter of the Borrower,
commencing with the fiscal quarter ending March 31, 2002, a ratio of
Consolidated Current Assets to Consolidated Total Debt of not less than
1.50:1.00, calculated on a rolling four-quarter basis.
ARTICLE VII
NEGATIVE COVENANTS
------------------
The Borrower covenants and agrees that so long as any Lender
has a Commitment hereunder or the principal of or interest on any Loan remains
unpaid or any fee or any LC Disbursement remains unpaid or any Letter of Credit
remains outstanding:
Section 7.1 Indebtedness. The Borrower will not, and
------------
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness created pursuant to the Loan Documents;
(b) Indebtedness existing on the date hereof and set
forth on Schedule 7.1 and extensions, renewals and replacements of any such
------------
Indebtedness that do not increase the outstanding principal amount thereof
(immediately prior to giving effect to such extension, renewal or replacement)
or shorten the maturity or the weighted average life thereof;
(c) Indebtedness of the Borrower or any Subsidiary
incurred to finance the acquisition, construction or improvement of any fixed or
capital assets, including Capital Lease Obligations and any Indebtedness assumed
in connection with the acquisition of any such assets secured by a Lien on any
such assets prior to the acquisition thereof; provided, that such Indebtedness
--------
is incurred prior to or within ninety (90) days after such acquisition or the
completion of such construction or improvements or extensions, renewals, and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof (immediately prior to giving
40
effect to such extension, renewal or replacement) or shorten the maturity or the
weighted average life thereof; provided further, that the aggregate principal
-------- -------
amount of such Indebtedness does not exceed $10,000,000 at any time outstanding;
(d) Indebtedness of the Borrower owing to any
Subsidiary Loan Party and of any Subsidiary Loan Party owing to the Borrower or
any other Subsidiary Loan Party;
(e) Private Placement Debt or other unsecured
Indebtedness incurred after the date hereof in an aggregate principal amount not
to exceed $95,000,000 at any time outstanding;
(f) Indebtedness of any Person which becomes a Subsidiary
after the date of this Agreement; provided, that (i) such Indebtedness exists at
the time that such Person becomes a Subsidiary and is not created in
contemplation of or in connection with such Person becoming a Subsidiary and
(ii) the aggregate principal amount of such Indebtedness permitted hereunder
shall not exceed $5,000,000 outstanding at any time;
(g) Indebtedness in respect of obligations under Hedging
Agreements permitted by Section 7.10;
------------
(h) Indebtedness in respect of any Securitization
Transaction permitted by Section 7.6(c); and
----------- -
(i) other unsecured (other than by a Letter of Credit)
Indebtedness in an aggregate principal amount not to exceed $20,000,000 at any
time outstanding that represents a portion of the costs of an Acquisition
permitted by Section 7.4(a)(viii) payable to Persons selling an equity interest
----------- - ----
or assets to the Borrower or any of its Subsidiaries; provided, that such
--------
Indebtedness is fully subordinate (other than in those cases where supported by
a Letter of Credit) to the payment and performance of the Obligations on terms
acceptable to the Administrative Agent; further provided, that in computing such
------- --------
$20,000,000 aggregate Indebtedness amount, in the event that any such
Indebtedness is secured or enhanced by a Letter of Credit or by a Guarantee of
the Borrower or any of its Subsidiaries, the amount of the original Indebtedness
only, but not such Letter of Credit or such Guarantee, shall count towards such
$20,000,000 limitation.
Section 7.2 Negative Pledge. The Borrower will not, and
---------------
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Lien on any of its assets or property now owned or hereafter acquired,
except:
(a) Liens, if any, created in favor of the Administrative
Agent for the benefit of the Lenders pursuant to the Loan Documents;
(b) Permitted Encumbrances;
(c) any Liens on any property or asset of the Borrower or
any Subsidiary existing on the Closing Date set forth on Schedule 7.2; provided,
------------ --------
that such Lien shall not apply to any other property or asset of the Borrower or
any Subsidiary;
(d) purchase money Liens upon or in any fixed or capital
assets to secure the purchase price or the cost of construction or improvement
of such fixed or capital assets or to secure Indebtedness incurred solely for
the purpose of financing the acquisition, construction or improvement of such
fixed or capital assets (including Liens securing any Capital Lease
Obligations); provided, that (i) such Lien secures Indebtedness permitted by
--------
Section 7.1(c), (ii) such Lien attaches to such asset concurrently or within
- ----------- -
ninety (90) days after the acquisition, improvement or completion of the
construction thereof; (iii) such Lien does not extend to any other asset; and
(iv) the Indebtedness secured thereby does not exceed the cost of acquiring,
constructing or improving such fixed or capital assets;
(e) any Lien (i) existing on any asset of any Person at
the time such Person becomes a Subsidiary of the Borrower, (ii) existing on any
asset of any Person at the time such Person is merged with or into
41
the Borrower or any Subsidiary of the Borrower or (iii) existing on any asset
prior to the acquisition thereof by the Borrower or any Subsidiary of the
Borrower; provided, that any such Lien was not created in the contemplation of
--------
any of the foregoing and any such Lien secures only those obligations which it
secures on the date that such Person becomes a Subsidiary or the date of such
merger or the date of such acquisition;
(f) any Lien arising out of any Securitization
Transaction permitted by Section 7.6(c); and
----------- -
(g) extensions, renewals, or replacements of any Lien
referred to in paragraphs (a) through (f) of this Section 7.2; provided, that
----------- --------
the principal amount of the Indebtedness secured thereby is not increased and
that any such extension, renewal or replacement is limited to the assets
originally encumbered thereby.
Section 7.3 Fundamental Changes.
-------------------
(a) Except as otherwise permitted by Section 7.6(d), the
----------- -
Borrower will not, and will not permit any Subsidiary to, merge into or
consolidate into any other Person, or permit any other Person to merge into or
consolidate with it, or sell, lease, transfer or otherwise dispose of (in a
single transaction or a series of transactions) all or substantially all of its
assets (in each case, whether now owned or hereafter acquired) or all or
substantially all of the stock of any of its Subsidiaries (in each case, whether
now owned or hereafter acquired) or liquidate or dissolve; provided, that if at
--------
the time thereof and immediately after giving effect thereto, no Default or
Event of Default shall have occurred and be continuing (i) the Borrower or any
Subsidiary may merge with a Person if the Borrower (or such Subsidiary if the
Borrower is not a party to such merger) is the surviving Person, (ii) any
Subsidiary may merge into another Subsidiary; provided, that (A) if any party to
--------
such merger is a Subsidiary Loan Party, the Subsidiary Loan Party shall be the
surviving Person (and if the non-surviving Subsidiary was also a Subsidiary Loan
Party, the Administrative Agent, upon such event and at the request and expense
of the Borrower and/or the surviving Subsidiary Loan Party, will execute such
documents as shall be acceptable to the Administrative Agent and its counsel
releasing the non-surviving Subsidiary Loan Party from its obligations under the
Subsidiary Guarantee Agreement) or (B) if any party to such merger is not a
Subsidiary Loan Party, the surviving Person shall execute and deliver to the
Administrative Agent an agreement guaranteeing payment of the Obligations in
form and substance satisfactory to the Administrative Agent and the Required
Lenders, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of
all or substantially all of its assets to the Borrower or to a Subsidiary Loan
Party, and (iv) any Subsidiary (other than a Subsidiary Loan Party) may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; provided, that any such merger
--------
involving a Person that is not a wholly-owned Subsidiary immediately prior to
such merger shall not be permitted unless also permitted by Section 7.4.
-----------
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date hereof and businesses reasonably related thereto.
Section 7.4 Investments, Loans, Capital Expenditures, Etc.
----------------------------------------------
(a) The Borrower will not, and will not permit any of its
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly-owned Subsidiary prior to such merger),
any common stock, evidence of indebtedness or other securities (including any
option, warrant, or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person
(all of the foregoing being collectively called "Investments"), or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person that constitute a business unit, except:
(i) Investments (other than Permitted
Investments) existing on the date hereof and set forth on Schedule 7.4
------------
(including Investments in Subsidiaries);
(ii) Permitted Investments;
42
(iii) Guarantees constituting Indebtedness
permitted by Section 7.1;
----------
(iv) Investments in Subsidiary Loan Parties and
in repurchases of the capital stock of the Borrower to the extent
otherwise permitted hereunder;
(v) Loans or advances to employees, officers
or directors of the Borrower or any Subsidiary in the ordinary course
of business for travel, relocation and related expenses;
(vi) Hedging Agreements permitted by Section 7.10;
------------
(vii) notes or other evidence of indebtedness
permitted by Section 7.6(d);
----------- -
(viii) the purchase or other acquisition of a
controlling equity interest in another Person (including the purchase
of an option, warrant, convertible or similar type security to acquire
such a controlling interest at the time it becomes exercisable by the
holder thereof), whether by purchase of such equity interest or upon
exercise of an option or warrant for, or conversions of securities
into, such equity interest, or the purchase or other acquisition (in
one transaction or a series of transactions) of any assets of any other
Person that constitute a business unit (each, an "Acquisition"),
provided, that: (i) the Person to be (or whose assets are to be) so
purchased or acquired does not oppose such Acquisition, (ii) the line
or lines of business of the Person to be (or whose assets are to be) so
purchased or acquired are substantially the same as the Major
Subsidiaries and their lines of business, (iii) Albert Nahmad is before
and continues to be after any such Acquisition the Chairman or Chief
Executive Officer of the Borrower, (iv) prior to and immediately after
giving effect to such Acquisition, no Default or Event of Default shall
have occurred and be continuing, (v) if the costs of such Acquisition
exceed $10,000,000, the Borrower shall have furnished to the
Administrative Agent pro forma historical financial statements as of
the end of the most recently completed fiscal period of the Borrower
(whether quarterly or year end) giving effect to such Acquisition and
assuming that any Indebtedness incurred to effect such Acquisition
shall be deemed to have been outstanding during the four full
consecutive fiscal quarter period of the Borrower preceding such
Acquisition and to have borne a rate of interest during such period
equal to that rate in existence at the date of determination, together
with a certificate of a Responsible Officer, in the form of Exhibit
-------
5.1(c), prepared on a historical pro forma basis giving effect to such
--- -
Acquisition as of the most recent fiscal quarter of the Borrower then
ended, which certificate shall demonstrate that no Default or Event of
Default would exist immediately after giving effect thereto, and (vi)
the Person acquired shall be a Subsidiary, or be merged into or with
the Borrower or one of its Subsidiaries, immediately upon consummation
of the Acquisition (or if assets are being purchased or acquired, the
acquirer shall be the Borrower or one of its Subsidiaries);
(ix) Investments of any Person acquired in an
Acquisition permitted under Section 7.4(a)(viii); and
------------ - ----
(x) additional Investments in other Persons,
provided, that (i) the aggregate costs incurred in making such
--------
Investments (reduced by cash dividends or other cash payments received
on or in consideration of such Investments) shall not exceed
$20,000,000 in the aggregate at any time and (ii) prior to and
immediately after giving effect to such Investment, no Default or Event
of Default shall have occurred and be continuing.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, make Capital Expenditures in the aggregate in excess of
$20,000,000 during any fiscal year of the Borrower.
Section 7.5 Restricted Payments. The Borrower will not,
-------------------
and will not permit its Subsidiaries to, declare or make, or agree to pay or
make, directly or indirectly, any dividend on any class of its stock, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, retirement, defeasance or other acquisition
of, any shares of common stock or Indebtedness subordinated to the Obligations
of the Borrower or any options, warrants, or other rights to purchase such
common stock or such Indebtedness, whether now or hereafter outstanding (each, a
"Restricted Payment"), except for
43
(a) dividends payable by the Borrower solely in shares of any class of its
common stock, (b) Restricted Payments made by any Subsidiary to the Borrower or
to another Subsidiary Loan Party, (c) dividends paid by any Subsidiary to
Borrower or to another Subsidiary that is its direct parent and (d) cash
dividends paid on, and cash redemptions of, the common stock of the Borrower
which do not exceed fifty percent (50%) of Consolidated Net Income (if greater
than $0) earned during the immediately preceding fiscal year, provided, that (i)
--------
no Default or Event of Default has occurred and is continuing at the time such
dividend is paid or redemption is made, and (ii) if Restricted Payments in any
fiscal year are less than permitted in such fiscal year, the excess permitted
amount for such fiscal year may be carried forward to the next succeeding fiscal
year.
Section 7.6 Sale of Assets. The Borrower will not, and
--------------
will not permit any of its Subsidiaries to, convey, sell, lease, assign,
transfer or otherwise dispose of, any of its assets, business or property,
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's common stock to any Person other
than the Borrower or a Subsidiary Loan Party (or to qualify directors if
required by applicable law), except:
(a) the sale or other disposition for fair market value of
obsolete or worn out property or other property not necessary for the principal
business operations disposed of in the ordinary course of business;
(b) the sale of inventory and Permitted Investments in
the ordinary course of business;
(c) the sale or other disposition of such assets in
connection with any Securitization Transaction in an aggregate amount not to
exceed $75,000,000 at any time during the term of this Agreement, provided, that
--------
fifty percent (50%) of the Net Cash Proceeds resulting from such Securitization
Transaction are used by the Borrower to prepay the outstanding Revolving Credit
Loans and to permanently reduce the Revolving Commitments hereunder;
(d) the sale or other disposition of all or substantially
all of the Capital Stock or assets of Dunhill for no less than fair market
value, as reasonably determined by the Board of Directors of the Borrower (upon
which event, the Administrative Agent, at the request and expense of the
Borrower, will execute such documents as shall be acceptable to the
Administrative Agent and its counsel releasing Dunhill from its obligations
under the Subsidiary Guarantee Agreement), consideration for which may include
notes or other evidence of indebtedness of purchasers in an aggregate amount not
exceeding $25,000,000 and a repayment term not exceeding three years;
(e) the sale, without recourse, other than for
misrepresentation, by Gemaire and Coastline of accounts receivable having a
value, net of all allowances and discounts, not to exceed during any fiscal year
of the Borrower an aggregate dollar value of $5,000,000, which receivables shall
be payable by Persons who are not United States citizens or organized and
existing under the laws of the United States or a state or territory thereof;
and
(f) the sale or other disposition of such assets in
an aggregate amount not to exceed $25,000,000 in any fiscal year of the
Borrower.
Section 7.7 Transactions with Affiliates. The Borrower
----------------------------
will not, and will not permit any of its Subsidiaries to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) in the ordinary course of
business at prices and on terms and conditions not less favorable to the
Borrower or such Subsidiary than could be obtained on an arm's-length basis from
unrelated third parties, (b) transactions between or among the Borrower and
Subsidiary Loan Parties not involving any other Affiliates, and (c) any
Restricted Payment permitted by Section 7.5.
-----------
Section 7.8 Restrictive Agreements. The Borrower will
----------------------
not, and will not permit any Subsidiary to, directly or indirectly, enter into,
incur or permit to exist any agreement that prohibits, restricts or imposes any
condition upon (a) the ability of the Borrower or any Subsidiary to create,
incur or permit any Lien upon any of its assets or properties, whether now owned
or hereafter acquired, or (b) the ability of any Subsidiary to
44
pay dividends or other distributions with respect to its common stock, to make
or repay loans or advances to the Borrower or any other Subsidiary, to Guarantee
Indebtedness of the Borrower or any other Subsidiary or to transfer any of its
property or assets to the Borrower or any Subsidiary of the Borrower; provided,
--------
that (i) the foregoing shall not apply to restrictions or conditions imposed (A)
by law, (B) by this Agreement or any other Loan Document, (C) by the documents
governing the Private Placement Debt, or (D) by any documents creating a
Permitted Lien, (ii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
--------
Subsidiary that is sold and such sale is permitted hereunder, (iii) clause (a)
shall not apply to restrictions or conditions imposed by any agreement relating
to secured Indebtedness permitted by this Agreement if such restrictions and
conditions apply only to the property or assets securing such Indebtedness, and
(iv) clause (a) shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof.
Section 7.9 Sale and Leaseback Transactions. Except as
-------------------------------
may be permitted under Section 7.6(f), the Borrower will not, and will not
----------- -
permit any of the Subsidiaries to, enter into any arrangement, directly or
indirectly, whereby it shall sell or transfer any property, real or personal,
used or useful in its business, whether now owned or hereinafter acquired, and
thereafter rent or lease such property or other property that it intends to use
for substantially the same purpose or purposes as the property sold or
transferred.
Section 7.10 Hedging Agreements. The Borrower will not,
------------------
and will not permit any of the Subsidiaries to, enter into any Hedging
Agreement, other than Hedging Agreements which are non-speculative in purpose
and nature and are entered into in the ordinary course of business to hedge or
mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct
of its business or the management of its liabilities. Solely for the avoidance
of doubt, the Borrower acknowledges that a Hedging Agreement entered into for
speculative purposes or of a speculative nature (which shall be deemed to
include any Hedging Agreement under which the Borrower or any of the
Subsidiaries is or may become obliged to make any payment (i) in connection with
the purchase by any third party of any common stock or any Indebtedness or (ii)
as a result of changes in the market value of any common stock or any
Indebtedness) is not a Hedging Agreement entered into in the ordinary course of
business to hedge or mitigate risks.
Section 7.11 Amendment to Material Documents. The Borrower
-------------------------------
will not, and will not permit any Subsidiary to, amend, modify or waive any of
its rights under (a) its certificate of incorporation, bylaws or other
organizational documents in a manner materially adverse to the Lenders or (b)
any of the Major Distribution Agreement set forth in Schedule 4.14 in a manner
-------------
that results in, or could reasonably be expected to result in, a Material
Adverse Effect.
Section 7.12 Accounting Changes. The Borrower will not,
------------------
and will not permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required or, with the approval of
the Required Lenders, as permitted, by GAAP, or change the fiscal year of the
Borrower or any Subsidiary, except to change the fiscal year of a Subsidiary to
conform its fiscal year to that of the Borrower.
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
Section 8.1 Events of Default. If any of the following
-----------------
events (each an "Event of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any
Loan or of any reimbursement obligation in respect of any LC Disbursement when
and as the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment or otherwise; or
(b) the Borrower shall fail to pay any interest on any
Loan or any fee or any other amount (other than an amount payable under clause
(a) of this Article VIII) payable under this Agreement or any other Loan
------------
45
Document, when and as the same shall become due and payable, and such failure
shall continue unremedied for a period of three (3) Business Days; or
(c) any representation or warranty made or deemed made by
or on behalf of the Borrower or any Subsidiary in or in connection with this
Agreement or any other Loan Document (including the Schedules attached thereto)
and any amendments or modifications hereof or waivers hereunder, or in any
certificate, report, financial statement or other document submitted to the
Administrative Agent or the Lenders by any Loan Party or any representative of
any Loan Party pursuant to or in connection with this Agreement or any other
Loan Document shall prove to be incorrect in any material respect when made or
deemed made or submitted; or
(d) the Borrower shall fail to observe or perform any
covenant or agreement contained in Sections 5.1(a), (b), (c), (d), and (e), 5.2,
------------ - - - - - ---
5.3 (with respect to the Borrower's legal existence unless, in the case of any
- ---
involuntary administrative dissolution of the Borrower, such failure to
preserve, renew or maintain its legal existence is remedied within ten (10) days
after the earlier of (i) any Responsible Officer of the Borrower becomes aware
of such failure, or (ii) notice thereof shall have been given to the Borrower by
the Administrative Agent or any Lender, provided, that until the Borrower's
--------
legal existence is lawfully reinstated by the appropriate Governmental
Authority, the Lenders or the Issuing Bank, as applicable, may withhold any
further Borrowing or issuance of any additional Letter of Credit), 5.7, 5.9,
--- ---
5.10 or Articles VI or VII; or
- ---- ----------- ---
(e) any Loan Party shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those referred to
in clauses (a), (b) and (d) above), and such failure shall remain unremedied for
thirty (30) days after the earlier of (i) any Responsible Officer of the
Borrower becomes aware of such failure, or (ii) notice thereof shall have been
given to the Borrower by the Administrative Agent or any Lender;
(f) the Borrower or any of its Subsidiaries shall default
in the performance or observance of any term, condition or provision of any
Major Distribution Agreement that results in, or could reasonably be expected to
result in, a Material Adverse Effect; or
(g) the Borrower or any Subsidiary (whether as primary
obligor or as guarantor or other surety) shall fail to pay any principal of or
premium or interest on any Material Indebtedness that is outstanding, when and
as the same shall become due and payable (whether at scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument evidencing such Indebtedness; or any other event shall occur or
condition shall exist under any agreement or instrument relating to such
Indebtedness and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or permit the acceleration of, the maturity of such
Indebtedness; or any such Indebtedness shall be declared to be due and payable,
required to be prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or any offer to prepay,
redeem, purchase or defease such Indebtedness shall be required to be made, in
each case prior to the stated maturity thereof; or
(h) the Borrower or any Subsidiary shall (i) commence a
voluntary case or other proceeding or file any petition seeking liquidation,
reorganization or other relief under any federal, state or foreign bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a custodian, trustee, receiver, liquidator or other similar
official of it or any substantial part of its property, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (i) of this Section 8.1(h), (iii)
----------- -
apply for or consent to the appointment of a custodian, trustee, receiver,
liquidator or other similar official for the Borrower or any such Subsidiary or
for a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, or (vi) take any action for the
purpose of effecting any of the foregoing; or
(i) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the Borrower or any Subsidiary or its debts, or any
substantial part of its assets, under any federal, state or foreign bankruptcy,
insolvency or other similar law now or hereafter in effect or (ii) the
appointment of a custodian, trustee, receiver, liquidator or other similar
official for the Borrower or any Subsidiary or for a substantial part of its
assets, and in any such case, such proceeding or petition
46
shall remain undismissed for a period of sixty (60) days or an order or decree
approving or ordering any of the foregoing shall be entered; or
(j) the Borrower or any Subsidiary shall become unable to
pay, shall admit in writing its inability to pay, or shall fail to pay, its
debts as they become due; or
(k) an ERISA Event shall have occurred that, in the
opinion of the Required Lenders, when taken together with other ERISA Events
that have occurred, could reasonably be expected to result in liability to the
Borrower and the Subsidiaries in an aggregate amount exceeding $1,000,000; or
(l) any judgment or order for the payment of money where
the amount not covered by insurance exceeds $1,000,000 individually or in the
aggregate shall be rendered against the Borrower or any Subsidiary, and either
(i) enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be a period of thirty (30) consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(m) any non-monetary judgment or order shall be rendered
against the Borrower or any Subsidiary that could reasonably be expected to have
a Material Adverse Effect, and there shall be a period of thirty (30)
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
(n) a Change in Control shall occur or exist; or
(o) any provision of any Subsidiary Guarantee Agreement
shall for any reason cease to be valid and binding on, or enforceable against,
any Subsidiary Loan Party, or any Subsidiary Loan Party shall so state in
writing, or any Subsidiary Loan Party shall seek to terminate its Subsidiary
Guarantee Agreement; or
(p) an event of default shall have occurred under any
other Loan Document; then, and in every such event (other than an event with
respect to the Borrower described in clause (h) or (i) of this Section 8.1) and
-----------
at any time thereafter during the continuance of such event, the Administrative
Agent may, and upon the written request of the Required Lenders shall, by notice
to the Borrower, take any or all of the following actions, at the same or
different times: (i) terminate the Commitments, whereupon the Commitment of each
Lender shall terminate immediately; (ii) declare the principal of and any
accrued interest on the Loans, and all other Obligations owing hereunder, to be,
whereupon the same shall become, due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower and (iii) exercise all remedies contained in any
other Loan Document; and that, if an Event of Default specified in either clause
(h) or (i) shall occur, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon,
and all fees, and all other Obligations shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower.
ARTICLE IX
THE ADMINISTRATIVE AGENT
Section 9.1 Appointment of Administrative Agent.
-----------------------------------
(a) Each Lender irrevocably appoints SunTrust Bank as the
Administrative Agent and authorizes it to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent under this
Agreement and the other Loan Documents, together with all such actions and
powers that are reasonably incidental thereto. The Administrative Agent may
perform any of its duties hereunder by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and
powers through their respective Related Parties.
47
The exculpatory provisions set forth in this Article IX shall apply to any such
----------
sub-agent and the Related Parties of the Administrative Agent and any such
sub-agent and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
(b) The Issuing Bank shall act on behalf of the Lenders
with respect to any Letters of Credit issued by it and the documents associated
therewith until such time and except for so long as the Administrative Agent may
agree at the request of the Required Lenders to act for the Issuing Bank with
respect thereto; provided, that the Issuing Bank shall have all the benefits and
--------
immunities (i) provided to the Administrative Agent in this Article IX with
----------
respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit issued by it or proposed to be issued by it
and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as the term "Administrative Agent" as used in this
Article IX included the Issuing Bank with respect to such acts or omissions and
- ----------
(ii) as additionally provided in this Agreement with respect to the Issuing
Bank.
Section 9.2 Nature of Duties of Administrative Agent. The
----------------------------------------
Administrative Agent shall not have any duties or obligations except those
expressly set forth in this Agreement and the other Loan Documents. Without
limiting the generality of the foregoing, (a) the Administrative Agent shall not
be subject to any fiduciary or other implied duties, regardless of whether a
Default or an Event of Default has occurred and is continuing, (b) the
Administrative Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except those discretionary rights and powers
expressly contemplated by the Loan Documents that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.2), and (c) except as expressly set forth in the Loan
------------
Documents, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower or any of its Subsidiaries that is communicated to or obtained by the
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.2) or in the absence of its own gross negligence or
------------
willful misconduct. The Administrative Agent shall not be deemed to have
knowledge of any Default or Event of Default unless and until written notice
thereof is given to the Administrative Agent by the Borrower or any Lender, and
the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements, or other terms and conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article III or elsewhere in any Loan
-----------
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
Section 9.3 Lack of Reliance on the Administrative Agent.
---------------------------------------------
Each of the Lenders, the Swingline Lender and the Issuing Bank acknowledges that
it has, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each of the Lenders, the Swingline Lender and the Issuing Bank also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, continue to make its own decisions in
taking or not taking of any action under or based on this Agreement, any related
agreement or any document furnished hereunder or thereunder.
Section 9.4 Certain Rights of the Administrative Agent.
------------------------------------------
If the Administrative Agent shall request instructions from the Required Lenders
with respect to any action or actions (including the failure to act) in
connection with this Agreement, the Administrative Agent shall be entitled to
refrain from such act or taking such act, unless and until it shall have
received instructions from such Lenders; and the Administrative Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders where required by the terms of this Agreement.
48
Section 9.5 Reliance by Administrative Agent. The
--------------------------------
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed, sent or made by the proper Person. The Administrative
Agent may also rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person and shall not incur any liability
for relying thereon. The Administrative Agent may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or not taken
by it in accordance with the advice of such counsel, accountants or experts.
Section 9.6 The Administrative Agent in its Individual
------------------------------------------
Capacity. The bank serving as the Administrative Agent shall have the same
- --------
rights and powers under this Agreement and any other Loan Document in its
capacity as a Lender as any other Lender and may exercise or refrain from
exercising the same as though it were not the Administrative Agent; and the
terms "Lenders", "Required Lenders", "holders of Notes", or any similar terms
shall, unless the context clearly otherwise indicates, include the
Administrative Agent in its individual capacity. The bank acting as the
Administrative Agent and its Affiliates may accept deposits from, lend money to,
and generally engage in any kind of business with the Borrower or any Subsidiary
or Affiliate of the Borrower as if it were not the Administrative Agent
hereunder.
Section 9.7 Successor Administrative Agent.
------------------------------
(a) The Administrative Agent may resign at any time by
giving notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Administrative Agent, subject to the approval by the Borrower provided that no
--------
Default or Event of Default shall exist at such time. If no successor
Administrative Agent shall have been so appointed, and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent
gives notice of resignation, then the retiring Administrative Agent may, on
behalf of the Lenders and the Issuing Bank, appoint a successor Administrative
Agent, which shall be a commercial bank organized under the laws of the United
States of America or any state thereof or a bank which maintains an office in
the United States, having a combined capital and surplus of at least
$500,000,000.
(b) Upon the acceptance of its appointment as the
Administrative Agent hereunder by a successor, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents. If within forty-five (45) days
after written notice is given of the retiring Administrative Agent's resignation
under this Section 9.7 no successor Administrative Agent shall have been
-----------
appointed and shall have accepted such appointment, then on such 45th day (i)
the retiring Administrative Agent's resignation shall become effective, (ii) the
retiring Administrative Agent shall thereupon be discharged from its duties and
obligations under the Loan Documents and (iii) the Required Lenders shall
thereafter perform all duties of the retiring Administrative Agent under the
Loan Documents until such time as the Required Lenders appoint a successor
Administrative Agent as provided above. After any retiring Administrative
Agent's resignation hereunder, the provisions of this Article IX shall continue
----------
in effect for the benefit of such retiring Administrative Agent and its
representatives and agents in respect of any actions taken or not taken by any
of them while it was serving as the Administrative Agent.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices.
-------
(a) Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications to any party herein to be effective shall be in writing and shall
be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
49
To the Borrower: Watsco, Inc.
2665 South Bayshore Drive, Suite 901
Coconut Grove, Florida 33133
Attention: Barry Logan, Chief
Financial Officer
Telecopy Number: (305) 858-6898
With a copy to: Moore & Van Allen PLLC
100 North Tryon Street, Suite 4700
Charlotte, North Carolina 28202
Attention: Stephen Hope, Esquire
Telecopy Number: (704) 378-2036
To the Administrative Agent
or the Swingline Bank: SunTrust Bank
200 South Orange Avenue
Orlando, Florida 32801
Attention: Florida Corporate
Telecopy Number: (407) 237-6855
With a copy in each case to: SunTrust Capital Markets, Inc.
303 Peachtree Street, N. E./25th Floor
Atlanta, Georgia 30308
Attention: Agency Services
Telecopy Number: (404) 658-4906
To the Issuing Bank: SunTrust Bank
25 Park Place, N.E./MC 3706
Atlanta, Georgia 30303
Attention: Michael E. Sullivan,
Group Vice President
Telecopy Number: (404) 588-8129
To any other Lender: the address set forth in the
Administrative Questionnaire
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All such notices
and other communications shall, when transmitted by overnight delivery, or
faxed, be effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively, or if mailed,
upon the fifth Business Day after the date deposited into the mails or if
delivered, upon delivery; provided, that notices delivered to the Administrative
--------
Agent, the Issuing Bank or the Swingline Bank shall not be effective until
actually received by such Person at its address specified in this Section 10.1.
------------
(b) Any agreement of the Administrative Agent and the
Lenders herein to receive certain notices by telephone or facsimile is solely
for the convenience and at the request of the Borrower. The Administrative Agent
and the Lenders shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Borrower to give such notice and the
Administrative Agent and Lenders shall not have any liability to the Borrower or
other Person on account of any action taken or not taken by the Administrative
Agent or the Lenders in reliance upon such telephonic or facsimile notice. The
obligation of the Borrower to repay the Loans and all other Obligations
hereunder shall not be affected in any way or to any extent by any failure of
the Administrative Agent and the Lenders to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Administrative Agent and
the Lenders of a confirmation which is at variance with the terms understood by
the Administrative Agent and the Lenders to be contained in any such telephonic
or facsimile notice.
50
Section 10.2 Waiver; Amendments.
------------------
(a) No failure or delay by the Administrative Agent, the
Issuing Bank or any Lender in exercising any right or power hereunder or any
other Loan Document, and no course of dealing between the Borrower and the
Administrative Agent or any Lender, shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power hereunder
or thereunder. The rights and remedies of the Administrative Agent, the Issuing
Bank and the Lenders hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies provided by law. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section 10.2, and then such
------------
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. Without limiting the generality of the foregoing, the
making of a Loan or the issuance of a Letter of Credit shall not be construed as
a waiver of any Default or Event of Default, regardless of whether the
Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default or Event of Default at the time.
(b) No amendment or waiver of any provision of this
Agreement or the other Loan Documents, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Borrower and the Required Lenders or the Borrower and
the Administrative Agent with the consent of the Required Lenders (and, if the
Administrative Agent executes and delivers any such amendment, waiver or consent
which states that it is being provided by the Administrative Agent in its
capacity as such with the consent of the Required Lenders, the Borrower shall be
entitled to rely thereon) and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, that no amendment or waiver shall: (i) increase the Commitment of any
- --------
Lender without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or
reduce any fees payable hereunder, without the written consent of each Lender
affected thereby, (iii) postpone the date fixed for any payment of any principal
of, or interest on, any Loan or LC Disbursement or interest thereon or any fees
hereunder or reduce the amount of, waive or excuse any such payment, or postpone
the scheduled date for the termination or reduction of any Commitment, without
the written consent of each Lender affected thereby, (iv) change Section 2.20(b)
------------ -
or (c) in a manner that would alter the pro rata sharing of payments required
-
thereby, without the written consent of each Lender, (v) change any of the
provisions of this Section 10.2 or the definition of "Required Lenders" or any
------------
other provision hereof specifying the number or percentage of Lenders which are
required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the consent of each
Lender; (vi) release any guarantor or limit the liability of any such guarantor
under any guaranty agreement; (vii) release all or substantially all of the
collateral (if any) securing any of the Obligations; provided further, that no
-------- -------
such agreement shall amend, modify or otherwise affect the rights, duties or
obligations of the Administrative Agent, the Swingline Bank or the Issuing Bank
without the prior written consent of such Person.
Section 10.3 Expenses; Indemnification.
-------------------------
(a) The Borrower shall pay (i) all reasonable,
out-of-pocket costs and expenses of the Administrative Agent and its Affiliates,
including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent and its Affiliates, in connection with the syndication of
the credit facilities provided for herein, the preparation and administration of
the Loan Documents and any amendments, modifications or waivers thereof (whether
or not the transactions contemplated in this Agreement or any other Loan
Document shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all out-of-pocket costs and expenses (including, without limitation, the
reasonable fees, charges and disbursements of outside counsel and the allocated
cost of inside counsel) incurred by the Administrative Agent, the Issuing Bank
or any Lender in connection with the enforcement or protection of its rights in
connection with this Agreement, including its rights under this Section 10.3, or
------------
in connection with the Loans made or any Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.
51
(b) The Borrower shall indemnify the Administrative
Agent, the Issuing Bank and each Lender, and each Related Party of any of the
foregoing (each, an "Indemnitee") against, and hold each of them harmless from,
any and all costs, losses, liabilities, claims, damages and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee,
which may be incurred by or asserted against any Indemnitee arising out of, in
connection with or as a result of (i) the execution or delivery of this
Agreement or any other agreement or instrument contemplated hereby, the
performance by the parties hereto of their respective obligations hereunder or
the consummation of any of the transactions contemplated hereby, (ii) any Loan
or Letter of Credit or any actual or proposed use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned by the Borrower or any Subsidiary or any Environmental Liability related
in any way to the Borrower or any Subsidiary or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided, that the Borrower shall not be
--------
obligated to indemnify any Indemnitee for any of the foregoing arising out of
such Indemnitee's gross negligence or willful misconduct as determined by a
court of competent jurisdiction in a final and nonappealable judgment.
(c) The Borrower shall pay, and hold the Administrative
Agent and each of the Lenders harmless from and against, any and all present and
future stamp, documentary, and other similar taxes with respect to this
Agreement and any other Loan Documents, any collateral described therein, or any
payments due thereunder, and save the Administrative Agent and each Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission to pay such taxes.
(d) To the extent that the Borrower fails to pay any
amount required to be paid to the Administrative Agent, the Issuing Bank or the
Swingline Lender under clauses (a), (b) or (c) hereof, each Lender severally
agrees to pay to the Administrative Agent, the Issuing Bank or the Swingline
Lender, as the case may be, such Lender's Pro Rata Share (determined as of the
time that the unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided, that the unreimbursed expense or indemnified payment,
--------
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Issuing Bank or the Swingline
Lender in its capacity as such.
(e) To the extent permitted by applicable law, the
Borrower shall not assert, and hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to actual or direct damages) arising out of, in connection
with or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the transactions contemplated therein, any Loan or any
Letter of Credit or the use of proceeds thereof.
(f) All amounts due under this Section 10.3 shall be
------------
payable promptly after written demand therefor.
Section 10.4 Successors and Assigns.
----------------------
(a) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights hereunder without the prior written consent of each Lender (and
any attempted assignment or transfer by the Borrower without such consent shall
be null and void).
(b) Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
and the other Loan Documents (including all or a portion of its Commitment and
the Loans and LC Exposure at the time owing to it); provided, that (i) except in
--------
the case of an assignment to a Lender or an Affiliate of a Lender, each of the
Borrower and the Administrative Agent (and, in the case of an assignment of all
or a portion of a Commitment or any Lender's obligations in respect of its LC
Exposure or Swingline Exposure, the Issuing Bank and the Swingline Lender) must
give their prior written consent (which consent shall not be unreasonably
withheld or delayed), (ii) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire amount of the assigning
Lender's Commitment hereunder or an assignment while an Event of Default has
occurred and is continuing, the amount of the Commitment of the
52
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 (unless the Borrower and
the Administrative Agent shall otherwise consent), (iii) each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender's rights and obligations under this Agreement and the other Loan
Documents, (iv) the assigning Lender and the assignee shall execute and deliver
to the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee payable by the assigning Lender or the assignee
(as determined between such Persons) in an amount equal to $1,000 and (v) such
assignee, if it is not a Lender, shall deliver a duly completed Administrative
Questionnaire to the Administrative Agent; provided, that any consent of the
--------
Borrower otherwise required hereunder shall not be required if an Event of
Default has occurred and is continuing. Upon the execution and delivery of the
Assignment and Acceptance and payment by such assignee to the assigning Lender
of an amount equal to the purchase price agreed between such Persons, such
assignee shall become a party to this Agreement and any other Loan Documents to
which such assigning Lender is a party and, to the extent of such interest
assigned by such Assignment and Acceptance, shall have the rights and
obligations of a Lender under this Agreement, and the assigning Lender shall be
released from its obligations hereunder to a corresponding extent (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.17,
-------------
2.18 and 2.19 and 10.3. Upon the consummation of any such assignment hereunder,
- ---- ---- ----
the assigning Lender, the Administrative Agent and the Borrower shall make
appropriate arrangements to have new Notes issued if so requested by either or
both the assigning Lender or the assignee. Any assignment or other transfer by a
Lender that does not fully comply with the terms of this clause (b) shall be
treated for purposes of this Agreement as a sale of a participation pursuant to
clause (c) below.
(c) Any Lender may at any time, without the consent of the
Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender,
sell participations to one or more banks or other entities (a "Participant") in
-----------
all or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment, the Loans owing to it and its LC
Exposure); provided, that (i) such Lender's obligations under this Agreement
--------
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of its obligations hereunder, and (iii)
the Borrower, the Administrative Agent, the Swingline Bank, the Issuing Bank and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. Any agreement between such Lender and the Participant
with respect to such participation shall provide that such Lender shall retain
the sole right and responsibility to enforce this Agreement and the other Loan
Documents and the right to approve any amendment, modification or waiver of this
Agreement and the other Loan Documents; provided, that such participation
--------
agreement may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver of this Agreement
described in the first proviso of Section 10.2(b) that affects the Participant.
------------ -
The Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.17, 2.18 and 2.19 to the same extent as if it were a Lender hereunder
- ------------- ---- ----
and had acquired its interest by assignment pursuant to paragraph (b); provided,
--------
that no Participant shall be entitled to receive any greater payment under
Section 2.17 or 2.19 than the applicable Lender would have been entitled to
- ------------ ----
receive with respect to the participation sold to such Participant unless the
sale of such participation is made with the Borrower's prior written consent. To
the extent permitted by law, the Borrower agrees that each Participant shall be
entitled to the benefits of Section 2.20 as though it were a Lender, provided,
------------ --------
that such Participant agrees to share with the Lenders the proceeds thereof in
accordance with Section 2.20 as fully as if it were a Lender hereunder. A
------------
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.19 unless the Borrower is notified of such
------------
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.19(e) as though it were a
------------ -
Lender hereunder.
(d) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement and its Notes
(if any) to secure its obligations to a Federal Reserve Bank without complying
with this Section 10.4; provided, that no such pledge or assignment shall
------------ --------
release a Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for such Lender as a party hereto.
(e) Notwithstanding anything to the contrary contained
herein, any Lender (a "Granting Lender") may grant to a special purpose funding
---------------
vehicle (an "SPV"), identified as such in writing from time to time by the
---
Granting Lender to the Administrative Agent and the Borrower, the option to
provide to the Borrower all or any part of any Loan that such Granting Lender
would otherwise be obligated to make to the Borrower pursuant to
53
this Agreement; provided, that (i) nothing herein shall constitute a commitment
--------
by any SPV to make any Loan and (ii) if an SPV elects not to exercise such
option or otherwise fails to provide all or any part of any Loan, the Granting
Lender shall be obligated to make such Loan pursuant to the terms hereof. The
making of a Loan by an SPV hereunder shall utilize the Commitment of the
Granting Lender to the same extent, and as if such Loan were made by such
Granting Lender. Each party hereto hereby agrees that no SPV shall be liable for
any indemnity or similar payment obligation under this Agreement (all liability
for which shall remain with the Granting Lender). In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPV, it will not institute against, or join any other
person in instituting against, such SPV any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any State contrary in this Section 10.4, any SPV may (i) with notice
------------
to, but without the prior written consent of, the Borrower and the
Administrative Agent and without paying any processing fee therefor, assign all
or a portion of its interests in any Loans to the Granting Lender or to any
financial institutions (consented to by the Borrower and the Administrative
Agent) providing liquidity and/or credit support to or for the account of such
SPV to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPV. As this Section 10.4(e) applies to
---------------
any particular SPV, this Section 10.4 may not be amended without the written
------------
consent of such SPV.
Section 10.5 Governing Law; Jurisdiction; Consent to
---------------------------------------
Service of Process.
- ------------------
(a) This Agreement and the other Loan Documents shall be
construed in accordance with and be governed by the law (without giving effect
to the conflict of law principles thereof) of the State of Florida.
(b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the non-exclusive jurisdiction of the
United States District Court of the Middle District of Florida, and of any state
court of the State of Florida and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or any other
Loan Document or the transactions contemplated hereby or thereby, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such Florida state
court or, to the extent permitted by applicable law, such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the Administrative Agent,
the Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or any other Loan Document against the
Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower irrevocably and unconditionally waives
any objection which it may now or hereafter have to the laying of venue of any
such suit, action or proceeding described in paragraph (b) of this Section 10.5
------------
and brought in any court referred to in paragraph (b) of this Section 10.5. Each
------------
of the parties hereto irrevocably waives, to the fullest extent permitted by
applicable law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to
the service of process in the manner provided for notices in Section 10.1.
Nothing in this Agreement or in any other Loan Document will affect the right of
any party hereto to serve process in any other manner permitted by law.
Section 10.6 Waiver Of Jury Trial. EACH PARTY HERETO
--------------------
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER
54
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.6.
------------
Section 10.7 Right of Setoff. In addition to any rights
---------------
now or hereafter granted under applicable law and not by way of limitation of
any such rights, each Lender and the Issuing Bank shall have the right, at any
time or from time to time upon the occurrence and during the continuance of an
Event of Default, without prior notice to the Borrower, any such notice being
expressly waived by the Borrower to the extent permitted by applicable law, to
set off and apply against all deposits (general or special, time or demand,
provisional or final) of the Borrower at any time held or other obligations at
any time owing by such Lender and the Issuing Bank to or for the credit or the
account of the Borrower against any and all Obligations held by such Lender or
the Issuing Bank, as the case may be, irrespective of whether such Lender or the
Issuing Bank shall have made demand hereunder and although such Obligations may
be unmatured. Each Lender and the Issuing Bank agree promptly to notify the
Administrative Agent and the Borrower after any such set-off and any application
made by such Lender and the Issuing Bank, as the case may be; provided, that the
failure to give such notice shall not affect the validity of such set-off and
application.
Section 10.8 Counterparts; Effectiveness of Agreement;
----------------------------------------
Integration. This Agreement may be executed by one or more of the parties to
- -----------
this Agreement in any number of separate counterparts (including by telecopy),
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Notwithstanding execution of this Agreement by the
Borrower and each of the Lenders party hereto and satisfaction (or waiver) of
each of the conditions set forth in Section 3.1, this Agreement shall not be or
become effective and binding upon the parties until executed and accepted by the
Administrative Agent in its capacity as such on behalf of the Lenders. This
Agreement, the other Loan Documents, and any separate letter agreement(s)
relating to any fees payable to the Administrative Agent constitute the entire
agreement among the parties hereto and thereto regarding the subject matters
hereof and thereof and supersede all prior agreements and understandings, oral
or written, regarding such subject matters.
Section 10.9 Survival. All covenants, agreements,
--------
representations and warranties made by the Borrower herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans and issuance of any Letters of Credit, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent, the Issuing Bank or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated. The provisions of Sections 2.17, 2.18, 2.19, and 10.3
and Article IX shall survive and remain in full force and effect regardless of
the consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof. All
representations and warranties made herein, in the certificates, reports,
notices, and other documents delivered pursuant to this Agreement shall survive
the execution and delivery of this Agreement and the other Loan Documents, and
the making of the Loans and the issuance of the Letters of Credit.
Section 10.10 Severability. Any provision of this
------------
Agreement or any other Loan Document held to be illegal, invalid or
unenforceable in any jurisdiction, shall, as to such jurisdiction, be
ineffective to the extent of such illegality, invalidity or unenforceability
without affecting the legality, validity or enforceability of the remaining
provisions hereof or thereof; and the illegality, invalidity or unenforceability
of a particular provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 10.11 Confidentiality. Each of the Administrative
---------------
Agent, the Issuing Bank and each Lender agrees to take normal and reasonable
precautions to maintain the confidentiality of any information designated in
writing as confidential and provided to it by the Borrower or any Subsidiary,
except that, subject to taking such normal and reasonable precautions to
maintain the confidentiality thereof, such information may be disclosed by the
Administrative Agent, the Issuing Bank and any Lender (i) to any Related Party
of the Administrative Agent, the Issuing Bank or any such Lender, including
without limitation accountants, legal counsel and other advisors, provided, that
--------
such Related Party agrees to be bound by the provisions of this Section 10.11,
-------------
(ii)
55
to the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (iii) to the extent requested by any regulatory agency or
authority, (iv) to the extent that such information becomes publicly available
other than as a result of a breach of this Section 10.11, or which becomes
-------------
available to the Administrative Agent, the Issuing Bank, any Lender or any
Related Party of any of the foregoing on a nonconfidential basis from a source
other than the Borrower, (v) in connection with the exercise of any remedy
hereunder or any suit, action or proceeding relating to this Agreement or the
enforcement of rights hereunder, and (vi) subject to provisions substantially
similar to this Section 10.11, to any actual or prospective assignee or
-------------
Participant, or (vii) with the consent of the Borrower. Any Person required to
maintain the confidentiality of any information as provided for in this Section
-------
10.11 shall be considered to have complied with its obligation to do so if such
- -----
Person has exercised the same degree of care to maintain the confidentiality of
such information as such Person would accord its own confidential information.
Section 10.12 Interest Rate Limitation. Notwithstanding
------------------------
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which may be treated
as interest on such Loan under applicable law (collectively, the "Charges"),
shall exceed the maximum lawful rate of interest (the "Maximum Rate") which may
be contracted for, charged, taken, received or reserved by a Lender holding such
Loan in accordance with applicable law, the rate of interest payable in respect
of such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest and
Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section 10.12 shall be cumulated
-------------
and the interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Rate to
the date of repayment, shall have been received by such Lender.
[Balance of page left intentionally blank]
56
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed under seal in the case of the Borrower by their
respective authorized officers as of the day and year first above written.
WATSCO, INC.
By: /s/ Ana Menendez
--------------------------------------
Name: Ana Menendez
Title: Vice President-Treasurer
[SEAL]
SUNTRUST BANK, as Administrative Agent, as
Issuing Bank, as Swingline Lender and as a
Lender
By: /s/ Edward E. Wooten
--------------------------------------
Name: Edward E. Wooten
Title: Director
Revolving Commitment: $40,000,000
Swingline Commitment: $15,000,000
BANK OF AMERICA, N.A., as a Lender
By: /s/ Alexander L. Roddy
--------------------------------------
Name: Alexander L. Roddy
Title: Senior Vice President
Revolving Commitment: $27,500,000
MIZUHO CORPORATE BANK, LIMITED, as a
Lender
By: /s/ James W. Masters
--------------------------------------
Name: James W. Masters
Title: Senior Vice President
Revolving Commitment: $27,500,000
WACHOVIA BANK, NATIONAL ASSOCIATION, as a
Lender
By: /s/ David L. Driggers
--------------------------------------
Name: David L. Driggers
Title: Managing Director
Revolving Commitment: $27,500,000
FIRSTAR BANK, NATIONAL ASSOCIATION, as a
Lender
By: /s/ Richard J. Popp
--------------------------------------
Name: Richard J. Popp
Title: Vice President
Revolving Commitment: $22,500,000
COMERICA BANK, as a Lender
By: /s/ Gerald R. Finney, jr.
--------------------------------------
Name: Gerald R. Finney, jr.
Title: Vice President
Revolving Commitment: $20,000,000
THE NORTHERN TRUST COMPANY, as a Lender
By: /s/ Susan Kaminski
--------------------------------------
Name: Susan Kaminski
Title: Vice President
Revolving Commitment: $20,000,000
REGIONS BANK, as a Lender
By: /s/ Anthony D. Nigro
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Name: Anthony D. Nigro
Title: Vice President
Revolving Commitment: $15,000,000
JPMORGAN CHASE BANK, as a Lender
By: /s/ Michael D. Pickerd
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Name: Michael D. Pickerd
Title: Senior Vice President
Revolving Commitment: $15,000,000
ISRAEL DISCOUNT BANK OF NEW YORK, as a
Lender
By: /s/ Roberto R. Munoz
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Name: Roberto R. Munoz
Title: First Vice President
Revolving Commitment: $10,000,000