EXHIBIT 10.12
EXECUTION COPY
================================================================================
WATSCO, INC.
$125,000,000
AMENDED AND RESTATED
PRIVATE SHELF AGREEMENT
as of October 30, 2002
================================================================================
TABLE OF CONTENTS
PARAGRAPH PAGE
1. PRELIMINARY STATEMENTS...................................................................................1
1A. Authorization and Issue of Series A Notes.......................................................1
1B. Authorization of Issue of Notes.................................................................2
2. PURCHASE AND SALE OF NOTES...............................................................................2
2A. Purchase and Sale of Issued Notes...............................................................2
2B. Purchase and Sale of Shelf Notes................................................................2
2C. Issuance Period.................................................................................3
2D. Periodic Spread Information.....................................................................3
2E. Request for Purchase............................................................................3
2F. Rate Quotes.....................................................................................4
2G. Acceptance......................................................................................4
2H. Market Disruption...............................................................................5
2I. Facility Closings...............................................................................5
2J. Fees............................................................................................6
3. CONDITIONS OF CLOSING....................................................................................7
3A. Certain Documents...............................................................................7
3B. Opinion of Purchaser's Special Counsel.........................................................10
3C. Representations and Warranties; No Default.....................................................10
3D. Purchase Permitted by Applicable Laws..........................................................10
3E. Payment of Fees................................................................................10
3F. No Material Adverse Effect.....................................................................10
3G. Guaranty Agreements............................................................................10
4. PREPAYMENTS.............................................................................................10
4A. Required Prepayments of Notes..................................................................11
4B. Optional Prepayment With Yield-Maintenance Amount..............................................11
4C. Notice of Optional Prepayment..................................................................11
4D. Mandatory Offer to Prepay......................................................................11
4E. Allocation of Partial Prepayments..............................................................12
4F. Offer to Prepay Notes in the Event of a Change in Control......................................12
4G. Maturity; Surrender, Etc.......................................................................13
4H. Retirement of Notes............................................................................13
5. AFFIRMATIVE COVENANTS...................................................................................14
5A. Reporting Requirements.........................................................................14
5B. Inspection of Property.........................................................................17
5C. Covenant to Secure Notes Equally...............................................................17
5D. Guaranteed Obligations.........................................................................17
- i -
5E. Maintenance of Insurance.......................................................................18
5F. Maintenance of Corporate Existence/Compliance with Law/Preservation of Property................18
5G. Compliance with Environmental Laws.............................................................18
5H. No Integration.................................................................................19
5I. Financial Records..............................................................................19
5J. Other Covenants................................................................................19
5K. Payment of Obligations.........................................................................19
5L. Additional Subsidiaries........................................................................20
5M. Compliance with Major Distribution Agreements..................................................20
6. NEGATIVE COVENANTS......................................................................................20
6A. Financial Limitation...........................................................................20
6B. Liens, Debt and Other Restrictions.............................................................21
6C. Sale of Assets.................................................................................25
6D. Subsidiary Stock and Debt......................................................................27
6E. Sale of Receivables............................................................................27
6F. ERISA..........................................................................................27
6G. Environmental Matters..........................................................................28
6H. Specified Laws.................................................................................28
6I. Business Activities............................................................................28
7. EVENTS OF DEFAULT.......................................................................................28
7A. Acceleration...................................................................................28
7B. Rescission of Acceleration.....................................................................31
7C. Notice of Acceleration or Rescission...........................................................32
7D. Other Remedies.................................................................................32
8. REPRESENTATIONS, COVENANTS AND WARRANTIES...............................................................32
8A. Organization...................................................................................32
8B. Financial Statements...........................................................................32
8C. Actions Pending................................................................................33
8D. Outstanding Debt...............................................................................33
8E. Title to Properties............................................................................33
8F. Taxes..........................................................................................34
8G. Conflicting Agreements and Other Matters.......................................................34
8H. Offering of Notes..............................................................................34
8I. Use of Proceeds................................................................................34
8J. ERISA..........................................................................................35
8K. Governmental Consent...........................................................................35
8L. Environmental Compliance.......................................................................35
8M. Disclosure.....................................................................................36
8N. Compliance with Laws and Agreements............................................................37
8O. Labor Relations................................................................................37
8P. Major Distribution Agreements..................................................................37
8Q. Solvency.......................................................................................37
- ii -
8R. Senior Debt....................................................................................37
9. REPRESENTATIONS OF THE PURCHASERS.......................................................................37
9A. Nature of Purchase.............................................................................37
9B. Source of Funds................................................................................38
10. DEFINITIONS; ACCOUNTING MATTERS.........................................................................39
10A. Yield-Maintenance Terms........................................................................39
10B. Other Terms....................................................................................40
10C. Accounting Principles, Terms and Determinations................................................56
11. MISCELLANEOUS...........................................................................................56
11A. Payments.......................................................................................56
11B. Expenses.......................................................................................57
11C. Consent to Amendments..........................................................................58
11D. Form and Registration; Transfer and Exchange; Transfer Restrictions; Lost Notes................58
11E. Persons Deemed Owners; Participations..........................................................59
11F. Survival of Representations and Warranties; Entire Agreement...................................59
11G. Successors and Assigns.........................................................................59
11H. Independence of Covenants......................................................................60
11I. Notices........................................................................................60
11J. Payments Due on Non-Business Days..............................................................60
11K. Severability...................................................................................60
11L. Descriptive Headings...........................................................................61
11M. Satisfaction Requirement.......................................................................61
11N. Governing Law; Submission to Jurisdiction......................................................61
11O. Severalty of Obligations.......................................................................61
11P. Counterparts...................................................................................61
11Q. Binding Agreement..............................................................................62
- iii -
WATSCO, INC.
2665 South Bayshore Drive, Suite 901
Coconut Grove, Florida 33133
As of October 30, 2002
The Prudential Insurance Company of America ("Prudential")
Hartford Life Insurance Company
Medica Health Plan
Pruco Life Insurance Company of New Jersey
Each Other Prudential Affiliate (as hereinafter defined)
which becomes bound by certain provisions of this
Agreement as hereinafter provided (together with
Prudential, the "Purchasers")
c/o Prudential Capital Group
1170 Peachtree Street, Suite 500
Atlanta, Georgia 30309
Ladies and Gentlemen:
The undersigned, Watsco, Inc., a Florida corporation (the "Company"),
is a party with you to that certain Private Shelf Agreement, dated as of January
31, 2000 (as amended, modified or supplemented from time to time, the "2000
Agreement"), pursuant to which the Company has issued Notes. The Company has
requested and you have agreed (on the terms and subject to the conditions
hereinafter set forth) to amend and restate the 2000 Agreement in its entirety
as set forth herein.
NOW THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree that the 2000 Agreement shall be and
hereby is amended and restated effective as of the date hereof to read in its
entirety as follows:
1. PRELIMINARY STATEMENTS.
1A.Authorization and Issue of Series A Notes. The Company has
authorized and issued Senior Series A Notes in the aggregate principal amount of
$30,000,000, dated February 7, 2001 to mature April 9, 2007 and bearing interest
at 7.07% per annum on the unpaid balance thereof from the date thereof until the
principal thereof shall have become due and payable (the "Issued Series A
Notes"). The Company will authorize and agree to execute an Allonge, in
substantially the form of Exhibit A-1 (each an "Allonge"), for each Issued
Series A Note issued and outstanding as of the date hereof. The terms "Issued
Series A Note" and "Issued Series A Notes" as used herein shall include each
Issued Series A Note previously delivered pursuant to
the 2000 Agreement, as amended by such Allonge, and any such Note delivered in
substitution or exchange therefor.
1B. Authorization of Issue of Notes. The Company may authorize the
issue of its senior unsecured promissory notes (the "Shelf Notes") in the
aggregate principal amount of up to $125,000,000, to be dated the date of issue
thereof, to mature, in the case of each Shelf Note so issued, no more than
twelve years after the date of original issuance thereof, to have an average
life, in the case of each Shelf Note so issued, of no more than ten years after
the date of original issuance thereof, to bear interest on the unpaid balance
thereof from the date thereof at the rate per annum, and to have such other
particular terms, as shall be set forth, in the case of each Shelf Note so
issued, in the Confirmation of Acceptance with respect to such Shelf Note
delivered pursuant to paragraph 2G, and to be substantially in the form of
Exhibit A-2 attached hereto. The terms "Shelf Note" and "Shelf Notes" as used
herein shall include each Issued Series A Note and each Shelf Note delivered
pursuant to any provision of this Agreement and each Shelf Note delivered in
substitution or exchange for any such Shelf Note pursuant to any such provision.
The terms "Note" and "Notes" as used herein shall include each Issued Series A
Note and each Shelf Note delivered pursuant to any provision of this Agreement
and each Note delivered in substitution or exchange for any such Note pursuant
to any such provision. Notes which have (i) the same final maturity, (ii) the
same principal prepayment dates, (iii) the same principal prepayment amounts (as
a percentage of the original principal amount of each Note), (iv) the same
interest rate, (v) the same interest payment periods and (vi) the same date of
issuance (which, in the case of a Note issued in exchange for another Note,
shall be deemed for these purposes the date on which such Note's ultimate
predecessor Note was issued), are herein called a "Series" of Notes.
2. PURCHASE AND SALE OF NOTES.
2A.Purchase and Sale of Issued Notes. On February 7, 2001, the Company
sold to you the Issued Series A Notes in the aggregate principal amount of
$30,000,000. The Company hereby agrees to execute and deliver to you and,
subject to the terms and conditions herein set forth, you agree to accept from
the Company, for each Issued Series A Note, an Allonge, in substantially the
form of Exhibit A-1.
2B.Purchase and Sale of Shelf Notes.
2B(1) Facility. Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase by Prudential
and Prudential Affiliates from time to time, the purchase of Shelf Notes
pursuant to this Agreement. The willingness of Prudential to consider such
purchase of Shelf Notes is herein called the "Facility". At any time, the
aggregate principal amount of Shelf Notes stated in paragraph 1B, minus the
aggregate principal amount of Shelf Notes purchased and sold pursuant to this
Agreement prior to such time, minus the aggregate principal amount of Accepted
Notes (as hereinafter defined) which have not yet been purchased and sold
hereunder prior to such time, plus the aggregate principal amount of Shelf Notes
purchased and sold pursuant to this Agreement and thereafter retired prior to
such time is herein called the "Available Facility Amount" at such time.
NOTWITHSTANDING THE WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF SHELF
NOTES, THIS AGREEMENT IS ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT
2
NEITHER PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR
ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS
WITH RESPECT TO SPECIFIC PURCHASES OF SHELF NOTES, AND THE FACILITY SHALL IN NO
WAY BE CONSTRUED AS A COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
2C. Issuance Period. Shelf Notes may be issued and sold pursuant to
this Agreement until the earlier of:
(i) January 31, 2006;
(ii) the thirtieth day after Prudential shall have given to
the Company, or the Company shall have given to Prudential, a notice
stating that it elects to terminate the issuance and sale of Shelf
Notes pursuant to this Agreement (or if such thirtieth day is not a
Business Day, the Business Day next preceding such thirtieth day),
(iii) the last Closing Day after which there is no Available
Facility Amount,
(iv) the termination of the Facility under paragraph 7A, and
(v) the acceleration of any Note under paragraph 7A of this
Agreement.
The period during which Shelf Notes may be issued and sold pursuant to this
Agreement is herein called the "Issuance Period".
2D.Periodic Spread Information. Not later than 9:30 A.M. (New York
City local time) on a Business Day during the Issuance Period if there is an
Available Facility Amount on such Business Day, the Company may request by
telecopier or telephone, and Prudential will, to the extent reasonably
practicable, provide to the Company on such Business Day (or, if such request is
received after 9:30 A.M. (New York City local time) on such Business Day, on the
following Business Day), information (by telecopier or telephone) with respect
to various spreads at which Prudential or Prudential Affiliates might be
interested in purchasing Shelf Notes of different average lives; provided,
however, that the Company may not make such requests more frequently than once
in every five Business Days or such other period as shall be mutually agreed to
by the Company and Prudential. The amount and content of information so provided
shall be in the sole discretion of Prudential but it is the intent of Prudential
to provide information which will be of use to the Company in determining
whether to initiate procedures for use of the Facility. Information so provided
shall be representative of potential interest only for the periods commencing on
the day such information is provided and ending on the earlier of the fifth
Business Day after such day and the first day after such day on which further
spread information is provided. Prudential may suspend or terminate providing
information pursuant to this paragraph 2D for any reason, including its
determination that the credit quality of the Company has declined since the date
of this Agreement.
2E.Request for Purchase. The Company may from time to time during the
Issuance Period make requests for purchases of Shelf Notes (each such request
being herein called a
3
"Request for Purchase"). Each Request for Purchase shall be made to Prudential
by telecopier or overnight delivery service, and shall:
(i) specify the aggregate principal amount of Shelf Notes
covered thereby, which shall not be less than the lesser of (A)
$10,000,000 and (B) the Available Facility Amount if such Available
Facility Amount is equal to or greater than $5,000,000 and not be
greater than the Available Facility Amount at the time such Request for
Purchase is made,
(ii) specify the principal amounts, final maturities (which
shall be no more than twelve years from the date of issuance), average
life (which shall be no more than 10 years from the date of issuance)
principal prepayment dates, if any, and amounts and interest payment
periods (which shall be quarterly or semiannually in arrears) of the
Shelf Notes covered thereby,
(iii) specify the use of proceeds of such Shelf Notes,
(iv) specify the proposed day for the closing of the purchase
and sale of such Shelf Notes, which shall be a Business Day during the
Issuance Period not less than 10 days and not more than 20 days after
the making of such Request for Purchase,
(v) specify the number of the account and the name and
address of the depository institution to which the purchase prices of
such Shelf Notes are to be transferred on the Closing Day for such
purchase and sale,
(vi) certify that the representations and warranties
contained in paragraph 8 are true on and as of the date of such Request
for Purchase and that there exists on the date of such Request for
Purchase no Event of Default or Default, and
(vii) be substantially in the form of Exhibit B attached
hereto.
Each Request for Purchase shall be in writing and shall be deemed made when
received by Prudential.
2F.Rate Quotes. Not later than five Business Days after the Company
shall have given Prudential a Request for Purchase pursuant to paragraph 2E,
Prudential may, but shall be under no obligation to, provide to the Company by
telephone or telecopier, in each case between 9:30 A.M. and 2:00 P.M. New York
City local time (or such later time as Prudential may elect), interest rate
quotes for the several principal amounts, maturities, principal prepayment
schedules, and interest payment periods of Shelf Notes specified in such Request
for Purchase. Each quote shall represent the interest rate per annum payable on
the outstanding principal balance of such Shelf Notes at which Prudential or a
Prudential Affiliate would be willing to purchase such Shelf Notes at 100% of
the principal amount thereof.
2G.Acceptance. Within 30 minutes after Prudential shall have provided
any interest rate quotes pursuant to paragraph 2F or such shorter period as
Prudential may specify to the Company (such period herein called the "Acceptance
Window"), the Company may, subject to
4
paragraph 2H, elect to accept such interest rate quotes as to not less than the
lesser of (A) $10,000,000 aggregate principal amount of the Shelf Notes
specified in the related Request for Purchase or (B) the Available Facility
Amount if such Available Facility Amount is equal to or greater than $5,000,000.
Such election shall be made by an Authorized Officer of the Company notifying
Prudential by telephone or telecopier within the Acceptance Window (but not
earlier than 9:30 A.M. or later than 2:00 P.M., New York City local time) that
the Company elects to accept such interest rate quotes, specifying the Shelf
Notes (each such Shelf Note being herein called an "Accepted Note") as to which
such acceptance (herein called an "Acceptance") relates. The day the Company
notifies Prudential of an Acceptance with respect to any Accepted Notes is
herein called the "Acceptance Day" for such Accepted Notes. Any interest rate
quotes as to which Prudential does not receive an Acceptance within the
Acceptance Window shall expire, and no purchase or sale of Shelf Notes hereunder
shall be made based on such expired interest rate quotes. Subject to paragraph
2H and the other terms and conditions hereof, the Company agrees to sell to
Prudential or a Prudential Affiliate, and Prudential agrees to purchase, or to
cause the purchase by a Prudential Affiliate of, the Accepted Notes at 100% of
the principal amount of such Notes. As soon as practicable following the
Acceptance Day, the Company, Prudential and each Prudential Affiliate which is
to purchase any such Accepted Notes will execute a confirmation of such
Acceptance substantially in the form of Exhibit C attached hereto (herein called
a "Confirmation of Acceptance"). If the Company should fail to execute and
return to Prudential within three Business Days following receipt thereof a
Confirmation of Acceptance with respect to any Accepted Notes, Prudential may at
its election at any time prior to its receipt thereof cancel the closing with
respect to such Accepted Notes by so notifying the Company in writing.
2H.Market Disruption. Notwithstanding the provisions of paragraph 2G,
if Prudential shall have provided interest rate quotes pursuant to paragraph 2F
and thereafter prior to the time an Acceptance with respect to such quotes shall
have been notified to Prudential in accordance with paragraph 2G the domestic
market for U.S. Treasury securities or other financial instruments shall have
closed or there shall have occurred a general suspension, material limitation,
or significant disruption of trading in securities generally on the New York
Stock Exchange or in the domestic market for U.S. Treasury securities or other
financial instruments, then such interest rate quotes shall expire, and no
purchase or sale of Shelf Notes hereunder shall be made based on such expired
interest rate quotes. If the Company thereafter notifies Prudential of the
Acceptance of any such interest rate quotes, such Acceptance shall be
ineffective for all purposes of this Agreement, and Prudential shall promptly
notify the Company that the provisions of this paragraph 2H are applicable with
respect to such Acceptance.
2I. Facility Closings. Not later than 11:30 A.M. (New York City local
time) on the Closing Day for any Accepted Notes, the Company will deliver to
each Purchaser listed in the Confirmation of Acceptance relating thereto at the
offices of the Prudential Capital Group, 1114 Avenue of the Americas, 30th
Floor, New York, New York, the Accepted Notes to be purchased by such Purchaser
in the form of one or more Notes in authorized denominations as such Purchaser
may request for each Series of Accepted Notes to be purchased on the Closing
Day, dated the Closing Day and registered in such Purchaser's name (or in the
name of its nominee), against payment of the purchase price thereof by transfer
of immediately available funds for credit to the Company's account specified in
the Request for Purchase of such Notes. If the
5
Company fails to tender to any Purchaser the Accepted Notes to be purchased by
such Purchaser on the scheduled Closing Day for such Accepted Notes as provided
above in this paragraph 2I, or any of the conditions specified in paragraph 3
shall not have been fulfilled by the time required on such scheduled Closing
Day, the Company shall, prior to 1:00 P.M., New York City local time, on such
scheduled Closing Day notify Prudential (which notification shall be deemed
received by each Purchaser) in writing whether (i) such closing is to be
rescheduled (such rescheduled date to be a Business Day during the Issuance
Period not less than one Business Day and not more than 10 Business Days after
such scheduled Closing Day (the "Rescheduled Closing Day") and certify to
Prudential (which certification shall be for the benefit of each Purchaser) that
the Company reasonably believes that it will be able to comply with the
conditions set forth in paragraph 3 on such Rescheduled Closing Day and that the
Company will pay the Delayed Delivery Fee, if applicable, in accordance with
paragraph 2J(3) or (ii) such closing is to be canceled. In the event that the
Company shall fail to give such notice referred to in the preceding sentence,
Prudential (on behalf of each Purchaser) may at its election, at any time after
1:00 P.M., New York City local time, on such scheduled Closing Day, notify the
Company in writing that such closing is to be canceled. Notwithstanding anything
to the contrary appearing in this Agreement, the Company may elect to reschedule
a closing with respect to any given Accepted Notes on not more than one
occasion, unless Prudential shall have otherwise consented in writing.
2J. Fees.
2J(1) Facility Fee. In consideration for the time, effort and expense
involved in the preparation, negotiation and execution of this Agreement, on the
Amendment Closing Day, the Company will pay to Prudential in immediately
available funds a nonrefundable fee (herein called the "Facility Fee") in the
amount of $30,000.00.
2J(2) Issuance Fee. The Company will pay to Prudential in immediately
available funds a fee (herein called the "Issuance Fee") on each Closing Day
(other than on the Amendment Closing Day) in an amount equal to 0.125% of the
aggregate principal amount of Notes sold on such Closing Day.
2J(3) Delayed Delivery Fee. If the closing of the purchase and sale of
any Accepted Note is delayed for any reason beyond the original Closing Day for
such Accepted Note, the Company will pay to Prudential (a) on the Cancellation
Date or actual closing date of such purchase and sale and (b) if earlier, the
next Business Day following 90 days after the Acceptance Day for such Accepted
Note and on each Business Day following 90 days after the prior payment
hereunder, a fee (herein called the "Delayed Delivery Fee") calculated as
follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond equivalent yield per
annum of such Accepted Note, "MMY" means Money Market Yield, i.e., the yield per
annum on a commercial paper investment of the highest quality selected by
Prudential on the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same as, or closest
to, the Rescheduled Closing Day or Rescheduled Closing Days (a new alternative
investment being selected by Prudential each time such closing is delayed);
"DTS"
6
means Days to Settlement, i.e., the number of actual days elapsed from and
including the original Closing Day with respect to such Accepted Note (in the
case of the first such payment with respect to such Accepted Note) or from and
including the date of the next preceding payment (in the case of any subsequent
delayed delivery fee payment with respect to such Accepted Note) to but
excluding the date of such payment; and "PA" means Principal Amount, i.e., the
principal amount of the Accepted Note for which such calculation is being made.
In no case shall the Delayed Delivery Fee be less than zero. If the foregoing
calculation yields a negative number or zero, no Delayed Delivery Fee shall be
due. Nothing contained herein shall obligate any Purchaser to purchase any
Accepted Note on any day other than the Closing Day for such Accepted Note, as
the same may be rescheduled from time to time in compliance with paragraph 2I.
2J(4) Cancellation Fee. If the Company at any time notifies Prudential
in writing that the Company is canceling the closing of the purchase and sale of
any Accepted Note, or if Prudential notifies the Company in writing under the
circumstances set forth in the last sentence of paragraph 2G or the penultimate
sentence of paragraph 2I that the closing of the purchase and sale of such
Accepted Note is to be canceled, or if the closing of the purchase and sale of
such Accepted Note is not consummated on or prior to the last day of the
Issuance Period (the date of any such notification, or the last day of the
Issuance Period, as the case may be, being herein called the "Cancellation
Date"), the Company will pay the Purchasers in immediately available funds an
amount (the "Cancellation Fee") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the bid
price (as determined by Prudential) of the Hedge Treasury Notes(s) having a
maturity date the same as, or closest to, such Accepted Note, on the Acceptance
Day (if the difference is a negative number or zero, no Cancellation Fee shall
be due) by (b) such bid price; and "PA" has the meaning ascribed to it in
paragraph 2J(3). The foregoing bid and ask prices shall be as reported by
Telerate Systems, Inc. (or, if such data for any reason ceases to be available
through Telerate Systems, Inc., any publicly available source of similar market
data). Each price shall be based on a U.S. Treasury security having a par value
of $100.00 and shall be rounded to the second decimal place. In no case shall
the Cancellation Fee be less than zero.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser to purchase
and pay for any other Notes is subject to the satisfaction of (i) all of the
conditions set forth in this paragraph 3 other than paragraph 3A(2) on or before
the closing date, October 30, 2002 (hereinafter "Amendment Closing Day"), which
closing shall occur at the offices of King & Spalding, 1185 Avenue of the
Americas, New York, New York, and (ii) all of the conditions set forth in this
paragraph 3 other than paragraph 3A(1) on or before such other Closing Day for
the purchase of any Notes:
3A.Certain Documents. Such Purchaser shall have received the
following:
7
3A(1) Amendment Closing Day. Such Purchaser shall have received, each
dated the date of the Amendment Closing Day:
(i) This Agreement and an Allonge for each holder of Issued
Series A Notes duly executed by the parties hereto;
(ii) Each Guaranty Agreement duly executed by the applicable
Guarantor;
(iii) Certified copies of the resolutions of the Board of
Directors of (A) the Company authorizing the execution and delivery of
this Agreement and the issuance of the Notes, and of all documents
evidencing other necessary corporate action and governmental approvals,
if any, with respect to this Agreement and the Notes and (B) each
Guarantor authorizing the execution and delivery of its Guaranty
Agreement and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to its Guaranty
Agreement;
(iv) A certificate of the Secretary or an Assistant Secretary
and one other officer of (A) the Company certifying the names and true
signatures of the officers of the Company authorized to sign this
Agreement and the Notes and the other documents to be delivered
hereunder and (B) each Guarantor certifying the names and true
signatures of the officers of such Guarantor authorized to sign its
Guaranty Agreement and the other documents to be delivered thereunder;
(v) Certified copies of the Articles of Incorporation and
By-laws of the Company and each Guarantor;
(vi) A good standing certificate for (A) the Company from the
Secretary of State of Florida and (B) each Guarantor from the Secretary
of State of the State of its formation, each dated as of a recent date
and good standing and such other evidence of the status of the Company
or such Guarantor as such Purchaser may reasonably request;
(vii) A favorable opinion of Moore Van Allen, PLLC, special
counsel to the Company (or such other counsel designated by the Company
and acceptable to the Purchaser(s)) satisfactory to such Purchaser and
substantially in the form of Exhibit D-1 attached hereto and as to such
other matters as such Purchaser may reasonably request. The Company
hereby directs each such counsel to deliver such opinion, agrees that
the issuance and sale of any Notes will constitute a reconfirmation of
such direction, and understands and agrees that each Purchaser
receiving such an opinion will and is hereby authorized to rely on such
opinion;
(viii) A favorable opinion of Greenberg Traurig Hoffman Lipoff
Rosen & Quentel P.A., special Florida counsel to the Company (or such
other counsel designated by the Company and acceptable to the
Purchaser(s)) satisfactory to such Purchaser and substantially in the
form of Exhibit D-2 attached hereto and as to such other matters as
such Purchaser may reasonably request. The Company hereby directs each
such counsel to deliver such opinion, agrees that the issuance and sale
of any Notes will constitute a
8
reconfirmation of such direction, and understands and agrees that each
Purchaser receiving such an opinion will and is hereby authorized to
rely on such opinion; and
(ix) Additional documents or certificates with respect to
legal matters or corporate or other proceedings related to the
transactions contemplated hereby as may be reasonably requested by such
Purchaser.
3A(2) Subsequent Closing Day. Such Purchaser shall have received, each
dated the date of the applicable Closing Day:
(i) Certified copies of the resolutions of the Board of
Directors of the Company authorizing the execution and delivery and the
issuance of the Notes on such Closing Day, and of all documents
evidencing other necessary corporate action and governmental approvals,
if any, with respect to such Notes;
(ii) A certificate of the Secretary or an Assistant Secretary
and one other officer of the Company certifying the names and true
signatures of the officers of the Company authorized to sign such Notes
and the other documents to be delivered hereunder;
(iii) Certified copies of the Articles of Incorporation and
By-laws of the Company or confirmation that there have been no
modifications to such documents delivered on the Amendment Closing Day;
(iv) A good standing certificate for the Company from the
Secretary of State of Florida dated of a recent date and good standing
and such other evidence of the status of the Company as such Purchaser
may reasonably request; and
(v) A favorable opinion of Moore Van Allen, PLLC, special
counsel to the Company (or such other counsel designated by the Company
and acceptable to the Purchaser(s)) satisfactory to such Purchaser and
substantially in the form of Exhibit D-3 attached hereto and as to such
other matters as such Purchaser may reasonably request. The Company
hereby directs each such counsel to deliver such opinion, agrees that
the issuance and sale of any Notes will constitute a reconfirmation of
such direction, and understands and agrees that each Purchaser
receiving such an opinion will and is hereby authorized to rely on such
opinion.
(vi) A favorable opinion of Greenberg Traurig Hoffman Lipoff
Rosen & Quentel P.A., special Florida counsel to the Company (or such
other counsel designated by the Company and acceptable to the
Purchaser(s)) satisfactory to such Purchaser and substantially in the
form of Exhibit D-4 attached hereto and as to such other matters as
such Purchaser may reasonably request. The Company hereby directs each
such counsel to deliver such opinion, agrees that the issuance and sale
of any Notes will constitute a reconfirmation of such direction, and
understands and agrees that each Purchaser receiving such an opinion
will and is hereby authorized to rely on such opinion.
9
(vii) A Private Placement number issued by Standard & Poor's
CUSIP Service Bureau (in cooperation with the Securities Valuation
Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes to be purchased.
(viii) Additional documents or certificates with respect to
legal matters or corporate or other proceedings related to the
transactions contemplated hereby as may be reasonably requested by such
Purchaser.
3B.Opinion of Purchaser's Special Counsel. Such Purchaser shall have
received from King & Spalding or such other counsel who is acting as special
counsel for it in connection with this transaction, a favorable opinion
satisfactory to such Purchaser as to such matters incident to the matters herein
contemplated as it may reasonably request.
3C.Representations and Warranties; No Default. The representations and
warranties contained in paragraph 8 shall be true on and as of such Closing Day,
except to the extent of changes caused by the transactions herein contemplated
and for any Closing Day after the Amendment Closing Day changes since the date
of this Agreement which are disclosed in writing to Prudential and to which
Prudential shall have consented in writing; there shall exist on such Closing
Day no Event of Default or Default; and the Company shall have delivered to such
Purchaser an Officer's Certificate, dated such Closing Day, to both such
effects.
3D.Purchase Permitted by Applicable Laws. The purchase of and payment
for the Notes to be purchased by such Purchaser on the terms and conditions
herein provided (including the use of the proceeds of such Notes by the Company)
shall not violate any applicable law or governmental regulation (including,
without limitation, Section 5 of the Securities Act or Regulation T, U or X of
the Board of Governors of the Federal Reserve System) and shall not subject such
Purchaser to any tax (other than any income taxes arising from such Purchaser's
ownership of the Notes), penalty, liability or other onerous condition under or
pursuant to any applicable law or governmental regulation, and such Purchaser
shall have received such certificates or other evidence as it may request to
establish compliance with this condition.
3E.Payment of Fees. The Company shall have paid to Prudential any fees
due it pursuant to or in connection with this Agreement, including any Facility
Fee due pursuant to paragraph 2J(1), any Issuance Fee due pursuant to paragraph
2J(2) and any Delayed Delivery Fee due pursuant to paragraph 2J(3) and any fees
and expenses of its legal counsel.
3F.No Material Adverse Effect. Prudential shall have received a
certificate from the chief financial officer of the Company, dated the
applicable Closing Day, stating that since December 31, 2001, there shall have
been no change which has had or could reasonably be expected to have a Material
Adverse Effect.
3G.Guaranty Agreements. Each Guaranty Agreement, on and after the date
of its execution and delivery, shall remain in full force and effect, and the
Company shall have delivered an Officer's Certificate, dated such Closing Day,
to such effect.
4. PREPAYMENTS. Any Notes shall be subject to required prepayment as
and to the extent provided in paragraph 4A. Any Notes shall also be subject to
prepayment under the
10
circumstances set forth in paragraphs 4B, 4D and 4F. Any prepayment made by the
Company pursuant to any other provision of this paragraph 4 shall not reduce or
otherwise affect its obligation to make any required prepayment as specified in
paragraph 4A.
4A.Required Prepayments of Notes. Until the Issued Series A Notes shall
be paid in full, the Company shall apply to the prepayment of the Issued Series
A Notes, without Yield-Maintenance Amount, the sum of $10,000,000 on each of
April 9, 2005 and April 9, 2006, and such principal amounts of the Issued Series
A Notes, together with interest thereon to the payment dates, shall become due
on such payment dates. The remaining unpaid principal amount of the Issued
Series A Notes, together with interest accrued thereon, shall become due on the
maturity date of the Issued Series A Notes. Each other Series of Shelf Notes
shall be subject to required prepayments, if any, set forth in the Notes of such
Series.
4B.Optional Prepayment With Yield-Maintenance Amount. The Notes of each
Series shall be subject to prepayment, in whole at any time or from time to time
in part (in integral multiples of $1,000,000 and in a minimum amount of
$5,000,000), at the option of the Company, at 100% of the principal amount so
prepaid plus interest thereon to the prepayment date and the Yield-Maintenance
Amount, if any, with respect to each such Note. Any partial prepayment of a
Series of the Notes pursuant to this paragraph 4B shall be applied in
satisfaction of required payments of principal in inverse order of their
scheduled due dates.
4C.Notice of Optional Prepayment. The Company shall give the holder of
each Note of a Series to be prepaid pursuant to paragraph 4B irrevocable written
notice of such prepayment not less than 10 Business Days prior to the prepayment
date, specifying such prepayment date, the aggregate principal amount of the
Notes of such Series to be prepaid on such date, the principal amount of the
Notes of such Series held by such holder to be prepaid on that date and that
such prepayment is to be made pursuant to paragraph 4B. Notice of prepayment
having been given as aforesaid, the principal amount of the Notes specified in
such notice, together with interest thereon to the prepayment date and together
with the Yield-Maintenance Amount, if any, herein provided, shall become due and
payable on such prepayment date. The Company shall, on or before the day on
which it gives written notice of any prepayment pursuant to paragraph 4B, give
telephonic notice of the principal amount of the Notes to be prepaid and the
prepayment date to each Significant Holder which shall have designated a
recipient for such notices in the Purchaser Schedule attached hereto or the
applicable Confirmation of Acceptance or by notice in writing to the Company.
4D.Mandatory Offer to Prepay.
(a) Upon receipt by the Company or any Subsidiary of Net Cash
Proceeds from any Securitization Transaction, the Company shall certify
to the Purchasers the amount of such Net Cash Proceeds so received and
offer to prepay the Notes (as provided in clause (b) below) in an
aggregate principal amount equal to 50% of the Net Cash Proceeds.
(b) The offer to prepay Notes contemplated by the foregoing
subparagraph (a) shall be made in writing to each holder of a Note at
least 10 Business Days before the proposed date of prepayment
specifying such proposed date and the amount available for prepayment.
A holder of a Note may accept such offer to prepay by causing a notice
of
11
such acceptance to be delivered to the Company within seven Business
Days after receipt of the notice required pursuant to this subparagraph
(b). A failure by a holder of Notes to respond to an offer to prepay
made pursuant to this subparagraph (b) within such seven Business Day
period shall be deemed to constitute a rejection of such offer by such
holder. The amount of all prepayments pursuant to subparagraph (a)
shall be made ratably to each holder of a Note accepting an offer to
prepay made under this paragraph 4D. For purposes of subparagraph (a)
and this subparagraph (b), each Note's pro rata share shall be a
fraction, the numerator of which is the unpaid principal balance of
such Note on the date of such prepayment (the "Note Prepayment
Amount"), and the denominator of which is the sum of the Note
Prepayment Amount for such Note plus the Note Prepayment Amount for
each other Note to be prepaid on the date of prepayment, provided,
however, that in no event will the aggregate amount the Company or any
Subsidiary may be obligated to pay under this paragraph 4D exceed 50%
of Net Cash Proceeds received by such entity. No Yield-Maintenance
Amount shall be payable in connection with any prepayment under this
paragraph 4D.
4E.Allocation of Partial Prepayments. In the case of each prepayment of
less than the entire unpaid principal amount of all outstanding Notes of any
Series pursuant to paragraphs 4A, 4B or 4D, the amount to be prepaid shall be
applied pro rata to all outstanding Notes of such Series (including, for the
purpose of this paragraph 4E only, all Notes prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its Subsidiaries or
Affiliates other than by prepayment pursuant to paragraph 4A, 4B or 4D)
according to the respective unpaid principal amounts thereof.
4F.Offer to Prepay Notes in the Event of a Change in Control.
4F(1) Notice of Impending Change in Control. The Company shall give to
each holder of Notes prompt written notice of any impending Change in Control
for which it has received a written offer or notice.
4F(2) Notice of Occurrence of Change in Control. The Company will,
within five Business Days after any Responsible Officer has knowledge of the
occurrence of any Change in Control, give written notice of such Change in
Control to each holder of Notes. If a Change in Control has occurred and in
connection therewith (i) the Availability Period (as defined in the Bank
Agreement), the Commitment Termination Date (as defined in the Bank Agreement),
or any other similar or corresponding terms used in the Bank Agreement, is
reduced or accelerated (whether by waiver, amendment, or otherwise), (ii) any
Debt under the Bank Agreement becomes due and payable or is required to be
prepaid or redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased or (iii) any Commitments (as defined in the
Bank Agreement) under the Bank Agreement are terminated, then such notice shall
contain and constitute an offer to prepay the Notes as described in paragraphs
4F(3) and 4F(5) and shall be accompanied by the certificate described in
paragraph 4F(6) hereof.
4F(3) Offer to Prepay Notes. The offer to prepay Notes contemplated by
the foregoing paragraph 4F(2) shall be an offer to prepay, in accordance with
and subject to this paragraph 4F, all, but not less than all, the Notes held by
each holder (in this case only, "holder" in respect of any Note registered in
the name of a nominee for a disclosed beneficial owner shall mean such
12
beneficial owner) on a date specified in such offer (the "Proposed Prepayment
Date"). Such Proposed Prepayment Date shall be not less than 30 days and not
more than 90 days after the date of such offer (if the Proposed Prepayment Date
shall not be specified in such offer, the Proposed Prepayment Date shall be the
60th day after the date of such offer).
4F(4) Rejection, Acceptance. A holder of Notes may accept the offer to
prepay made pursuant to this paragraph 4F by causing a notice of such acceptance
to be delivered to the Company no later than seven Business Days prior to the
Proposed Prepayment Date. A failure by a holder of Notes to respond to an offer
to prepay made pursuant to this paragraph 4F within such seven Business Day
period shall be deemed to constitute a rejection of such offer by such holder.
4F(5) Prepayment. Prepayment of the Notes to be prepaid pursuant to
this paragraph 4F shall be at 100% of the principal amount of such Notes,
together with interest on such Notes accrued but unpaid to the date of
prepayment. The prepayment shall be made on the Proposed Prepayment Date. No
Yield-Maintenance Amount shall be payable in connection with any prepayment
under this paragraph 4F.
4F(6) Officer's Certificate. Each offer to prepay the Notes pursuant to
this paragraph 4F shall be accompanied by a certificate, executed by a
Responsible Officer of the Company and dated the date of such offer, specifying:
(a) the Proposed Prepayment Date; (b) that such offer is made pursuant to this
paragraph 4F; (c) the principal amount of each Note offered to be prepaid; (d)
the interest that would be due on each Note offered to be prepaid, accrued to
the Proposed Prepayment Date; (e) that the conditions of paragraphs 4F(2),
4F(3), 4F(5) and 4F(6) have been fulfilled; and (f) in reasonable detail, the
nature and date of the Change in Control.
4F(7) Termination of Effectiveness. Immediately upon the effectiveness
of an amendment of the Bank Agreement such that a Change of Control shall cease
to constitute an "Event of Default" thereunder and not otherwise cause a
prepayment or commitment reduction thereunder, the provisions of this paragraph
4F shall no longer be applicable to the Notes.
4G.Maturity; Surrender, Etc. In the case of the prepayment of Notes
pursuant to this paragraph 4, the principal amount of each Note to be prepaid
shall mature and become due and payable on the date fixed for such prepayment,
together with interest on such principal amount accrued but unpaid prior to such
date and the applicable Yield-Maintenance Amount, if any. From and after such
date, unless prior thereto the Company shall fail to pay such principal amount
when so due and payable, together with the interest and the applicable
Yield-Maintenance Amount, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and canceled and the Company shall be immediately
discharged from any obligation under such Notes.
4H.Retirement of Notes. The Company shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or
in part prior to their stated final maturity (other than by prepayment pursuant
to paragraphs 4A, 4B, 4D or 4F or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise
13
acquire, directly or indirectly, Notes of any Series held by any holder unless
the Company or such Subsidiary or Affiliate shall have offered to prepay or
otherwise retire or purchase or otherwise acquire, as the case may be, the same
proportion of the aggregate principal amount of Notes of such Series held by
each other holder of Notes of such Series at the time outstanding upon the same
terms and conditions. Any Notes so prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any of its Subsidiaries or Affiliates shall
not be deemed to be outstanding for any purpose under this Agreement, except as
provided in paragraph 4E.
5. AFFIRMATIVE COVENANTS.
5A. Reporting Requirements.
5A(1) General Information. The Company covenants that it will deliver
to each Significant Holder:
(i) as soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the fourth quarterly
period) in each fiscal year,
(1) Consolidated statements of income, stockholders'
equity and cash flows for the period from the beginning of the
current fiscal year to the end of such quarterly period, and
(2) a Consolidated balance sheet as at the end of such
quarterly period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and reasonably satisfactory in form to the Required Holder(s)
and certified by an authorized financial officer of the Company as
fairly presenting, in all material respects, the financial condition of
the Company and its Consolidated Subsidiaries as of the end of such
period and the results of their operations for the period then ended in
accordance with generally accepted accounting principles, subject to
changes resulting from normal year-end adjustments and the inclusion of
abbreviated footnotes; provided, however, that delivery pursuant to
clause (iii) below of copies of the Quarterly Report on Form 10-Q of
the Company for such quarterly period filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this
clause (i);
(ii) as soon as practicable and in any event within 90 days
after the end of each fiscal year,
(1) Consolidated statements of income, stockholders'
equity and cash flows for such year, and
(2) a Consolidated balance sheet as at the end of such
year,
setting forth in each case in comparative form corresponding
Consolidated figures from the preceding annual audit, all in reasonable
detail and reasonably satisfactory in scope to the Required Holder(s)
and reported on by independent public accountants of recognized
standing selected by the Company whose report shall be without
limitation as to the scope of the audit and reasonably satisfactory in
substance to the Required Holder(s); provided, however, that delivery
pursuant to clause (iii) below of copies of the Annual
14
Report on Form 10-K of the Company for such year filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this clause (ii);
(iii) if the Company shall be publicly held, promptly upon
transmission thereof, copies of all such financial statements, proxy
statements, notices, certificates and reports as it shall send to its
public stockholders and copies of all registration statements (without
exhibits) and all reports (other than any registration statement filed
on Form S-8) and certificates which it files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to
the functions of the Securities and Exchange Commission), including
without limitation the certifications of the chief executive officer
and the chief financial officer described in Sections 302 and 906 of
the Sarbanes-Oxley Act of 2002 (as amended from time to time);
(iv) promptly upon receipt thereof, a copy of each other
report (including, without limitation, management letters) submitted to
the Company or any Subsidiary by independent accountants in connection
with any annual, interim or special audit made by them of the books of
the Company or any Subsidiary;
(v) promptly upon receipt thereof, a copy of each report,
survey, study, evaluation, assessment or other document prepared by any
consultant, engineer, Environmental Authority or other Person relating
to compliance by the Company or any Subsidiary with any Environmental
Requirements, if the cost of remediation, repair or compliance may be
reasonably expected to exceed $250,000 in any one case or in the
aggregate;
(vi) with reasonable promptness, upon the request of the
holder of any Note, provide such holder, and any qualified
institutional buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule
144A under the Securities Act in connection with the resale of Notes,
except at such times as the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act. For the
purpose of this clause (vi), the term "qualified institutional buyer"
shall have the meaning specified in Rule 144A under the Securities Act;
and
(vii) with reasonable promptness, such other data relating to
the business, operations, properties or financial condition of the
Company or any of its Subsidiaries as a Significant Holder may
reasonably request;
5A(2) Officer's Certificates. Together with each delivery of financial
statements required by clauses 5A(i) and (ii) above, the Company will deliver to
each Significant Holder an Officer's Certificate demonstrating (with
computations in reasonable detail) compliance with the provisions of paragraphs
6A, 6B(1), 6B(2), 6B(3) and 6C and stating that there exists no Event of Default
or Default, or, if any Event of Default or Default exists, specifying the nature
and period of existence thereof and what action the Company has taken, is taking
or proposes to take with respect thereto.
15
5A(3) Special Information. The Company also covenants that immediately
after any Responsible Officer obtains actual knowledge of:
(a) an Event of Default or Default;
(b) a material adverse change in the financial condition,
business or operations of the Company and its Subsidiaries, taken as a
whole;
(c) legal proceedings filed or commenced against, or to the
knowledge of the Company, affecting the Company and/or any Subsidiary,
which reasonably could be expected to have a Material Adverse Effect or
which in any manner draws into question the validity of this Agreement
or the Notes;
(d) a default under any agreement or note evidencing Debt for
which the Company or any Subsidiary is liable;
(e) the occurrence of any other event that reasonably could be
expected to impair the ability of the Company to meet its obligations
hereunder;
(f) any (i) Environmental Liabilities, (ii) pending, threatened
or anticipated Environmental Proceedings, (iii) Environmental Notices,
(iv) Environmental Judgments and Orders, or (v) Environmental Releases
at, on, in, under or in any way affecting the Properties which
reasonably could be expected to have a Material Adverse Effect;
(g) the occurrence of any other event that results in, or could
reasonably be expected to result in, a Material Adverse Effect;
(h) 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 Company and its Subsidiaries in
an aggregate amount exceeding $1,000,000;
(i) any change in the fiscal year of the Company or any
Subsidiary, except to change the fiscal year of a Subsidiary to conform
its fiscal year to that of the Company; or
(j) 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
16
of any summary of the circumstances relating thereto, and an
explanation of what action, if any, the Company 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;
the Company will deliver to each Significant Holder an Officer's Certificate
specifying the nature and period of existence thereof and what action the
Company or the Subsidiary has taken, is taking or proposes to take with respect
thereto.
5B.Inspection of Property. The Company covenants that, at such
reasonable times and upon reasonable notice and as often as a Significant Holder
may reasonably request, it will permit any Person designated by a Significant
Holder in writing, at such Significant Holder's expense unless a Default has
occurred and is continuing in which case at the Company's expense, to:
(i) visit and inspect any of the properties of the Company
and any Subsidiary;
(ii) examine the corporate books and financial records of the
Company and its Subsidiaries and make copies thereof or extracts
therefrom; and
(iii) discuss the affairs, finances and accounts of any of
such corporations with the principal officers of the Company or any
Subsidiary and their independent public accountants.
5C.Covenant to Secure Notes Equally. The Company covenants that if it
or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
paragraph 6B(1) (unless prior written consent shall have been obtained under
paragraph 11C), it will make or cause to be made effective provision whereby the
Notes will be secured by such Lien equally and ratably with any and all other
Debt thereby secured so long as any such other Debt shall be so secured.
5D.Guaranteed Obligations. The Company covenants that if any Person
(other than the Company) Guarantees or provides collateral in any manner for any
Debt of the Company or any Subsidiary other than as permitted by paragraph
6B(1), it will simultaneously cause such Person to Guarantee or provide
collateral for the Notes equally and ratably with all Debt Guaranteed or secured
by such Person for so long as such Debt is Guaranteed and pursuant to
documentation in form and substance reasonably satisfactory to such holder.
Subject to the foregoing, the Company shall cause each of its Subsidiaries not
existing as of the date hereof to execute and deliver a guaranty agreement, in
substantially the form of the Guaranty Agreements, as soon as practicable and in
any event within thirty days of the creation or acquisition of any such
17
Subsidiary. The delivery of such guaranty agreement shall be accompanied by such
other documents as the Required Holders may reasonably request including
charter, bylaws, appropriate resolutions of the Board of Directors of any such
Subsidiary providing such a guaranty agreement and legal opinions. Upon the
delivery thereof, such guaranty agreement and such other documents shall
constitute Related Documents hereunder.
5E.Maintenance of Insurance. The Company covenants that it and each
Subsidiary will maintain, with responsible insurers, insurance with respect to
its properties and business against such casualties and contingencies
(including, but not limited to, public liability, larceny, embezzlement or other
criminal misappropriation) and in such amounts as is customary in the case of
similarly situated corporations engaged in the same or similar businesses.
5F.Maintenance of Corporate Existence/Compliance with Law/Preservation
of Property. The Company covenants that, except as permitted under paragraphs
6B(3) and 6C, it and each Subsidiary will do or cause to be done all things
necessary to, at all times:
(i) preserve, renew and maintain in full force and effect
its legal existence of the Company and its Subsidiaries and continue to
engage in the same business as presently conducted or such other
businesses that are reasonably related thereto; provided, however, the
Company shall not be required to preserve the legal existence of any
Subsidiary if the Company reasonably determines that the preservation
thereof is no longer necessary or desirable in the conduct of the
business of the Company and its Subsidiaries taken as a whole.
(ii) comply with all laws and regulations (including, without
limitation, laws and regulations relating to equal employment
opportunity and employee safety) applicable to it and any Subsidiary,
except where the failure to comply, either individually or in the
aggregate, could not reasonably be expected to result in a Material
Adverse Effect;
(iii) maintain, preserve and protect all material licenses,
certificates, permits, franchises and intellectual property of the
Company and its Subsidiaries; and
(iv) preserve all the remainder of its property used or
useful in the conduct of its business and keep the same in good repair,
working order and condition excluding normal wear and tear, except
where the failure to preserve such property, either individually or in
the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
5G.Compliance with Environmental Laws. The Company covenants that it
and each Subsidiary will, comply in a timely fashion with, or operate pursuant
to valid waivers of the provisions of, all applicable Environmental
Requirements, including, without limitation, the emission of wastewater
effluent, solid and hazardous waste and air emissions together with any other
applicable Environmental Requirements for conducting, on a timely basis,
periodic tests and monitoring for contamination of ground water, surface water,
air and land and for biological toxicity of the aforesaid, and all applicable
regulations of the Environmental Protection Agency or other relevant
Governmental Authority, except where the failure to comply could not
18
reasonably be expected to have a Material Adverse Effect. The Company agrees to
indemnify and hold you, your officers, agents and employees (each an
"Indemnified Person") harmless from any loss, liability, claim or expense that
you may incur or suffer as a result of a breach by the Company or any
Subsidiary, as the case may be, of this covenant other than as a result of the
gross negligence or willful misconduct of such Indemnified Person. The Company
shall not be deemed to have breached or violated this paragraph 5G if the
Company or any Subsidiary is challenging in good faith by appropriate
proceedings diligently pursued the application or enforcement of such
Environmental Requirements for which adequate reserves have been established in
accordance with generally accepted accounting principles.
5H.No Integration. The Company covenants that it has taken and will
take all necessary action so that the issuance of the Notes does not and will
not require registration under the Securities Act. The Company covenants that no
future offer and sale of debt securities of the Company of any class will be
made if there is a reasonable possibility that such offer and sale would, under
the doctrine of "integration", subject the issuance of the Notes to you to the
registration requirements of the Securities Act.
5I.Financial Records. The Company covenants that it and each Subsidiary
will keep proper books of record and account in which full and correct entries
(in all material respects and subject to normal year end adjustments and, as to
interim statements, the absence of footnotes) will be made of the business and
affairs of the Company or such Subsidiary under generally accepted accounting
principles consistently applied (except for changes disclosed in the financial
statements furnished to you pursuant to paragraph 5A and concurred in by the
independent public accountants referred to in paragraph 5A).
5J.Other Covenants. If (in the reasonable opinion of the Required
Holders) at any time and from time to time, after the date hereof, any of the
material covenants, material representations and warranties or material events
of default, or any other material term or provision (other than any term or
provision relating to payment terms, interest rates or penalties) (collectively,
"Material Provisions"), contained in any document evidencing any Debt in excess
of $5,000,000, or in any document, agreement or instrument from time to time
entered into by the Company in respect thereof (collectively, the "Other Debt
Documents"), is more favorable to the lender or beneficiary under such Other
Debt Documents than are the terms of this Agreement to the holders of the Notes,
this Agreement shall be deemed amended to contain each more favorable Material
Provision on the same basis and to the extent that such Material Provisions are
reflected in such Other Debt Documents. The Company hereby agrees to so amend
this Agreement and to execute and deliver all such documents required by the
Required Holder(s) to reflect such Amendment. Prior to the execution and
delivery of such documents by the Company, this Agreement shall be deemed to
contain each more favorable Material Provision for purposes of determining the
rights and obligations hereunder.
5K.Payment of Obligations. The Company will, and will cause each
Subsidiary to, pay and discharge at or before maturity, all of its obligations
and liabilities, including without limitation:
19
(i) all taxes, assessments and governmental charges or
levies imposed upon it or any of its property other than any taxes,
assessments and government charges or levies; and
(ii) all claims or demands of materialmen, mechanics,
carriers, warehousemen, vendors, landlords and other like Persons that,
if unpaid, could reasonable be expected to result in the creation of a
Lien upon any of its property:
provided, that items of the foregoing clauses (i) and (ii) need not be
paid
(1) while being actively contested in good faith by
appropriate proceedings diligently conducted and with respect to
which adequate reserves or other appropriate provisions have been
established and are being maintained in accordance with generally
accepted accounting principles;
(2) if applicable, so long as the title to, and right to
use, such property, is not materially adversely affected thereby;
and
(3) the failure to make payment pending such contest
could not reasonably be expected to result in a Material Adverse
Effect.
5L.Additional Subsidiaries. If any additional Subsidiary is acquired
or formed after the date hereof, the Company will, within fifteen (15) Business
Days after such Subsidiary is acquired or formed, notify each of the Significant
Holders and will cause such Subsidiary to deliver simultaneously therewith
similar documents applicable to such Subsidiary required under paragraph 3A as
reasonably requested by the Required Holders.
5M.Compliance with Major Distribution Agreements. The Company 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 Required Holders, 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.
6. NEGATIVE COVENANTS. Unless the Required Holders otherwise agree in
writing, the Company shall not, and shall not permit any Subsidiary, to take any
of the following actions or permit the occurrence or existence of any of the
following events or conditions:
6A. Financial Limitation. The Company covenants that it will not permit
at any time:
(i) Consolidated Debt to exceed 300% of Consolidated EBITDA
calculated at the end of each fiscal quarter of the Company on a
rolling four quarter basis; or
(ii) Consolidated Debt to exceed 50% of Consolidated Total
Capitalization calculated at the end of each fiscal quarter of the
Company; or
20
(iii) Priority Debt to exceed 15% of Consolidated Net Worth,
calculated at the end of each fiscal quarter of the Company; or
(iv) the Interest Coverage Ratio of the Company and its
Subsidiaries, as of the end of each fiscal quarter of the Company,
commencing with the fiscal quarter ended June 30, 2002, to be less than
3.00:1.00, calculated on a rolling four-quarter basis; or
(v) the Company and its Subsidiaries, as of the end of each
fiscal quarter of the Company, commencing with the fiscal quarter ended
June 30, 2002, to have a Consolidated Net Worth in an amount less than
(a) $290,178,000 and (b) as at the last day of each succeeding fiscal
quarter of the Company and until (but excluding) the last day of the
next following fiscal quarter of the Company, 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 Company 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; or
(vi) the Company and its Subsidiaries to have, as of the end
of each fiscal quarter of the Company, commencing with the fiscal
quarter ended June 30, 2002, a ratio of Consolidated Current Assets to
Consolidated Debt less than 1.50:1.00, calculated at the end of each
fiscal quarter of the Company;
provided, however, that if (A) the Bank Agreement is amended to increase the
Consolidated Debt to Consolidated EBITDA ratio for the most recently ended four
fiscal quarter period, the Purchasers agree to amend clause (i) above so that
the Consolidated Debt to Consolidated EBITDA ratio is also increased
accordingly, provided, however, that the Consolidated Debt to Consolidated
EBITDA ratio shall not, at any time, exceed 375%, (B) the Bank Agreement is
amended to increase the Consolidated Debt to Consolidated Total Capitalization
ratio for the most recently ended four fiscal quarter period, the Purchasers
agree to amend clause (ii) above so that the Consolidated Debt to Consolidated
Total Capitalization ratio is also increased accordingly, provided, however,
that the Consolidated Debt to Consolidated Total Capitalization ratio shall not,
at any time, exceed 62.5%, and (C) if the Bank Agreement is amended to delete
Section 6.2, Section 6.3 or Section 6.5 thereof, the Purchasers agree to delete
the corresponding clause (iv), (v) or (vi) above, as the case may be.
6B.Liens, Debt and Other Restrictions. The Company covenants that it
will not and will not permit any Subsidiary to:
6B(1) Liens. Create, assume or suffer to exist any Lien upon any of its
property or assets, whether now owned or hereafter acquired (whether or not
provision is made for the equal and ratable securing of the Notes pursuant to
paragraph 5C), except:
21
(i) Liens existing on the Amendment Closing Day and
specified on Schedule 6B(1);
(ii) Liens imposed by law for taxes, assessments or charges
of any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with generally accepted
accounting principles and which Liens do not constitute a prior or
senior lien;
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
120 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
generally accepted accounting principles and which Liens do not
constitute a prior or senior lien;
(iv) Liens incurred or deposits made in the ordinary course
of business (including, without limitation, surety bonds and appeal
bonds) in connection with workers' compensation, taxes (and with
respect to Liens, to the extent permitted under paragraph 5K),
unemployment insurance and other types of social security benefits or
to secure the performance of tenders, bids, leases, contracts (other
than for the repayment of Debt), statutory obligations and other
similar obligations or arising as a result of progress payments under
government contracts;
(v) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Company and
its Subsidiaries taken as a whole and which do not materially detract
from the value of the property to which they attach or materially
impair the use thereof to the Company and its Subsidiaries taken as a
whole;
(vi) any right of set off or banker's lien (whether by
common law, statute, contract or otherwise) in connection with ordinary
course of business deposit arrangements maintained by the Company or
its Subsidiaries with a bank a party to the Bank Agreement or with its
other banks or financial institutions so long as any such bank or other
financial institution (A) shall not at any time make loans or otherwise
extend credit to the Company or any Subsidiary, (B) does not maintain
accounts (for the deposit of cash or otherwise) for the benefit of the
Company or any Subsidiary, (C) shall have waived in writing for the
benefit of each holder of a Note such right of setoff or banker's lien,
or (D) shall be subject to a pro rata sharing agreement in form and
substance satisfactory to each Significant Holder;
(vii) any Lien renewing, extending, or refunding any
outstanding obligations secured by a Lien described in clause (i),
provided (A) the principal amount secured is
22
not increased or the weighted average life to maturity thereof reduced;
(B) such Lien is not extended to any other property of the Company or
its Subsidiaries; (C) the Debt secured thereby is permitted under
paragraph 6A and (D) no Default or Event of Default has occurred and is
continuing;
(viii) Liens on insurance policies owned by the Company on
the lives of its officers securing policy loans obtained from the
insurers under such policies, provided that (A) the aggregate amount
borrowed on each policy shall not exceed the loan value thereof and (B)
the Company shall not incur any liability to repay any such loan;
(ix) additional Liens securing Priority Debt permitted by
paragraph 6A(iii); and
(x) any Lien arising out of any Securitization Transaction
permitted by Paragraph 6C(vi).
6B(2) Debt. Create, incur, assume or suffer to exist any Debt, except:
(i) Debt represented by this Agreement or any of the Related
Documents;
(ii) Debt existing on the Amendment Closing Day as set forth
on Schedule 6B(2) and refinancings or replacements thereof in an amount
not to exceed (A) in the case of the Bank Agreement, $315 million and
(B) in all cases, the principal amount specified on such Schedule;
(iii) Debt of any Subsidiary owing to the Company or any other
Subsidiary of the Company;
(iv) Debt represented by endorsement of negotiable
instruments for collection in the ordinary course of business;
(v) additional Debt of the Company or any Subsidiary
(whether Secured or Unsecured) incurred in the ordinary course of
business as conducted on the date hereof;
(vi) Debt of any Person which becomes a Subsidiary after the
date of this Agreement; provided, that (i) such Debt 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 Debt
permitted hereunder shall not exceed $5,000,000 outstanding at any
time;
(vii) Debt in respect of any Securitization Transaction
permitted by Paragraph 6C(vi);
(viii) Debt in respect of obligations under Hedging Agreements
under the Bank Agreement;
(ix) other unsecured (other than by a Letter of Credit (as
defined in the Bank Agreement) or Guarantee of the Company or any of
its Subsidiaries) Debt in an aggregate
23
principal amount not to exceed $20,000,000 at any time outstanding that
represents a portion of the costs of an Acquisition permitted by
Paragraph 6B(4)(vi) payable to Persons selling an equity interest or
assets to the Company or any of its Subsidiaries; provided, that such
Debt 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 and in form and substance satisfactory to the Required
Holders; provided, further, that in computing such $20,000,000
aggregate Debt amount, in the event that any such Debt is secured or
enhanced by a Letter of Credit or by a Guarantee of the Company or any
of its Subsidiaries, the principal amount of the Debt and not the
amount of any such Letter of Credit or Guarantee, shall count towards
such $20,000,000 limitation.
Notwithstanding the foregoing exceptions to the prohibition against incurring or
maintaining Debt, the Company shall not permit at any time, prior to or after
the incurrence thereof, the aggregate outstanding amount of Debt to exceed the
limitations of paragraph 6A hereof or incur any Debt if a Default or Event of
Default has occurred and is continuing.
6B(3) Merger or Consolidation. Merge, consolidate or exchange shares
with any other Person, except that:
(i) any Subsidiary may merge or consolidate with the Company
or any other Subsidiary;
(ii) the Company may merge or consolidate with any other
corporation (including a Subsidiary) provided (A) the Company is the
surviving corporation, and (B) immediately after giving effect to such
transaction, no Default or Event of Default shall occur or exist;
(iii) any Subsidiary may merge or consolidate with any other
corporation provided (A) such Subsidiary is the surviving corporation,
and (B) immediately after giving effect to such transaction, no Default
or Event of Default shall occur or exist; and
(iv) Dunhill may merge or consolidated with any other Person
in connection with a transaction permitted by paragraph 6C(iii).
6B(4) Investments. Make or permit to remain outstanding any Investments
except any of the following:
(i) securities of any Person acquired in an Acquisition
provided that such Person shall become a Guarantor at the time of, or
promptly after, such Acquisition;
(ii) Eligible Securities;
(iii) Investments existing on the Amendment Closing Day and
specified in Schedule 6B(4);
(iv) accounts receivable arising and trade credit granted in
the ordinary course of business and any securities or other assets
received in satisfaction or partial
24
satisfaction thereof in connection with accounts of financially
troubled Persons to the extent reasonably necessary in order to prevent
or limit loss;
(v) Investments in the Company and in Subsidiaries which are
Guarantors;
(vi) additional investments in other Persons, provided that
(A) 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 (B) prior to and immediately after giving effect to such
investment, no Default or Event of Default shall exist and be
continuing;
(vii) loans and advances between or among the Company and the
Guarantors permitted by paragraph 6B(2)(iii);
(viii) travel and entertainment advances made to employees of
the Company or any of its Subsidiaries in the ordinary course of
business;
(ix) Investments consisting of ownership interests in another
Person resulting from the dispositions or mergers permitted under
paragraphs 6C(iii) or 6B(3); and
(x) notes of purchasers of Dunhill (A) not exceeding an
aggregate principal amount of $25,000,000 and (B) having a repayment
term less than or equal to seven years.
6B(5) Transactions with Related Party. Except as permitted in paragraph
6B(3) and 6B(4), effect any transaction with any Affiliate or Subsidiary by
which any asset or services of the Company or a Subsidiary of the Company is
transferred to such Affiliate or Subsidiary, or from such Affiliate or
Subsidiary or enter into any other transaction with an Affiliate or Subsidiary,
on terms more favorable than would be reasonably expected to be given in a
similar transaction with an unrelated entity.
6C.Sale of Assets. The Company will not, and will not permit any
Subsidiary to, Dispose of any property or assets (including the Capital Stock of
a Subsidiary), except:
(i) inventory in the ordinary course of business;
(ii) any Subsidiary may Dispose of its assets to the Company
or a wholly-owned Subsidiary;
(iii) 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
Company (upon which event, all of the Required Holders, at the request
and expense of the Company, will execute such documents as shall be
acceptable to the Required Holders and its counsel releasing the
Guaranty Agreement of Dunhill, Inc.), 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;
25
(iv) the Disposition of Eligible Securities in the ordinary
course of management of the investment portfolio of the Company and its
Subsidiaries;
(v) Dispositions of property that is substantially worn,
damaged, obsolete or in the judgment of the Company, no longer best
used or useful in its business or that of any Subsidiary;
(vi) 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 50% of the Net Cash Proceeds resulting from
such Securitization Transaction are used by the Company to prepay the
outstanding Obligations hereunder as described in Section 4D;
(vii) the Company or any Subsidiary may Dispose of its assets
(whether or not leased back) so long as, immediately after giving
effect to such proposed Disposition:
(A) the consideration for such assets represents the
Fair Market Value of such assets at the time of such Disposition;
and
(B) (1) the net book value of all assets so Disposed of
by the Company and its Subsidiaries (other than pursuant to
clause (iv)) does not constitute a Substantial Part of the
Consolidated assets or (2) the proceeds of such Disposition are
reinvested in a similar business or assets within 12 months of
such Disposition; and
(C) no Default or Event of Default shall exist;
(viii) the sale, without recourse, other than for
misrepresentation, by any Subsidiary of accounts receivable having a
value, net of all allowances and discounts, not to exceed during any
fiscal year of the Company 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
(ix) the sale or other disposition of such assets in an
aggregate amount not to exceed $25,000,000 in any fiscal year of the
Company;
provided, however, that if the Bank Agreement is amended to delete Section
7.6(e) or Section 7.6(f) thereof, respectively, the Purchasers agree to delete
the corresponding clause (viii) or (ix) above, as the case may be.
For purposes of this paragraph 6C:
(i) "Dispose" means the sale, lease, transfer or other
disposition of property of the Company or any of its Subsidiaries, and
"Disposition" and "Disposed of" has a corresponding meaning to Dispose;
26
(ii) Calculation of net book value. The net book value of any
assets shall be determined as of the respective date of Disposition of
those assets; and
(iii) Sales of less than all the stock of a Subsidiary. In the
case of the sale or issuance of the stock of a Subsidiary, the amount
of Consolidated Assets contributed by the stock Disposed of shall be
assumed to be the percentage of outstanding stock sold or to be sold.
6D.Subsidiary Stock and Debt. The Company will not:
(i) directly or indirectly sell, assign, pledge or otherwise
dispose of any Debt of or any shares of stock of (or warrants, rights
or options to acquire stock of) any Subsidiary except to a wholly-owned
Subsidiary and except as permitted pursuant to paragraph 6C;
(ii) permit any Subsidiary directly or indirectly to sell,
assign, pledge or otherwise dispose of any Debt of the Company or any
other Subsidiary, or any shares of stock of (or warrants, rights or
options to acquire stock of) any other Subsidiary, except to the
Company or a wholly-owned Subsidiary and except as permitted pursuant
to paragraph 6C;
(iii) permit any Subsidiary directly or indirectly to issue
or sell any shares of its stock (or warrants, rights or options to
acquire its stock) except to the Company or a wholly-owned Subsidiary
and except as permitted pursuant to paragraph 6B(3) and 6C;
(iv) permit any Subsidiary to enter into or otherwise be
bound by or subject to any contract or agreement (including, without
limitation, any provision of its certificate or articles of
incorporation or bylaws) that restricts its ability to pay dividends or
other distributions on account of its stock except for such
restrictions set forth in the Bank Agreement, so long as such
restrictions do not prohibit or restrict any Subsidiary's ability to
pay dividends or other distributions on account of its stock to the
Company or another Subsidiary;
(v) permit any Subsidiary to create, incur, assume or
maintain any Debt except as permitted by paragraph 6B(2); or
(vi) permit any Guarantor to make any payments under any
Subsidiary Guarantee Agreement (as defined in the Bank Agreement)
unless the holders of Notes receive a pro rata payment pursuant to the
Guaranty Agreement.
6E.Sale of Receivables. The Company covenants that it will not, and
will not permit any Subsidiary to, sell (with or without recourse), or discount
or otherwise sell for less than the face value thereof, any of its Receivables
other than in connection with a sale in accordance with paragraph 6C(vi).
6F.ERISA. The Company covenants that it will not, nor permit any
Subsidiary to:
27
(i) terminate or withdraw from any Plan (other than a
Multiemployer Plan) resulting in the incurrence of any material
liability to the Pension Benefit Guaranty Corporation;
(ii) engage in or permit any Person to engage in any
prohibited transaction (as defined in Section 4975 of the Code)
involving any Plan (other than a Multiemployer Plan) which would
subject the Company or any Subsidiary to any material tax, penalty or
other liability;
(iii) incur or suffer to exist any material accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412
of the Code), whether or not waived, involving any Plan (other than a
Multiemployer Plan); or
(iv) allow or suffer to exist any risk or condition which
presents a risk of incurring a material liability to the Pension
Benefit Guaranty Corporation.
6G.Environmental Matters. The Company covenants that it will not, and
will not permit any Third Party to, use, produce, manufacture, process,
generate, store, dispose of, manage at, or ship or transport to or from the
Properties any Hazardous Materials except for Hazardous Materials used,
produced, released or managed in the ordinary course of business in compliance
with all applicable Environmental Requirements except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect and except
for Hazardous Materials released in amounts which do not require remediation
pursuant to applicable Environmental Requirements or if remediation is required,
such remediation could not reasonably be expected to have a Material Adverse
Effect.
6H.Specified Laws. Neither the Company nor any agent acting on its
behalf will take any action which could reasonably be expected to cause this
Agreement or the Notes to violate Regulation T or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the Exchange Act,
in any case as in effect now or as the same may hereafter be in effect.
6I.Business Activities. Neither the Company nor any of its
Subsidiaries will engage directly or indirectly (whether through subsidiaries or
otherwise) in any type of business other than the businesses conducted by the
Company or such Subsidiary on the date hereof and in related businesses.
7. EVENTS OF DEFAULT.
7A.Acceleration. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of,
or Yield- Maintenance Amount payable with respect to, any Note when the
same shall become due, either by the terms thereof or otherwise as
herein provided; or
28
(ii) the Company defaults in the payment of any interest on
any Note for more than 5 days after the date due; or
(iii) the Company or any Subsidiary defaults (whether as
primary obligor or as guarantor or other surety) in any payment of
principal of or interest on any other obligation for money borrowed (or
any Capitalized Lease Obligation, any obligation under a conditional
sale or other title retention agreement, any obligation issued or
assumed as full or partial payment for property whether or not secured
by a purchase money mortgage or any obligation under notes payable or
drafts accepted representing extensions of credit) beyond any period of
grace provided with respect thereto, or the Company or any Subsidiary
fails to perform or observe any other agreement, term or condition
contained in any agreement under which any such obligation is created
(or if any other event thereunder or under any such agreement shall
occur and be continuing) and the effect of such failure or other event
is to cause, or to permit the holder or holders of such obligation (or
a trustee on behalf of such holder or holders) to cause, such
obligation to become due (or to be repurchased by the Company or any
Subsidiary) prior to any stated maturity, provided that the aggregate
amount of all obligations as to which any default shall occur and be
continuing or any such a failure or other event permitting acceleration
(or resale to such Company or any such Subsidiary) shall occur and be
continuing exceeds $500,000; or
(iv) any representation or warranty made by the Company
herein or by the Company or any of its officers in any writing
furnished in connection with or pursuant to this Agreement shall be
false in any material respect on the date as of which made; or
(v) the Company fails to perform or observe any agreement
contained in paragraphs 5D or 5J or 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall
not be remedied within 30 days after the occurrence thereof; or
(vii) the Company or any Subsidiary makes an assignment for
the benefit of creditors or is generally not paying its debts as such
debts become due; or
(viii) any decree or order for relief in respect of the Company
or any Subsidiary is entered under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution
or liquidation or similar law, whether now or hereafter in effect
(herein called the "Bankruptcy Law"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to
any tribunal for, or consents to, the appointment of, or taking
possession by, a trustee, receiver, custodian, liquidator or similar
official of the Company or any Subsidiary, or of any substantial part
of the assets of the Company or any Subsidiary, or commences a
voluntary case under the Bankruptcy Law of the United States or any
proceedings (other than proceedings for the voluntary liquidation and
dissolution of a Subsidiary) relating to the Company or any Subsidiary
under the Bankruptcy Law of any other jurisdiction; or
29
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and
the Company or such Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein, or an order, judgment
or decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xi) 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 Company 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
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing a split-up
of the Company or such Subsidiary which requires the divestiture of
assets representing a substantial part, or the divestiture of the stock
of a Subsidiary whose assets represent a substantial part, of the
consolidated assets of the Company and its Subsidiaries (determined in
accordance with generally accepted accounting principles) or which
requires the divestiture of assets, or stock of a Subsidiary, which
shall have contributed a substantial part of the consolidated net
income of the Company and its Subsidiaries (determined in accordance
with generally accepted accounting principles) for any of the three
fiscal years then most recently ended, and such order, judgment or
decree remains unstayed and in effect for more than 60 days; or
(xiii) the Company or any ERISA Affiliate, in its capacity as
an employer under a Multiemployer Plan, makes a complete or partial
withdrawal from such Multiemployer Plan resulting in the incurrence by
such withdrawing employer of a withdrawal liability in an amount
exceeding $1,000,000; or
(xiv) the Company or any Guarantor or any other Person shall
disavow or attempt to terminate any or all of the Guaranty Agreements
or any or all of the Guaranty Agreements shall cease to be in full
force and effect in whole or in part for any reason whatsoever; or
(xv) the Company 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
(xvi) any non-monetary judgment or order shall be rendered
against the Company 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;
30
then:
(a) if such event is an Event of Default specified in clause (i)
or (ii) of this paragraph 7A, any holder (other than the Company or any
of its Subsidiaries) of any Note may at its option during the
continuance of such Event of Default, by notice in writing to the
Company, terminate the Facility and/or declare all of the Notes held by
such holder to be, and all of the Notes held by such holder shall
thereupon be and become, immediately due and payable at par together
with interest accrued thereon, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Company,
(b) if such event is an Event of Default specified in clause
(viii), (ix) or (x) of this paragraph 7A with respect to the Company,
the Facility shall automatically terminate and all of the Notes at the
time outstanding shall automatically become immediately due and payable
together with interest accrued thereon and together with the
Yield-Maintenance Amount, if any, with respect to each Note, without
presentment, demand, protest or notice of any kind, all of which are
hereby waived by the Company, and
(c) with respect to any event constituting an Event of Default,
the Required Holder(s) of the Notes of any Series may at its or their
option during the continuance of such Event of Default, by notice in
writing to the Company, terminate the Facility and/or declare all of
the Notes of such Series to be, and all of the Notes of such Series
shall thereupon be and become, immediately due and payable together
with interest accrued thereon and together with the Yield-Maintenance
Amount, if any, with respect to each Note of such Series, without
presentment, demand, protest or notice of any kind, all of which are
hereby waived by the Company.
7B. Rescission of Acceleration. At any time after any or all of the
Notes of any Series shall have been declared immediately due and payable
pursuant to paragraph 7A, the Required Holder(s) of the Notes of such Series
may, by notice in writing to the Company, rescind and annul such declaration and
its consequences if:
(i) the Company shall have paid all overdue interest on the
Notes of such Series, the principal of and Yield-Maintenance Amount, if
any, payable with respect to any Notes of such Series which have become
due otherwise than by reason of such declaration, and interest on such
overdue interest and overdue principal and Yield-Maintenance Amount at
the rate specified in the Notes of such Series,
(ii) the Company shall not have paid any amounts which have
become due solely by reason of such declaration,
(iii) all Events of Default and Defaults, other than
non-payment of amounts which have become due solely by reason of such
declaration, shall have been cured or waived pursuant to paragraph 11C,
and
(iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes of such Series or this
Agreement.
31
No such rescission or annulment shall extend to or affect any subsequent Event
of Default or Default or impair any right arising therefrom.
7C.Notice of Acceleration or Rescission. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
of each Series at the time outstanding.
7D.Other Remedies. If any Event of Default or Default shall occur and
be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents,
covenants and warrants as follows (all references to "Subsidiary" and
"Subsidiaries" in this paragraph 8 shall be deemed omitted if the Company has no
Subsidiaries at the time the representations herein are made or repeated):
8A.Organization.
(i) The Company is a corporation duly organized and existing
in good standing under the laws of the State of Florida, and each
Subsidiary is duly organized and existing in good standing under the
laws of the jurisdiction in which it is incorporated. Schedule 8A
hereto is an accurate and complete list of all Subsidiaries as of the
Amendment Closing Day, including the jurisdiction of incorporation and
ownership of all such Subsidiaries. The Company and each Subsidiary has
the corporate power to own its respective properties and to carry on
its respective businesses as now being conducted and is duly qualified
and authorized to do business in each other jurisdiction in which the
character of its respective properties or the nature of its respective
businesses require such qualification or authorization except where the
failure to be so qualified or authorized could not reasonably be
expected to have a Material Adverse Effect.
(ii) No Subsidiary is a party to, or otherwise subject to,
any legal restriction or any agreement restricting the ability of such
Subsidiary to pay dividends out of profits or make other similar
distributions of profits to the Company or any of its Subsidiaries that
owns outstanding shares of Capital Stock or similar equity interests of
such Subsidiary.
8B.Financial Statements. The Company has furnished you with the
following financial statements, identified by a principal financial officer of
the Company:
32
(i) a Consolidated balance sheet as at the last day of the
fiscal year in each of the years 2000 to 2001, inclusive, a
Consolidated statement of income, stockholders' equity and cash flows
for each such year, all reported on by Arthur Andersen LLC; and
(ii) a Consolidated balance sheet as at June 30, 2002 and
Consolidated statements of income, stockholders' equity and cash flows
for the six-month period ended on each such date, prepared by the
Company.
Those financial statements (including any related schedules and/or notes) fairly
present in all material respects (subject, as to interim statements, to the
absence of footnotes or to changes resulting from normal year-end adjustments)
the financial condition of the Company and have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved and show all liabilities, direct and contingent, of the Company
and its Subsidiaries required to be shown in accordance with such principles.
The balance sheets fairly present, in all material respects, the Consolidated
financial condition of the Company and its Subsidiaries as at the dates thereof,
and the statements of income, stockholders' equity and cash flows fairly
present, in all material respects, the Consolidated results of the operations of
the Company and its Subsidiaries, the changes in the Company's stockholders'
equity and their Consolidated cash flows for the periods indicated. Since
December 31, 2001, there have been no changes with respect to the Company and
its Subsidiaries which have had or could reasonably be expected to have, singly
or in the aggregate, a Material Adverse Effect.
8C.Actions Pending. Except as set forth on Schedule 8C hereto, there
is no action, suit, investigation or proceeding pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries, or any properties or rights of the Company or any of its
Subsidiaries, by or before any court, arbitrator or administrative or
governmental body (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 Agreement or
any of the Notes.
8D.Outstanding Debt. Neither the Company nor any of its Subsidiaries
has outstanding any Debt except as permitted by paragraphs 6A and 6B(2). There
exists no default under the provisions of any instrument evidencing such Debt or
of any agreement relating thereto. Schedule 8D hereto (as such Schedule 8D may
have been modified from time to time by written supplements thereto delivered by
the Company to Prudential) is an accurate and complete list of Debt of the
Company and its Subsidiaries on the applicable Closing Day.
8E.Title to Properties. The Company has and each of its Subsidiaries
has good and indefeasible title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, including the properties and assets reflected in the most
recent audited balance sheet referred to in paragraph 8B (other than properties
and assets disposed of in the ordinary course of business), subject to no Lien
of any kind except Liens permitted by paragraph 6B(1). All leases necessary in
any material respect for the conduct of the respective businesses of the Company
and its Subsidiaries are valid and subsisting and are in full force and effect.
33
8F.Taxes. The Company has filed and each of its Subsidiaries has filed
all federal, state and other income tax returns which, to the best knowledge of
the chief financial officer of the Company and its Subsidiaries, are required to
be filed, and each has paid all taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have become due, except
such taxes as are being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with generally
accepted accounting principles.
8G.Conflicting Agreements and Other Matters. Neither the Company nor
any of its Subsidiaries is a party to any contract or agreement or subject to
any charter or other corporate restriction which materially and adversely
affects its business, property or assets, condition (financial or otherwise) or
operations. Neither the execution nor delivery of this Agreement or the Notes,
nor the offering, issuance and sale of the Notes, nor fulfillment of nor
compliance with the terms and provisions hereof and of the Notes will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries pursuant to, the charter or by-laws of the Company or any of
its Subsidiaries, any award of any arbitrator or any agreement (including any
agreement with stockholders), instrument, order, judgment, decree, statute, law,
rule or regulation to which the Company or any of its Subsidiaries is subject.
Neither the Company nor any of its Subsidiaries is a party to, or otherwise
subject to any provision contained in, any instrument evidencing Debt of the
Company or such Subsidiary, any agreement relating thereto or any other contract
or agreement (including its charter) which limits the amount of, or otherwise
imposes restrictions on the incurring of, Debt of the Company or such Subsidiary
of the type and in the amount to be evidenced by the Notes except as set forth
in the agreements listed in Schedule 8G hereto.
8H.Offering of Notes. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security of
the Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than institutional investors, and neither the
Company nor any agent acting on its behalf has taken or will take any action
which would subject the issuance or sale of the Notes to the provisions of
Section 5 of the Securities Act or to the provisions of any securities or Blue
Sky law of any applicable jurisdiction. The Company hereby represents and
warrants to you that, within the preceding twelve months, neither the Company
nor any other Person acting on behalf of the Company has offered or sold to any
Person (other than accredited investors) any Notes, or any securities of the
same or a similar class as the Notes, or any other substantially similar
securities of the Company.
8I. Use of Proceeds. None of the proceeds of the sale of any Notes will
be used, directly or indirectly, for the purpose, whether immediate, incidental
or ultimate, of purchasing or carrying any "margin stock" as defined in
Regulation U or X (12 C.F.R. Parts 221 and 224) of the Board of Governors of the
Federal Reserve System (herein called "margin stock") or for the purpose of
maintaining, reducing or retiring any Debt which was originally incurred to
purchase or carry any stock that is then currently a margin stock or for any
other purpose which might constitute the purchase of such Notes a "purpose
credit" within the meaning of such Regulation U, unless the Company shall have
delivered to the Purchaser which is purchasing such Notes, on
34
the Closing Day for such Notes, an opinion of counsel satisfactory to such
Purchaser stating that the purchase of such Notes does not constitute a
violation of such Regulation U. Neither the Company nor any agent acting on its
behalf has taken or will take any action which might cause this Agreement or the
Notes to violate Regulation U, Regulation T or any other regulation of the Board
of Governors of the Federal Reserve System or to violate the Exchange Act, in
each case as in effect now or as the same may hereafter be in effect. None of
the proceeds of the sale of the Notes has been or will be used to finance a
Hostile Tender Offer.
8J. ERISA. No accumulated funding deficiency (as defined in Section 302
of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the
Pension Benefit Guaranty Corporation has been or is expected by the Company or
any ERISA Affiliate to be incurred with respect to any Plan (other than a
Multiemployer Plan) by the Company, any Subsidiary or any ERISA Affiliate which
could reasonably be expected to result in a Material Adverse Effect. Neither the
Company, any Subsidiary nor any ERISA Affiliate has incurred or presently
expects to incur any withdrawal liability under Title IV of ERISA with respect
to any Multiemployer Plan which could reasonably be expected to result in a
Material Adverse Effect. The execution and delivery of this Agreement and the
issuance and sale of the Notes will be exempt from or will not involve any
transaction which is subject to the prohibitions of Section 406 of ERISA and
will not involve any transaction in connection with which a penalty could be
imposed under Section 502(i) of ERISA or a tax could be imposed pursuant to
Section 4975 of the Code. The representation by the Company in the next
preceding sentence is made in reliance upon and subject to the accuracy of the
representation of each Purchaser in paragraph 9B as to the source of funds to be
used by it to purchase any Notes.
8K.Governmental Consent. Neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Notes is such as to require any authorization, consent, approval, exemption or
any action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the Closing Day for any
Notes with the Securities and Exchange Commission and/or state Blue Sky
authorities) in connection with the execution and delivery of this Agreement,
the offering, issuance, sale or delivery of the Notes or fulfillment of or
compliance with the terms and provisions hereof or of the Notes.
8L.Environmental Compliance.
(i) The Company and its Subsidiaries and all of their
respective Properties have complied at all times (during such period of
time the Company or its Subsidiaries have owned or operated each such
Property) and in all respects with all Environmental Requirements where
failure to comply could reasonably be expected to have a Material
Adverse Effect.
(ii) Except as set forth in Schedule 8L, neither the Company
nor any of its Subsidiaries (i) has failed to comply with any
Environmental Requirement or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental
Requirement that could reasonably be expected to have, either
35
individually or in the aggregate, a Material Adverse Effect, (ii) is
subject to any Environmental Liability or Environmental Requirement
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.
(iii) Except as set forth in Schedule 8L, neither the Company
nor any Subsidiary has been designated as a potentially responsible
party under CERCLA or under any state statute similar to CERCLA. None
of the Properties has been identified on any current or proposed
National Priorities List under 40 C.F.R. Section 300 or any list
arising from a state statute similar to CERCLA. None of the Properties
has been identified on any CERCLIS list.
(iv) No Hazardous Materials have been or are being used,
produced, manufactured, processed, generated, stored, disposed of,
released, managed at or shipped or transported to or from the
Properties (during such period of time the Company or its Subsidiaries
have owned or operated each such Property) or, to the actual knowledge
of the Company, are otherwise present at, on, in or under the
Properties or, to the actual knowledge of the Company, at or from any
adjacent site or facility, except for Hazardous Materials used,
produced, manufactured, processed, generated, stored, disposed of,
released and managed in the ordinary course of the Company's and any
Subsidiary's business in compliance with all applicable Environmental
Requirements and except for Hazardous Materials present in amounts
which have not required and do not require remediation, pursuant to
applicable law or regulation, or if remediation is required, such
remediation could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
(v) The Company and each Subsidiary have procured all
permits necessary under Environmental Requirements for the conduct of
their respective businesses or is otherwise in compliance with all
applicable Environmental Requirements, except to the extent the failure
to do so would not reasonably expected to have, either individually or
in the aggregate, a Material Adverse Effect.
8M. Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to any Purchaser by or on behalf of the
Company in connection herewith contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact peculiar to the
Company or any of its Subsidiaries which materially adversely affects or in the
future may (so far as the Company can now reasonably foresee) materially
adversely affect the business, property or assets, condition (financial or
otherwise) or operations of the Company or any of its Subsidiaries and which has
not been set forth in this Agreement. The Company has disclosed to the
Purchasers all agreements, instruments, and corporate or other restrictions to
which the Company or any of its Subsidiaries is subject, and all other matters
known to any of
36
them, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
8N.Compliance with Laws and Agreements. The Company 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.
8O.Labor Relations. There are no strikes, lockouts or other material
labor disputes or grievances against the Company or any of its Subsidiaries, or,
to the Company's knowledge, threatened against or affecting the Company or any
of its Subsidiaries, and no significant unfair labor practice, charges or
grievances are pending against the Company or any of its Subsidiaries, or to the
Company's knowledge, threatened against any of them before any Governmental
Authority. All payments due from the Company 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 Company or any such Subsidiary,
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
8P.Major Distribution Agreements. Schedule 8P sets forth a complete
and accurate list of all Major Distribution Agreements of the Company and its
Subsidiaries in effect as of the Amendment Closing Day. Other than as set forth
in Schedule 8P, each such Major Distribution Agreement is, and after giving
effect to the transactions contemplated by the Related 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 Related
Documents will occur, thereunder. If requested by any Significant Holder, the
Company and its Subsidiaries have delivered to such Significant Holder a true
and complete copy of each Major Distribution Agreement so requested.
8Q.Solvency. Each of the Company and its Subsidiaries is Solvent and,
in executing the Related Documents and consummating the transactions
contemplated thereby, neither the Company or any of its Subsidiaries intends to
hinder, delay or defraud either present or future creditors or other Persons to
which one or more of them is or will become indebted.
8R.Senior Debt. The Obligations constitute senior debt for purposes of
all subordinated debt facilities, if any.
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A.Nature of Purchase. Such Purchaser has acquired the Issued Series A
Notes and will acquire any Shelf Notes purchased from the Company pursuant to
this Agreement for investment for its own account, not as a nominee or agent,
and not with a view to, or for resale in connection with, any distribution
thereof within the meaning of the Securities Act, provided that the disposition
of such Purchaser's property shall at all times be and remain within its
control.
37
9B. Source of Funds. You represent that at least one of the following
statements is an accurate representation as to each source of funds (a "Source")
to be used by you to pay the purchase price of the Notes to be purchased by you
hereunder:
(a) the Source constitutes assets allocated to your "insurance
company general account" (as such term is defined under Section V of
the United States Department of Labor's Prohibited Transaction
Exemption ("PTE") 95-60), and as of the date of the purchase of the
Notes, you satisfy all of the applicable requirements for relief under
Sections I and IV of PTE 95-60; or
(b) if you are an insurance company, the Source does not include
assets allocated to any separate account maintained by you in which any
employee benefit plan (or its related trust) has any interest, other
than a separate account that is maintained solely in connection with
your fixed contractual obligations under which the amounts payable, or
credited, to such plan and to any participant or beneficiary of such
plan (including any annuitant) are not affected in any manner by the
investment performance of the separate account; or
(c) the Source is either (i) an insurance company pooled separate
account, within the meaning PTE 90-1 (issued January 29, 1990), or (ii)
a bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as you have disclosed to the Company
in writing pursuant to this clause (c), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(d) the Source constitutes asset of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's assets that are
included in such investment fund, when combined with the assets of all
other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment
fund have been disclosed to the Company in writing pursuant to clause
(c); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this clause (f); or
38
(g) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this paragraph 9B, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this Agreement,
the terms defined in paragraphs 10A and 10B (or within the text of any other
paragraph) shall have the respective meanings specified therein and all
accounting matters shall be subject to determination as provided in paragraph
10C.
10A. Yield-Maintenance Terms.
"Called Principal" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraphs 4B, 4D or 4F or is
declared to be immediately due and payable pursuant to paragraph 7A, as the
context requires.
"Designated Spread" shall mean 50 of 1%, except with respect to
paragraph 4D it shall mean 1.50 of 1%.
"Discounted Value" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (as converted to reflect
the periodic basis on which interest on such Note is payable, if payable other
than on a semi-annual basis) equal to the Reinvestment Yield with respect to
such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal
of any Note, the Designated Spread over the yield to maturity implied by (i) the
yields reported as of 10:00 a.m. (New York City local time) on the Business Day
next preceding the Settlement Date with respect to such Called Principal for
actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date on
the Treasury Yield Monitor page of Standard & Poor's MMS - Treasury Market
Insight (or, if Standard & Poor's shall cease to report such yields in MMS -
Treasury Market Insight or shall cease to be Prudential Capital Group's
customary source of information for calculating yield-maintenance amounts on
privately placed notes, then such source as is then Prudential Capital Group's
customary source of such information), or if such yields shall not be reported
as of such time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for
the latest day for which such yields shall have been so reported as of the
Business Day next preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15(519) (or any comparable
successor publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond equivalent
39
yields in accordance with accepted financial practice and (b) interpolating
linearly between yields reported for various maturities. The Reinvestment Yield
shall be rounded to that number of decimal places as appears in the coupon of
the applicable Note.
"Remaining Average Life" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4 or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"Yield-Maintenance Amount" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
10B. Other Terms.
"Acceptance" shall have the meaning specified in paragraph 2G.
"Acceptance Day" shall have the meaning specified in paragraph 2G.
"Acceptance Window" shall have the meaning specified in paragraph 2G.
"Accepted Note" shall have the meaning specified in paragraph 2G.
"Acquisition" shall mean the acquisition of (i) a controlling equity
interest in another Person (including the purchase of an option, warrant or
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 conversion
of securities into, such equity interest, or (ii) assets of another Person which
constitute all or substantially all of the assets of such Person or of a line or
lines of business conducted by such Person.
"Affiliate" shall mean any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with the Company; or (ii) which beneficially owns or holds 5% or
more of the aggregate voting rights for all of Company's classes or outstanding
Voting Stock (or in the case of a Person which is not a corporation, 5% or more
of the aggregate voting rights of such Person) of the Company, or 5% or more of
any class of the outstanding Voting Stock (or in the case of a Person which is
not a
40
corporation, 5% or more of the aggregate voting rights of such Person) of which
is beneficially owned or held by the Company. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting stock, by contract or otherwise.
"Amendment Closing Day" shall have the meaning specified in
paragraph 3.
"Authorized Officer" shall mean (i) in the case of the Company, its
chief executive officer, its president and chief operating officer, its chief
financial officer, any vice president of the Company designated as an
"Authorized Officer" of the Company in the Information Schedule attached hereto
or any vice president of the Company designated as an "Authorized Officer" of
the Company for the purpose of this Agreement in an Officer's Certificate
executed by the Company's chief executive officer or chief financial officer and
delivered to Prudential, and (ii) in the case of Prudential, any officer of
Prudential designated as its "Authorized Officer" in the Information Schedule or
any officer of Prudential designated as its "Authorized Officer" for the purpose
of this Agreement in a certificate executed by one of its Authorized Officers.
Any action taken under this Agreement on behalf of the Company by any individual
who on or after the date of this Agreement shall have been an Authorized Officer
of the Company and whom Prudential reasonably in good faith believes to be an
Authorized Officer of the Company at the time of such action shall be binding on
the Company even though such individual shall have ceased to be an Authorized
Officer of the Company, and any action taken under this Agreement on behalf of
Prudential by any individual who on or after the date of this Agreement shall
have been an Authorized Officer of Prudential and whom the Company reasonably in
good faith believes to be an Authorized Officer of Prudential at the time of
such action shall be binding on Prudential even though such individual shall
have ceased to be an Authorized Officer of Prudential.
"Available Facility Amount" shall have the meaning specified in
paragraph 2B.
"Bank Agreement" shall mean the Revolving Credit Agreement, dated as of
April 19, 2002, among the Company, the lenders party thereto and SunTrust Bank,
as Administrative Agent, as it may be amended, modified or supplemented, or
replaced or refinanced, from time to time.
"Bankruptcy Law" shall have the meaning specified in clause (viii) of
paragraph 7A.
"Business Day" shall mean any day other than (i) a Saturday or a
Sunday, (ii) a day on which commercial banks in States of New York and Florida
are required or authorized to be closed and (iii) for purposes of paragraph 2E
hereof only, a day on which Prudential is not open for business.
"Cancellation Date" shall have the meaning specified in paragraph
2J(4).
"Cancellation Fee" shall have the meaning specified in paragraph 2J(4).
41
"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.
"Capitalized Lease Obligation" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expenses) in accordance
with such principles.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act.
"CERCLIS" shall mean the Comprehensive Environmental Response,
Compensation and Liability Inventory System established pursuant to CERCLA.
"Change in Control" shall mean, at any time:
(a) with respect to the Company:
(i) any "person" or "group" (each as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) 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 Exchange Act), directly or indirectly, of
Voting Stock of the Company (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 Company (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 Company (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 April 19, 2002, individuals who
at the beginning of such twenty-four (24)-month period were
directors of the Company shall cease for any reason (other than
the death, disability or retirement of a director or of an
officer of the Company that is serving as a director at such time
so long as another officer of the Company replaces such Person as
a director) to constitute a majority of the board of directors of
the Company; 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
arrangement that results in its or their acquisition of
42
the power to exercise, directly or indirectly, a controlling
influence on the management or policies of the Company; or
(iv) with respect to any Major Subsidiary,
(1) the Company 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
(vii) any Person or two or more Persons acting in
concert other than the Company 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.
"Closing Day" shall mean with respect to any Accepted Note, the
Business Day specified for the closing of the purchase and sale of such Accepted
Note in the Request for Purchase of such Accepted Note, provided that (i) if the
Company and the Purchaser which is obligated to purchase such Accepted Note
agree on an earlier Business Day for such closing, the "Closing Day" for such
Accepted Note shall be such earlier Business Day, and (ii) if the closing of the
purchase and sale of such Accepted Note is rescheduled pursuant to paragraph 2I,
the Closing Day for such Accepted Note, for all purposes of this Agreement
except references to "original Closing Day" in paragraph 2J(3), shall mean the
Rescheduled Closing Day with respect to such Accepted Note.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder from time to
time.
"Confirmation of Acceptance" shall have the meaning specified in
paragraph 2G.
"Consolidated" shall mean, with respect to any item of financial
information, the item of financial information for the Company and its
Subsidiaries consolidated in accordance with generally accepted accounting
principles.
"Consolidated Current Assets" shall mean, as of any date, the sum of
(a) cash and cash equivalents that would be reflected on the Company's
consolidated balance sheet as of such date prepared in accordance with generally
accepted accounting principles, (b) accounts receivable (including the current
portion of any notes receivable) that would be reflected on the Company's
consolidated balance sheet as of such date prepared in accordance with generally
accepted accounting principles, and (c) inventory that would be reflected on the
Company's consolidated balance sheet as of such date prepared in accordance with
generally accepted accounting principles.
"Consolidated Debt" shall mean, as of any date of determination,
without duplication, all Debt of the Company and its Subsidiaries (other than as
described in subsection (j) under the definition of "Debt" herein), determined
on a consolidated basis in accordance with generally
43
accepted accounting principles. For purposes of determining "Consolidated Debt,"
the principal amount of any Synthetic Lease Obligation shall be deemed to be the
amount that would be reflected on the balance sheet of the Company and its
Subsidiaries if such Synthetic Lease Obligation were characterized as a capital
lease rather than an operating lease.
"Consolidated EBIT" shall mean, for the Company 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) 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 generally accepted accounting principles
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 Company 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 Company 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
generally accepted accounting principles 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
Company 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 Company and its
Subsidiaries for any period ending on the date of computation thereof,
determined on a consolidated basis in accordance with generally accepted
accounting principles, the sum of (a) total cash interest expense, including
without limitation, the interest component of any payments in respect of
Capitalized 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 Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with generally accepted accounting principles,
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 Company or any Subsidiary in the
unremitted earnings of
44
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 Company or any Subsidiary on the date that such Person's
assets are acquired by the Company or any Subsidiary.
"Consolidated Net Worth" shall mean, as of any date, (a) the total
assets of the Company and its Subsidiaries that would be reflected on the
Company's consolidated balance sheet as of such date prepared in accordance with
generally accepted accounting principles, 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 Company
solely as a result of the application to Company's financial statements of FAS
142, minus (b) the total liabilities of the Company and its Subsidiaries that
would be reflected on the Company's consolidated balance sheet as of such date
prepared in accordance with generally accepted accounting principles.
"Consolidated Total Assets" shall mean the aggregate amount carried as
total assets on the books of the Company and its Subsidiaries, on a consolidated
basis and after eliminating all inter-company items, in accordance with
generally accepted accounting principles.
"Consolidated Total Capitalization" shall mean, at any time, the sum of
(i) Consolidated Debt at such time plus (ii) Consolidated Net Worth at such
time.
"Consolidated Total Revenues" shall mean, for the Company and its
Subsidiaries for any period ending on the date of computation thereof,
determined on a consolidated basis in accordance with generally accepted
accounting principles, the total revenues of the Company and its Subsidiaries
for such period.
"Debt" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for 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);
(c) all liabilities created or arising under any conditional
sale or other title retention agreement(s) relating to property
acquired by such Person;
(d) its Capitalized Lease Obligations;
(e) all liabilities, contingent or otherwise, in respect of
letters of credit, acceptances or similar extensions of credit;
(f) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
45
(g) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (f) hereof;
(h) all liabilities, contingent or otherwise, to purchase,
redeem, retire or otherwise acquire for value any common stock of such
Person;
(i) Off-Balance Sheet Liabilities;
(j) liabilities under any Hedging Agreements; and
(k) all Securitization Transactions.
Debt of any Person shall include the Debt 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 Debt
provide that such Person is not liable therefor.
"Delayed Delivery Fee" shall have the meaning specified in paragraph
2J(3).
"Eligible Securities" shall mean the following obligations and any
other obligations previously approved in writing by the Required Holders:
(a) Government Securities;
(b) certificates of deposits, bankers' acceptances and time
deposits maturing within 180 days from the date of acquisition thereof
and issued or guaranteed by or place 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 of any state
thereof which has a combined capital surplus and undivided profits of
not less than $500,000,000;
(c) 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 (b) above;
(d) 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;
(e) shares of mutual funds which invest solely in any one or
more of the obligations described in clauses (a) through (e) above;
(f) subject to the limitation set forth in paragraph 6H,
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.
46
"Environmental Authority" shall mean any foreign, federal, state, local
or regional government that exercises any duly authorized form of jurisdiction
or authority under any Environmental Requirement.
"Environmental Judgments and Orders" shall mean all judgments, decrees
or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other duly authorized entity arising from or in any
way associated with any Environmental Requirement, whether or not incorporated
in a judgment, degree or order.
"Environmental Liabilities" shall mean any liabilities, 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 Company 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.
"Environmental Notices" shall mean any written communication from any
Environmental Authority stating possible or alleged noncompliance with or
possible or alleged liability under any Environmental Requirement, including
without limitation any complaints, citations, demands or requests from any
Environmental Authority for correction of any purported violation of any
Environmental Requirements or any investigation concerning any purported
violation of any Environmental Requirements. Environmental Notices also shall
mean (i) any written communication from any other Person threatening litigation
or administrative proceedings against or involving the Company relating to
alleged violation of any Environmental Requirements and (ii) any complaint,
petition or similar documents filed by any other Person commencing litigation or
administrative proceedings against or involving the Company relating to alleged
violation of any Environmental Requirements.
"Environmental Proceedings" shall mean any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" shall mean releases (as defined in CERCLA or
under any applicable state or local environmental law or regulation) of
Hazardous Materials. Environmental Releases does not include releases for which
no remediation or reporting is required by applicable Environmental Requirements
and which do not present a danger to health, safety or the environment.
"Environmental Requirements" shall mean any applicable local, state or
federal law, rule, regulation, permit, order, decision, determination or
requirement relating in any way to Hazardous Materials or to health, safety or
the environment.
"Equity Issuance" shall mean any issuance by the Company or any
Subsidiary to any Person which is not a Guarantor of (a) shares of its Capital
47
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 Company 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.
"ERISA Affiliate" shall mean any corporation which is a member of the
same controlled group of corporations as the Company within the meaning of
Section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) 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 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 Company 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 Company 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 Company 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 Company or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Company 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.
"ERISA Lien" shall mean any mortgage, pledge, security interest,
encumbrance, deposit arrangement, lien (statutory or otherwise) or charge of any
kind (including any agreement to give any of the foregoing) or any other type of
preferential arrangement protecting a creditor or securing an obligation
associated with the Employee Retirement Income Security Act of 1974.
"Event of Default" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "Default" shall mean any of such
events, whether or not any such requirement has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Facility" shall have the meaning specified in paragraph 2B.
"Facility Fee" shall have the meaning specified in paragraph 2J(1).
48
"Fair Market Value" shall mean, at any time, the sale value of property
that would be realized in an arm's-length sale at such time between an informed
and willing buyer, and an informed and willing seller, under no compulsion to
buy or sell, respectively.
"Governmental Authority" shall mean any Federal, state, municipal,
local, national or other governmental department, commission, board, bureau,
court, agency or instrumentality or political subdivision thereof or any entity
or officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case whether associated with a State of the United States, the United
States, or a foreign entity or government.
"Government Securities" shall mean direct obligations of, or
obligations the timely payment of principal and interest on which are fully and
unconditionally guaranteed by, the United States of America (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 year from the date of
acquisition thereof.
"Guarantors" shall mean, collectively, the Subsidiaries of the Company
listed on Schedule 10B and any Subsidiary that becomes a Guarantor in accordance
with paragraph 5D hereof.
"Guaranty" or "Guarantee" shall mean, with respect to any Person, any
obligation (except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person guaranteeing or
in effect guaranteeing any indebtedness, dividend or other obligation of any
other Person in any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent or otherwise,
by such Person:
(i) to purchase such indebtedness or obligation or any
property constituting security therefor;
(ii) to advance or supply funds for the purchase or payment
of such indebtedness or obligation, or to maintain any working capital
or other balance sheet condition or any income statement condition of
any Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(iii) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of any other Person to make
payment of the indebtedness or obligation; or
(iv) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
49
"Guaranty Agreement" shall mean any one of the Guaranty Agreements.
"Guaranty Agreements" shall mean collectively, each Guaranty Agreement,
in substantially the form of Exhibit E hereto, dated as of the date hereof (in
the case of the Guarantors listed on Schedule 10(B) or dated the date upon which
a Subsidiary of the Company becomes a Guarantor in accordance with paragraph 5D,
executed and delivered by each Guarantor in each case in connection with this
Agreement, as such Guaranty Agreement may be amended, restated modified or
supplemented from time to time in accordance with its terms.
"Hazardous Materials" shall mean (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable federal,
state or local law or regulation, (b) hazardous substances, as defined in
CERCLA, or in any applicable state or local law or regulation, (c) gasoline, or
any other petroleum product or by-product, (d) toxic substances, as defined in
the Toxic Substances Control Act of 1976, or in any applicable federal, state or
local law or regulation or (e) insecticides, fungicides, or rodenticides, as
defined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or
in any applicable federal, state or local law or regulation, as each such Act,
statute or regulation may be amended from time to time.
"Hedge Treasury Note(s)" shall mean, with respect to any Accepted Note,
the United States Treasury Note or Notes whose duration (as determined by
Prudential) most closely matches the duration of such Accepted Note.
"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.
"Hostile Tender Offer" shall mean, with respect to the use of proceeds
of any Note, any offer to purchase, or any purchase of, shares of capital stock
of any corporation or equity interests in any other entity, or securities
convertible into or representing the beneficial ownership of, or rights to
acquire, any such shares or equity interests, if such shares, equity interests,
securities or rights are of a class which is publicly traded on any securities
exchange or in any over-the-counter market, other than purchases of such shares,
equity interest, securities or rights representing less than 5% of the equity
interests or beneficial ownership of such corporation or other entity for
portfolio investment purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date on which the Company makes
the Request for Purchase of such Note.
"including" shall mean, unless the context clearly requires otherwise,
"including without limitation".
"Institutional Investors" shall mean (i) any bank, savings bank,
savings and loan association or insurance company, (ii) any pension plan or
portfolio or investment fund managed or administered by any bank, savings bank,
savings and loan association or insurance company,
50
(iii) any investment company owned by any bank, savings bank, savings and loan
association or insurance company, the majority of the shares of the capital
stock of which are traded on a national securities exchange or in the National
Association of Securities Dealers automated quotation system, or (iv) any
investment banking company.
"Intangibles" shall mean goodwill, patents, trademarks, trade names,
organization expense, licenses, franchises, exploration permits and import and
export permits and other like intangibles, determined in accordance with
generally accepted accounting principles.
"Interest Coverage Ratio" shall mean as of any date of determination
with respect to the Company, the ratio of (a) Consolidated EBIT as of such date
to (b) Consolidated Interest Expense as of such date.
"Investment" shall mean, when used with respect to any Person, any
direct or indirect advance, loan or other extension of credit or capital
contribution by such Person (by means of transfers of property to others or
payments for property or services for the account or use of others, or
otherwise) to any other Person, or any direct or indirect purchase or other
acquisition or beneficial ownership by such Person of, or of a beneficial
interest in, Capital Stock, partnership interests, bonds, notes, debentures or
other securities issued by any other Person or the assumption of any liability
of any other Person.
"Issuance Period" shall have the meaning specified in paragraph 2C.
"Issued Series A Note" shall have the meaning specified in paragraph
1A.
"Lien" shall mean any interest in property securing any obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the lien or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. For the purposes of this
Agreement, the Company and any Subsidiary shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional sale agreement,
financing lease, or other arrangement pursuant to which title to the property
has been retained by or vested in some other Person for security purposes.
"Major Distribution Agreements" shall mean those agreements identified
on Schedule 8P.
"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
51
Subsidiary of the Company having at any time: (i) assets in an amount equal to
at least 5% of the Consolidated Total Assets of the Company and its Subsidiaries
determined as of the last day of the most recent fiscal quarter of the Company
as reflected in the Company's most recent financial statements required by
paragraphs 5A(1)(i) or (ii); 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 Company and its Subsidiaries for the 12-month period ending on the last day
of the most recent fiscal quarter of the Company as reflected in the Company's
most recent financial statements required by paragraphs 5A(1)(i) or (ii).
"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 Company and of the Company and its Subsidiaries, taken as a whole, (b) the
ability of the Company to perform any of its obligations under this Agreement,
the Note or any other Related Document, (c) the rights and remedies of the
Purchasers under this Agreement, the Notes or any other Related Document or (d)
the legality, validity or enforceability of any of the Related Documents.
"Material Debt" shall mean Debt (other than the Notes) 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 Debt," the "principal amount" of the
obligations of the Company 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 Company 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
thereto.
"Material Provision" shall have the meaning specified in paragraph 5J.
"Multiemployer Plan" shall mean any Plan which is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean the aggregate cash proceeds received by
the Company 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 Company or any Subsidiary in any Equity Issuance or
Securitization Transaction.
"Notes" shall have the meaning specified in paragraph 1.
"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)
52
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.
"Officer's Certificate" shall mean a certificate signed in the name of
the Company by its President, one of its Vice Presidents or its Treasurer.
"Person" shall mean and include an individual, a partnership, a joint
venture, limited liability company, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
"Plan" shall mean any employee pension benefit plan (as such term is
defined in Section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any ERISA
Affiliate.
"Priority Debt" shall mean with respect to any Person, at any time,
without duplication, the sum of
(i) Debt of each Subsidiary (other than (a) Debt described
in clause (vii) of paragraph 6B(2), (b) Debt held by the Company, any
Guarantor or another wholly-owned Subsidiary, or (c) Debt of any
Subsidiary which constitutes Debt of such Subsidiary because it is a
Guaranty of Debt of the Company); and
(ii) Debt of such Subsidiary secured by any Lien other than a
Lien described in clauses (ii), (iii) or (v) of paragraph 6B(1).
"Properties" shall mean all real property owned, leased or otherwise
used or occupied by the Company or any Subsidiary, wherever located.
"Prudential" shall mean The Prudential Insurance Company of America.
"Prudential Affiliate" shall mean (i) any corporation or other entity
controlling, controlled by, or under common control with, Prudential and (ii)
any managed account or investment fund which is managed by Prudential or a
Prudential Affiliate described in clause (i) of this definition. For purposes of
this definition the terms "control", "controlling" and "controlled" shall mean
the ownership, directly or through subsidiaries, of a majority of a
corporation's or other entity's Voting Stock or equivalent voting securities or
interests.
"Purchasers" shall mean with respect to any Accepted Notes, Prudential
and/or the Prudential Affiliate(s), which are purchasing such Accepted Notes.
"QPAM Exemption" shall mean Prohibited Transaction Class Exemption
84-14 issued by the United States Department of Labor.
53
"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).
"Related Documents" shall mean this Agreement, any Note, each Guaranty
Agreement and any document or instrument executed in connection with any of the
foregoing.
"Rentals" shall mean for any period of determination all fixed rents or
charges (including as such all payments during any such period of determination
which the lessee is obligated to make on termination of the lease or surrender
of the property) payable by the Company or a Subsidiary (as lessee, sublessee,
licensee, franchisee or the like) for such period under a lease, license, or
other agreement for the use or possession of real or personal property, tangible
or intangible, as determined in accordance with generally accepted accounting
principles.
"Request for Purchase" shall have the meaning specified in paragraph
2E.
"Required Holder(s)" shall mean the holder or holders of at least
66-2/3% of the aggregate principal amount of the Notes or of a Series of Notes,
as the context may require, from time to time outstanding.
"Rescheduled Closing Day" shall have the meaning specified in paragraph
2I.
"Responsible Officer" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer of the
Company, general counsel of the Company or any other officer of the Company
involved principally in its financial administration or its controllership
function.
"S&P" shall mean Standard & Poor's Rating Group or any successor
thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securitization Transaction" shall mean (a) any transfer by the Company
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 Company 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 Company or any Subsidiary), or (b)
any transaction in which the Company or a Subsidiary incurs Debt 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 Debt or other securities referred to
in such clause or, if there shall be no such
54
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 Debt secured by Liens on the subject
Receivables.
"Series" shall have the meaning specified in paragraph 1.
"Shelf Note(s)" shall have the meaning specified in paragraph 1B.
"Significant Holder" shall mean (i) Prudential, so long as Prudential
or any Prudential Affiliate shall hold (or be committed under this Agreement to
purchase) any Note, or (ii) any other holder of at least 10% of the aggregate
principal amount of the Notes of any Series from time to time outstanding.
"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 generally accepted accounting
principles 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 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 Company.
55
"Substantial Part" shall mean, with respect to any transfer, assets
which (i)(A) together with all other assets disposed of in the same fiscal year
constitute 10% or more of Consolidated Total Assets determined as of the end of
the immediately preceding fiscal year or (B) have contributed 10% or more of
Consolidated Net Income for any of the three most recently completed fiscal
years and (ii) from the date hereof the aggregate book value or, if higher, Fair
Market Value of all Disposed assets exceed 25% of Consolidated Total Assets.
"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.
"Third Party" shall mean all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the ordinary
course of the Company's business (consistent with its practices on the Amendment
Closing Day) and on a temporary basis.
"Transferee" shall mean any direct or indirect transferee of all or any
part of any Note purchased by any Purchaser under this Agreement.
"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 persons
performing similar functions) of such Person, even though the right to vote has
been suspended by the happening of such a contingency.
10C. Accounting Principles, Terms and Determinations. All references in
this Agreement to "generally accepted accounting principles" shall be deemed to
refer to generally accepted accounting principles in effect in the United States
at the time of application thereof. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with the
most recent audited financial statements delivered pursuant to clause (ii) of
paragraph 5A or, if no such statements have been so delivered, the most recent
audited financial statements referred to in clause (i) of paragraph 8B.
11. MISCELLANEOUS.
11A. Payments. The Company agrees that, so long as any Purchaser shall
hold any Note, it will make payments of principal of, interest on, and any
Yield-Maintenance Amount payable with respect to, such Note, which comply with
the terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City
56
local time, on the date due) to (i) the account or accounts of such Purchaser
specified in the Confirmation of Acceptance with respect to such Note in the
case of any Shelf Note or (ii) such other account or accounts in the United
States as such Purchaser may from time to time designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to the
place of payment. Each Purchaser agrees that, before disposing of any Note, it
will make a notation thereon (or on a schedule attached thereto) of all
principal payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same agreement as the
Purchasers have made in this paragraph 11A.
11B. Expenses. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save Prudential, each
Purchaser and any Transferee harmless against liability for the payment of, all
out-of-pocket expenses arising in connection with such transactions, including:
(i) all taxes (together in each case with interest and
penalties, if any), other than state, federal, local or foreign income
taxes, intangible taxes, or franchise taxes, including without
limitation, all stamp, recording and other similar taxes, which may be
payable with respect to the execution and delivery of this Agreement or
the execution, delivery or acquisition of any Note;
(ii) all document production and duplication charges and the
fees and expenses of any special counsel engaged by the Purchasers in
connection with this Agreement, the transactions contemplated hereby
and any subsequent proposed modification of, or proposed consent under,
this Agreement, whether or not such proposed modification shall be
effected or proposed consent granted; provided, however, that in
connection with the fees and expenses of legal counsel of the
Purchasers incurred prior to the Amendment Closing Day, the Purchasers
shall agree to use the Facility Fee paid by the Company under paragraph
2J(1) to pay all or a portion of such fees and expenses; and
(iii) the costs and expenses, including fees and expenses of
legal counsel incurred by you, any other Purchaser or any Transferee in
connection with the restructuring, refinancing or "work out" of this
Agreement or the Notes or the transactions contemplated hereby or
thereby or in enforcing (or determining whether or how to enforce) any
rights under this Agreement or the Notes or in responding to any
subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the Notes or the transactions
contemplated hereby or by reason of your or any Transferee's having
acquired any Note, including without limitation costs and expenses
incurred in any bankruptcy case.
Notwithstanding the foregoing, the Company shall not be liable for any counsel
fees incurred by any Purchaser or Transferee arising in connection with a
transfer in the ordinary course of any Note or portion thereof or interest
therein by Prudential or any other Purchaser to any Transferee. The obligations
of the Company under this paragraph 11B shall survive the transfer of any Note
or portion thereof or interest therein by any Purchaser or any Transferee and
the payment of any Note.
57
11C. Consent to Amendments. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) of the
Notes of each Series except that, (i) with the written consent of the holders of
all Notes of a particular Series, and if an Event of Default shall have occurred
and be continuing, of the holders of all Notes of all Series, at the time
outstanding (and not without such written consents), the Notes of such Series
may be amended or the provisions thereof waived to change the maturity thereof,
to change or affect the principal thereof, or to change or affect the rate or
time of payment of interest on or any Yield-Maintenance Amount payable with
respect to the Notes of such Series, (ii) without the written consent of the
holder or holders of all Notes at the time outstanding, no amendment to or
waiver of the provisions of this Agreement shall change or affect the provisions
of paragraph 7A or this paragraph 11C insofar as such provisions relate to
proportions of the principal amount of the Notes of any Series, or the rights of
any individual holder of Notes, required with respect to any declaration of
Notes to be due and payable or with respect to any consent, amendment, waiver or
declaration, (iii) with the written consent of Prudential (and not without the
written consent of Prudential) the provisions of paragraph 2 may be amended or
waived (except insofar as any such amendment or waiver would affect any rights
or obligations with respect to the purchase and sale of Notes which shall have
become Accepted Notes prior to such amendment or waiver), and (iv) with the
written consent of all of the Purchasers which shall have become obligated to
purchase Accepted Notes of any Series (and not without the written consent of
all such Purchasers), any of the provisions of paragraphs 2 and 3 may be amended
or waived insofar as such amendment or waiver would affect only rights or
obligations with respect to the purchase and sale of the Accepted Notes of such
Series or the terms and provisions of such Accepted Notes. Each holder of any
Note at the time or thereafter outstanding shall be bound by any consent
authorized by this paragraph 11C, whether or not such Note shall have been
marked to indicate such consent, but any Notes issued thereafter may bear a
notation referring to any such consent. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein and in the Notes, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to time be amended or
supplemented. Prior to its effectiveness, any amendment, waiver or consent shall
be in writing and executed by the Company and the Required Holders or the
holders of all Notes, as applicable.
11D. Form and Registration; Transfer and Exchange; Transfer
Restrictions; Lost Notes.
11D(1) Form and Registration. The Notes are issuable as registered
notes without coupons in denominations of at least $1,000,000, except as may be
necessary to reflect any principal amount not evenly divisible by $1,000,000.
The Company shall keep at its principal office a register in which the Company
shall provide for the registration of Notes and of transfers of Notes. Upon
surrender for registration of transfer of any Note at the principal office of
the Company, the Company shall, at its expense, execute and deliver one or more
new Notes of like tenor and of a like aggregate principal amount, registered in
the name of such transferee or transferees.
58
11D(2) Transfer and Exchange of Notes. At the option of the holder of
any Note, such Note may be exchanged for other Notes of like tenor and of any
authorized denominations, of a like aggregate principal amount, upon surrender
of the Note to be exchanged at the principal office of the Company. Whenever any
Notes are so surrendered for exchange, the Company shall, at its expense,
execute and deliver the Notes which the holder making the exchange is entitled
to receive. Each installment of principal payable on each installment date upon
each new Note issued upon any such transfer or exchange shall be in the same
proportion to the unpaid principal amount of such new Note as the installment of
principal payable on such date on the Note surrendered for registration of
transfer or exchange bore to the unpaid principal amount of such Note. No
reference need be made in any such new Note to any installment or installments
of principal previously due and paid upon the Note surrendered for registration
of transfer or exchange. Every Note surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the holder of such Note or such holder's attorney
duly authorized in writing. Any Note or Notes issued in exchange for any Note or
upon transfer thereof shall carry the rights to unpaid interest and interest to
accrue which were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such transfer or
exchange.
11D(3) Lost Notes. Upon receipt of written notice from the holder of
any Note of the loss, theft, destruction or mutilation of such Note and, in the
case of any such loss, theft or destruction, upon receipt of such holder's
unsecured indemnity agreement, in form and substance reasonably satisfactory to
the Company, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a new Note, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. Persons Deemed Owners; Participations. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of and interest on, and any Yield-Maintenance
Amount payable with respect to, such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in all or any part of such Note
to any Person on such terms and conditions as may be determined by such holder
in its sole and absolute discretion.
11F. Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Transferee, regardless of any investigation made at any
time by or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter.
11G. Successors and Assigns. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the
59
respective successors and assigns of the parties hereto (including, without
limitation, any Transferee) whether so expressed or not.
11H. Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is prohibited by
any one of such covenants, the fact that it would be permitted by an exception
to, or otherwise be in compliance within the limitations of, another covenant
shall not avoid the occurrence of a Default or Event of Default if such action
is taken or such condition exists.
11I. Notices. All written communications provided for hereunder (other
than communications provided for under paragraph 2) shall be sent by first class
mail or nationwide overnight delivery service (with charges prepaid) and (i) if
to any Purchaser, addressed as specified for such communications in the
Purchaser Schedule attached to the applicable Confirmation of Acceptance (in the
case of any Shelf Notes) or at such other address as any such Purchaser shall
have specified to the Company in writing, (ii) if to any other holder of any
Note, addressed to it at such address as it shall have specified in writing to
the Company or, if any such holder shall not have so specified an address, then
addressed to such holder in care of the last holder of such Note which shall
have so specified an address to the Company and (iii) if to the Company,
addressed to it at 2665 South Bayshore Drive, Suite 901, Coconut Grove, Florida
33133, Attention: Barry Logan, telephone 305-714-4102, telecopy 305-858-4492,
provided, however, that any such communication to the Company may also, at the
option of the Person sending such communication, be delivered by any other means
either to the Company at its address specified above or to any Authorized
Officer of the Company. Any communication pursuant to paragraph 2 shall be made
by the method specified for such communication in paragraph 2, and shall be
effective to create any rights or obligations under this Agreement only if, in
the case of a telephone communication, an Authorized Officer of the party
conveying the information and of the party receiving the information are parties
to the telephone call, and in the case of a telecopier communication, the
communication is signed by an Authorized Officer of the party conveying the
information, addressed to the attention of an Authorized Officer of the party
receiving the information, and in fact received at the telecopier terminal the
number of which is listed for the party receiving the communication in the
Information Schedule or at such other telecopier terminal as the party receiving
the information shall have specified in writing to the party sending such
information.
11J. Payments Due on Non-Business Days. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
interest on, or Yield-Maintenance Amount payable with respect to, any Note that
is due on a date other than a Business Day shall be made on the next succeeding
Business Day. If the date for any payment is extended to the next succeeding
Business Day by reason of the preceding sentence, the period of such extension
shall be included in the computation of the interest payable on such Business
Day.
11K. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
60
11L. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11M. Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to any Purchaser, to any holder of Notes or to the
Required Holder(s), the determination of such satisfaction shall be made by such
Purchaser, such holder or the Required Holder(s), as the case may be, in the
sole and exclusive judgment (exercised in good faith) of the Person or Persons
making such determination.
11N. Governing Law; Submission to Jurisdiction. This Agreement shall be
construed and enforced in accordance with, and the rights of the Parties shall
be governed by, the Internal Law of the State of New York. THE COMPANY HEREBY
SUBMITS TO THE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK
LOCATED IN NEW YORK COUNTY, NEW YORK AND THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO THE
SOLE AND ABSOLUTE ELECTION OF THE REQUIRED HOLDER(S) AND TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR THE
NOTES SHALL BE LITIGATED IN SUCH COURTS, AND THE COMPANY WAIVES ANY OBJECTION
WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT
OF ANY PROCEEDING IN ANY SUCH COURTS.
11O. Severalty of Obligations. The sales of Notes to the Purchasers are
to be several sales, and the obligations of Prudential and the Purchasers under
this Agreement are several obligations. No failure by Prudential or any
Purchaser to perform its obligations under this Agreement shall relieve
Prudential, any other Purchaser or the Company of any of its obligations
hereunder, and neither Prudential nor any Purchaser shall be responsible for the
obligations of, or any action taken or omitted by, any other such Person
hereunder.
11P. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
61
11Q. Rank. The parties hereto, for their own benefit and not for the
benefit or for the purpose of creating any duty, obligation or liability to any
other Person, expressly designate that the right to payment of the Notes shall
be pari passu to the Bank Agreement in right of payment and performance.
11R. Binding Agreement. When this Agreement is executed and delivered
by the Company and Prudential, it shall become a binding agreement between the
Company and Prudential. This Agreement shall also inure to the benefit of each
Purchaser which shall have executed and delivered a Confirmation of Acceptance,
and each such Purchaser shall be bound by this Agreement to the extent provided
in such Confirmation of Acceptance.
Very truly yours,
WATSCO, INC.
By: /s/ Ana M. Menendez
--------------------------------
Name: Ana M. Menendez
Title: Treasurer
62
The foregoing Agreement is hereby accepted as of the date first above written.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: /s/ Billy Greer
-----------------------------
Vice President
PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
By: /s/ Billy Greer
-----------------------------
Vice President
HARTFORD LIFE INSURANCE COMPANY
By: Prudential Private Placement Investors,
L.P., as Investment Advisor
By: Prudential Private Placement Investors,
Inc., General Partner
By: /s/ Billy Greer
-----------------------------
Vice President
MEDICA HEALTH PLAN
By: Prudential Private Placement Investors,
L.P., as Investment Advisor
By: Prudential Private Placement Investors,
Inc., General Partner
By: /s/ Billy Greer
-----------------------------
Vice President
63