EXHIBIT 10.21
REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT
by and among
WATSCO, INC.
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH),
as Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
September 25, 1996
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Terms
1.1. Definitions........................................................... 2
1.2. Rules of Interpretation............................................... 29
1.3. Accounting Changes.................................................... 30
ARTICLE II
The Revolving Credit Facility
2.1. Revolving Loans....................................................... 32
2.2. Payment of Interest................................................... 35
2.3. Payment of Principal.................................................. 35
2.4. Non-Conforming Payments............................................... 35
2.5. Notes................................................................. 36
2.6. Pro Rata Payments..................................................... 36
2.7. Reductions............................................................ 36
2.8. Conversions and Elections of Subsequent Interest
Periods............................................................... 37
2.9. [reserved]............................................................ 38
2.10. Unused Fees........................................................... 38
2.11. Deficiency Advances................................................... 38
2.12. Use of Proceeds....................................................... 39
2.13. Swing Line............................................................ 39
ARTICLE III
Letters of Credit
3.1. Letters of Credit..................................................... 41
3.2. Reimbursement......................................................... 41
3.3. Letter of Credit Facility Fees........................................ 45
3.4. Administrative Fees................................................... 45
ARTICLE IV
Yield Protection and Illegality
4.1. Additional Costs...................................................... 46
4.2. Suspension of Loans................................................... 48
4.3. Illegality............................................................ 48
4.4. Compensation.......................................................... 49
4.5. Alternate Loan and Lender............................................. 49
4.6. Taxes................................................................. 50
ARTICLE V
Conditions to Making Loans
5.1. Conditions of Initial Advance......................................... 52
5.2. Conditions of Loans and Letters of Credit............................. 54
ARTICLE VI
Representations and Warranties
6.1. Organization and Authority............................................ 57
6.2. Loan Documents........................................................ 57
6.3. Solvency.............................................................. 58
6.4. Subsidiaries and Stockholders......................................... 58
6.5. Ownership Interests................................................... 58
6.6. Financial Condition................................................... 59
6.7. Title to Properties................................................... 59
6.8. Taxes................................................................. 59
6.9. Other Agreements...................................................... 60
6.10. Litigation............................................................ 60
6.11. Margin Stock.......................................................... 60
6.12. Investment Company.................................................... 60
6.13. Patents, Etc.......................................................... 61
6.14. No Untrue Statement................................................... 61
6.15. No Consents, Etc...................................................... 61
6.16. Employee Benefit Plans................................................ 61
6.17. No Default............................................................ 63
6.18. Hazardous Materials................................................... 63
6.19. Employment Matters.................................................... 63
6.20. RICO.................................................................. 64
ARTICLE VII
Affirmative Covenants
7.1. Financial Reports, Etc................................................ 65
7.2. Maintain Properties................................................... 66
7.3. Existence, Qualification, Etc......................................... 66
7.4. Regulations and Taxes................................................. 66
7.5. Insurance............................................................. 66
7.6. True Books............................................................ 67
7.7. Right of Inspection................................................... 67
7.8. Observe all Laws...................................................... 67
7.9. Governmental Licenses................................................. 67
7.10. Covenants Extending to Other Persons.................................. 67
7.11. Officer's Knowledge of Default........................................ 67
7.12. Suits or Other Proceedings............................................ 68
7.13. Notice of Discharge of Hazardous Material
or Environmental Complaint............................................ 68
7.14. Environmental Compliance.............................................. 68
7.15. Indemnification....................................................... 68
7.16. Further Assurances.................................................... 69
7.17. Employee Benefit Plans................................................ 69
7.18. Continued Operations.................................................. 70
7.19. New Subsidiaries...................................................... 70
ARTICLE VIII
Negative Covenants
8.1. Financial Covenants................................................... 73
8.2. Acquisitions.......................................................... 74
8.3. Capital Expenditures.................................................. 74
8.4. Liens................................................................. 74
8.5. Indebtedness.......................................................... 75
8.6. Transfer of Assets.................................................... 76
8.7. Investments........................................................... 77
8.8. Merger or Consolidation............................................... 77
8.9. Restricted Payments................................................... 78
8.10. Transactions with Affiliates.......................................... 79
8.11. Compliance with ERISA................................................. 79
8.12. Fiscal Year........................................................... 80
8.13. Dissolution, etc...................................................... 80
8.14. Limitations on Sales and Leasebacks................................... 80
8.15. Change in Control..................................................... 80
8.16. Rate Hedging Obligations.............................................. 80
8.17. Negative Pledge Clauses............................................... 80
8.18. Prepayments, Etc. of Indebtedness..................................... 81
ARTICLE IX
Events of Default and Acceleration
9.1. Events of Default..................................................... 82
9.2. Agent to Act.......................................................... 85
9.3. Cumulative Rights..................................................... 85
9.4. No Waiver............................................................. 86
9.5. Allocation of Proceeds................................................ 86
ARTICLE X
The Agent
10.1. Appointment.......................................................... 88
10.2. Attorneys-in-fact.................................................... 88
10.3. Limitation on Liability.............................................. 88
10.4. Reliance............................................................. 89
10.5. Notice of Default.................................................... 89
10.6. No Representations................................................... 89
10.7. Indemnification...................................................... 90
10.8. Lender............................................................... 90
10.9. Resignation.......................................................... 90
10.10. Sharing of Payments, etc............................................. 91
10.11. Fees................................................................. 92
ARTICLE XI
Miscellaneous
11.1. Assignments and Participations....................................... 93
11.2. Notices.............................................................. 95
11.3. Setoff............................................................... 96
11.4. Survival............................................................. 96
11.5. Expenses............................................................. 96
11.6. Amendments........................................................... 97
11.7. Counterparts......................................................... 98
11.8. Termination.......................................................... 98
11.9. Indemnification; Limitation of Liability............................. 99
11.10. Severability.........................................................100
11.11. Entire Agreement.....................................................100
11.12. Agreement Controls...................................................101
11.13. Usury Savings Clause.................................................101
11.14. Confidentiality......................................................101
11.15. Governing Law; Waiver of Jury Trial..................................102
EXHIBIT A Applicable Commitment Percentages...............................A-1
EXHIBIT B Form of Assignment and Acceptance...............................B-1
EXHIBIT C Notice of Appointment (or Revocation)
of Authorized Representative....................................C-1
EXHIBIT D Form of Borrowing Notice........................................D-1
EXHIBIT E Form of Interest Rate Selection Notice..........................E-1
EXHIBIT F-1 Form of Note..................................................F-1-1
EXHIBIT F-2 Form of Note..................................................F-2-1
EXHIBIT G Form of Opinion of Credit Parties' Counsel......................G-1
EXHIBIT H Compliance Certificate..........................................H-1
EXHIBIT I Form of Facility Guaranty.......................................I-1
Schedule 5.4 Subsidiaries and Investments in Other
Persons
Schedule 5.6 Indebtedness
Schedule 5.7 Liens
Schedule 5.8 Tax Matters
Schedule 5.10 Litigation
Schedule 6.5 Insurance
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September 25, 1996 (the "Agreement"),
is made by and among WATSCO, INC., a Florida corporation having its principal
place of business in Coconut Grove, Florida (the "Borrower"), NATIONSBANK,
NATIONAL ASSOCIATION (SOUTH), a national banking association organized and
existing under the laws of the United States, in its capacity as a Lender
("NationsBank"), and each other financial institution executing and delivering a
signature page hereto and each other financial institution which may hereafter
execute and deliver an instrument of assignment with respect to this Agreement
pursuant to SECTION 11.1 (hereinafter such financial institutions may be
referred to individually as a "Lender" or collectively as the "Lenders"), and
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking association
organized and existing under the laws of the United States, in its capacity as
agent for the Lenders (in such capacity, and together with any successor agent
appointed in accordance with the terms of SECTION 10.9, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower a revolving credit facility of up to $130,000,000, including a
sublimit for issuance of standby letters of credit in an amount of up to
$5,000,000 and a swing line facility in an amount of up to $10,000,000, the
proceeds of which are to be used (i) to repay in full the Prior Credit
Facilities (as herein defined), (ii) for seasonal working capital needs, and
(iii) for general corporate purposes, including the making of acquisitions
permitted hereunder; and
WHEREAS, the Lenders are willing to make such revolving credit facility
available to the Borrower upon the terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
ARTICLE I
DEFINITIONS AND TERMS
I.1. DEFINITIONS. For the purposes of this Agreement, in addition to the
definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Acquisition" means 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.
"Advance" means a borrowing under (i) the Revolving Credit
Facility consisting of a Base Rate Loan or a Eurodollar Rate Loan or
(ii) the Swing Line consisting of Base Rate Loans.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with the Borrower; or (ii) which beneficially owns
or holds 10% or more of the aggregate voting rights for all of
Borrower's classes of outstanding Voting Stock (or in the case of a
Person which is not a corporation, 10% or more of the aggregate voting
rights of such Person) of the Borrower; or 10% or more of any class of
the outstanding voting stock (or in the case of a Person which is not a
corporation, 10% or more of the aggregate voting rights of such Person)
of which is beneficially owned or held by the Borrower. 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.
"Applicable Commitment Percentage" means, with respect to each
Lender at any time, a fraction, the numerator of which shall be such
Lender's Revolving Credit Commitment and the denominator of which shall
be the Total Revolving Credit Commitment, which Applicable Commitment
Percentage for each Lender as of the Closing Date is as set forth in
EXHIBIT A; PROVIDED that the Applicable Commitment Percentage of each
Lender shall be increased or decreased to reflect any assignments to or
by such Lender effected in accordance with SECTION 11.1.
"Applicable Margin" means that percent per annum set forth below,
which shall be based upon the Consolidated Debt Coverage Ratio for the
Four-Quarter Period most recently ended as specified below:
APPLICABLE
MARGIN
------
CONSOLIDATED DEBT BASE EURODOLLAR
COVERAGE RATIO RATE RATE
-------------- ---- ----
(a) Greater than or equal
to 3.50 to 1.0 .25% 1.00%
(b) Greater than or equal to
3.0 to 1.0 and less than
3.50 to 1.0 .125% .75%
(c) Greater than or equal to
2.50 to 1.0 and less than
3.0 to 1.0 0% .625%
(d) Greater than or equal to
2.0 to 1.0 and less than
2.50 to 1.0 0% .50%
(e) Less than 2.0 to 1.0 0% .375%
The Applicable Margin shall be established at the end of each fiscal
quarter of the Borrower (each, a "Determination Date"). Any change in
the Applicable Margin following each Determination Date shall be
determined based upon the
computations set forth in the certificate furnished to the Agent
pursuant to SECTION 7.1(A)(II) and SECTION 7.1(B)(II), subject to review
and approval of such computations by the Agent, and shall be effective
commencing on the Business Day following the date such certificate is
received (or, if earlier, the date such certificate was required to be
delivered) until the date following the date on which a new certificate
is delivered or is required to be delivered, whichever shall first
occur; PROVIDED however, if the Borrower shall fail to deliver any such
certificate within the time period required by SECTION 7.1, then the
Applicable Margin shall be .25% for Base Rate Loans and 1.00% for
Eurodollar Rate Loans until the appropriate certificate is so delivered.
From the Closing Date to the first Determination Date, the Applicable
Margin shall be 0% for Base Rate Loans and .375% for Eurodollar Rate
Loans. Notwithstanding the foregoing if at any time the Borrower's long
term senior unsecured, unenhanced debt shall be rated "BB" or better by
either S&P or "Ba" or better by ▇▇▇▇▇'▇ (collectively, the "Threshold
Ratings"), then the Borrower may elect (which election may be reserved
at any time at the option of the Borrower), by notice to the Agent and
the Lenders, effective upon receipt (but subject to confirmation) by the
Agent, to have the Applicable Margin determined as set forth below based
on such ratings for the period from the date of receipt of such notice
by the Agent through the date on which either of the Threshold Ratings
are no longer in effect with respect to such debt of the Borrower:
APPLICABLE
MARGIN S&P ▇▇▇▇▇'▇
------ --- -------
Base Rate Eurodollar Rate
.25% 1% BB Ba2
.125% .75% BB+ Ba1
0% .55% BBB- Baa3
0% .45% BBB Baa2
0% .35% BBB+ or higher Baa1 or higher
If, during any period when the Applicable Margin is determined by
reference to ratings by either S&P or ▇▇▇▇▇'▇ of debt of the Borrower as
provided above, the respective ratings of each of either S&P or ▇▇▇▇▇'▇
set forth above
shall provide different levels of Applicable Margin, then, provided that
both ratings shall constitute Threshold Ratings, the higher rating shall
apply for purposes of determining the Applicable Margin.
"Applicable Unused Fee" means that percent per annum set forth
below, which shall be based upon the Consolidated Debt Coverage Ratio
for the Four-Quarter Period most recently ended as specified below:
APPLICABLE
CONSOLIDATED DEBT UNUSED
COVERAGE RATIO FEE
----------------- ------
(a) Greater than or equal
to 3.50 to 1.0 .25%
(b) Greater than or equal to
3.0 to 1.0 and less than
3.50 to 1.0 .25%
(c) Greater than or equal to
2.50 to 1.0 and less than
3.0 to 1.0 .225%
(d) Greater than or equal to
2.0 to 1.0 and less than
2.50 to 1.0 .20%
(e) Less than 2.0 to 1.0 .175%
The Applicable Unused Fee shall be established at the end of each fiscal
quarter of the Borrower (the "Determination Date"). Any change in the
Applicable Unused Fee following each Determination Date shall be
determined based upon the computations set forth in the certificate
furnished to the Agent pursuant to SECTION 7.1(A)(II) and SECTION
7.1(B)(II), subject to review and approval of such computations by the
Agent and shall be effective commencing on the Business Day following
the date such certificate is received (or, if
earlier, the date such certificate was required to be delivered) until
the date following the date on which a new certificate is delivered or
is required to be delivered, whichever shall first occur; PROVIDED
however, if the Borrower shall fail to deliver any such certificate
within the time period required by SECTION 7.1, then the Applicable
Unused Fee shall be .25% until the appropriate certificate is so
delivered. From the Closing Date to the first Determination Date, the
Applicable Unused Fee shall be .175%. Notwithstanding the foregoing, if
at any time the Borrower's long term senior unsecured, unenhanced debt
shall be rated "BB" or better by either S&P or "Ba" or better by ▇▇▇▇▇'▇
(collectively, the "Threshold Ratings"), then the Borrower may elect
(which election may be reversed at any time at the option of the
Borrower), by notice to the Agent and the Lenders, effective upon
receipt (but subject to confirmation) by the Agent, to have the
Applicable Unused Fee determined as set forth below based on such
ratings for the period from the date of receipt of such notice by the
Agent through the date on which either of the Threshold Ratings are not
longer in effect with respect to such debt of the Borrower:
APPLICABLE
UNUSED FEE S&P ▇▇▇▇▇'▇
---------- --- -------
.25% BB Ba2
.25% BB+ Ba1
.20% BBB- Baa3
.175% BBB Baa2
.125% BBB+ or higher Baa1 or higher
If, during any period when the Applicable Unused Fee is determined by
reference to ratings by either S&P or ▇▇▇▇▇'▇ of debt of the Borrower as
provided above, the respective ratings of each of either S&P or ▇▇▇▇▇'▇
set forth above shall provide different levels of Applicable Unused Fee,
then, provided that both ratings shall constitute Threshold Ratings, the
higher rating (i.e., the lower fee) shall apply for purposes of
determining the Applicable Unused Fee.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the
Borrower from time to time and delivered to the Issuing Bank to support
the issuance of Letters of Credit.
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of EXHIBIT B (with blanks appropriately filled
in) delivered to the Agent in connection with an assignment of a
Lender's interest under this Agreement pursuant to SECTION 11.1.
"Authorized Representative" means any of the President, Chief
Executive Officer, any Vice President or Treasurer of the Borrower or,
with respect to financial matters, the chief financial officer of the
Borrower, or any other Person expressly designated by the Board of
Directors of the Borrower (or the appropriate committee thereof) as an
Authorized Representative of the Borrower, as set forth from time to
time in a certificate in the form of EXHIBIT C.
"Base Rate" means the per annum rate of interest equal to the sum
of (x) the greater of (i) the Prime Rate or (ii) the Federal Funds
Effective Rate PLUS one-half of one percent (1/2%) plus (y) the
Applicable Margin. Any change in the Base Rate resulting from a change
in the Federal Funds Effective Rate shall become effective as of 12:01
A.M. of the Business Day on which each such change occurs. The Base Rate
is a reference rate used by Agent in determining interest rates on
certain loans and is not intended to be the lowest rate of interest
charged on any extension of credit to any debtor.
"Base Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Base Rate.
"Base Rate Refunding Loan" means a Base Rate Loan or Swing Line
Loan made either to (i) satisfy Reimbursement Obligations arising from a
drawing under a Letter of Credit or (ii) pay NationsBank in respect of
Swing Line Outstandings.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrower's Account" means a demand deposit account number
XXXXXXXXXX or any successor account with the Agent, which may be
maintained at one or more offices of the Agent or an agent of the Agent.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility or Swing Line in the form of EXHIBIT D.
"Business Day" means, (i) with respect to any Base Rate Loan, any
day which is not a Saturday, Sunday or a day on which banks in the
States of New York, Florida and North Carolina are authorized or
obligated by law, executive order or governmental decree to be closed
and, (ii) with respect to any Eurodollar Rate Loan, any day which is a
Business Day, as described above, and on which the relevant
international financial markets are open for the transaction of business
contemplated by this Agreement in London, England, New York, New York
and Charlotte, North Carolina.
"Capital Expenditures" means, with respect to the Borrower and
its Subsidiaries, for any period the SUM of (without duplication) (i)
all expenditures (whether paid in cash or accrued as liabilities) by the
Borrower or any Subsidiary during such period for items that would be
classified as "property, plant or equipment" or comparable items on the
consolidated balance sheet of the Borrower and its Subsidiaries,
including without limitation all transactional costs incurred in
connection with such expenditures provided the same have been
capitalized, excluding, however, the amount of any Capital Expenditures
paid for with proceeds of casualty insurance as evidenced in writing and
submitted to the Agent together with any compliance certificate
delivered pursuant to SECTION 7.1(A) or (B), and (ii) with respect to
any Capital Lease entered into by the Borrower or its Subsidiaries
during such period, the present value of the lease payments due under
such Capital Lease over the term of such Capital Lease applying a
discount rate equal to the interest rate provided in such lease (or in
the absence of a stated interest rate, that rate used in the preparation
of the financial statements
described in SECTION 7.1(A)), all the foregoing in accordance with GAAP
applied on a Consistent Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Change of Control" means, at any time:
(A) With respect to the Borrower,
(i) any "person" or "group" (each as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) other than ▇▇▇▇▇▇ ▇▇▇▇▇▇ 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
Borrower (or securities convertible into or exchangeable for such
Voting Stock) representing 25% or more of the combined voting
power of all Voting Stock of the Borrower (on a fully diluted
basis) or (B) otherwise has the ability, directly or indirectly,
to elect a majority of the board of directors of the Borrower
(PROVIDED that if an event described in this clause (i) shall
occur solely by reason of the death of one or more members of the
Existing Control Group, then a "Change of Control" shall not be
deemed to have occurred so long as the Voting Stock of the
decedent is owned of record by the estate or immediately family
of such decedent);
(ii) during any period of up to 24 consecutive months,
commencing on the Closing Date, individuals who at the beginning
of such 24-month period were directors of the Borrower shall
cease for any reason (other than the death, disability or
retirement of a director or of an officer of the Borrower that is
serving as a director at such time so long as another officer of
the Borrower replaces such Person as a director) to constitute a
majority of the board of directors of the Borrower; or
(iii) any Person or two or more Persons acting in concert
other than the Existing Control Group shall have acquired by
contract or otherwise, or shall have consummated a contract or
arrangement that results in its or their acquisition of the power
to exercise, directly or indirectly, a controlling influence on
the management or policies of the Borrower; or
(B) with respect to any Major Subsidiary,
(i) the Borrower shall cease to own, directly or indirectly,
at least 100% of the Voting Stock of each currently existing
Major Subsidiary; or
(ii) any Person or two or more Persons acting in concert other
than the Borrower shall have acquired by contract or otherwise,
or shall have consummated a contract or arrangement that results
in its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence on the management or policies
of such Subsidiary.
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, the Lenders and the Agent and on which the
conditions set forth in SECTION 5.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
"Comfort Supply" means Comfort Supply, Inc., a Delaware
corporation and a Subsidiary of the Borrower, and its successors.
"Consistent Basis" in reference to the application of GAAP means
the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the preparation
of the audited financial statements of the Borrower referred to in
SECTION 6.6(A).
"Consolidated Debt Coverage Ratio" means, as of the date of
computation thereof, the ratio of (i) the sum of
(without duplication) Consolidated Indebtedness (determined as at such
date) to (ii) Consolidated EBITDA (for the Four-Quarter Period ending on
(or most recently ended prior to) such date).
"Consolidated EBIT" means, with respect to the Borrower and its
Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the SUM of, without duplication, (i) Consolidated
Net Income, (ii) Consolidated Interest Expense, and (iii) taxes on
income, all determined on a consolidated basis in accordance with GAAP
applied on a Consistent Basis; PROVIDED, however, that with respect to
an Acquisition that is accounted for as a "purchase", for the four
Four-Quarter Periods ending next following the date of such Acquisition,
Consolidated EBIT shall include the results of operations of the Person
or assets so acquired for the appropriate periods, 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" means, with respect to the Borrower and its
Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the SUM of, without duplication, (i) Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) taxes on income,
(iv) amortization, and (v) depreciation, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis; PROVIDED, however, that with respect to an Acquisition that is
accounted for as a "purchase", for the four Four-Quarter Periods 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 Indebtedness" means all Indebtedness for Money
Borrowed of the Borrower and its Subsidiaries, all determined on a
consolidated basis.
"Consolidated Interest Coverage Ratio" means, with respect to the
Borrower and its Subsidiaries for any Four-
Quarter Period ending on the date of computation thereof, the ratio of
(i) Consolidated EBIT for such period, to (ii) Consolidated Interest
Expense for such period; PROVIDED, however, that Consolidated Interest
Expense shall be determined in the same manner provided in the
definition of "Consolidated EBIT" for any Acquisition that is accounted
for as a "purchase".
"Consolidated Interest Expense" means, with respect to any period
of computation thereof, the gross interest expense of the Borrower and
its Subsidiaries, including without limitation (i) the current amortized
portion of debt discounts to the extent included in gross interest
expense, (ii) the current amortized portion of all fees (including fees
payable in respect of any Swap Agreement) payable in connection with the
incurrence of Indebtedness to the extent included in gross interest
expense and (iii) the portion of any payments made in connection with
Capital Leases which is accounted for in accordance with GAAP as
interest expense, all determined on a consolidated basis in accordance
with GAAP applied on a Consistent Basis.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its
Subsidiaries (including payments received by the Borrower and its
Subsidiaries of (i) interest income, and (ii) dividends and
distributions made in the ordinary course of their businesses by Persons
in which investment is permitted pursuant to this Agreement and not
related to an extraordinary event), less all operating and non-operating
expenses of the Borrower and its Subsidiaries including taxes on income,
all determined on a consolidated basis in accordance with GAAP applied
on a Consistent Basis; but excluding (for all purposes other than
compliance with SECTION 7.1(A) hereof) as income: (i) net gains on the
sale, conversion or other disposition of capital assets, (ii) net gains
on the acquisition, retirement, sale or other disposition of capital
stock and other securities of the Borrower or its Subsidiaries, (iii)
net gains on the collection of proceeds of life insurance policies, (iv)
any write-up of any asset, and (v) any other net gain or credit of an
extraordinary nature as determined in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Net Worth" means, as of any date on which the
amount thereof is to be determined, Consolidated Shareholders' Equity
minus (without duplication of deductions in respect of items already
deducted in arriving at surplus and retained earnings) all reserves
(other than contingency reserves not allocated to any particular
purpose), including without limitation reserves for depreciation,
depletion, amortization, obsolescence, deferred income taxes, insurance
and inventory valuation, all as determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Shareholders' Equity" means, as of any date on
which the amount thereof is to be determined, the sum of the following
in respect of the Borrower and its Subsidiaries (determined on a
consolidated basis and excluding any upward adjustment after the Closing
Date due to revaluation of assets): (i) the amount of issued and
outstanding share capital, plus (ii) the amount of additional paid-in
capital and retained earnings (or, in the case of a deficit, minus the
amount of such deficit), plus (iii) the amount of any foreign currency
translation adjustment (if positive, or, if negative, minus the amount
of such translation adjustment), minus (iv) the amount of any treasury
stock, all as determined in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Total Capitalization" means, as of any date on
which the amount thereof is to be determined, the sum of Consolidated
Indebtedness plus Consolidated Shareholders' Equity.
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring thereof,
would be required) to be included in the financial statements (including
footnotes) of such Person in accordance with GAAP applied on a
Consistent Basis, including Statement No. 5 of the Financial Accounting
Standards Board, all Rate Hedging Obligations and any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, dividend
or other obligation of any other Person (the "primary obligor") in any
manner,
whether directly or indirectly, including obligations of such Person
however incurred:
(1) to purchase such Indebtedness or other obligation or
any property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for the
purchase or payment of such Indebtedness or other obligation, or
(ii) to maintain a minimum working capital, net worth or other
balance sheet condition or any income statement condition of the
primary obligor;
(3) to grant or convey any lien, security interest,
pledge, charge or other encumbrance on any property or assets of
such Person to secure payment of such Indebtedness or other
obligation;
(4) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the
owner or holder of such Indebtedness or obligation of the ability
of the primary obligor to make payment of such Indebtedness or
other obligation; or
(5) otherwise to assure the owner of the Indebtedness or
such obligation of the primary obligor against loss in respect
thereof.
"Cost of Acquisition" means, with respect to any Acquisition, as
at the date of entering into any agreement therefor, the SUM of the
following (without duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of Borrower or any
Subsidiary to be transferred in connection therewith, (ii) the amount of
any cash and fair market value of other property (excluding property
described in clause (i) and the unpaid principal amount of any debt
instrument) given as consideration, (iii) the amount (determined by
using the face amount or the amount payable at maturity, whichever is
greater) of any Indebtedness incurred, assumed or acquired by the
Borrower or any Subsidiary in connection with such Acquisition, (iv) all
additional purchase price amounts in the form of
earnouts and other contingent obligations that should be recorded on the
financial statements of the Borrower and its Subsidiaries in accordance
with GAAP, (v) all amounts paid in respect of covenants not to compete,
consulting agreements that should be recorded on financial statements of
the Borrower and its Subsidiaries in accordance with GAAP, and other
affiliated contracts in connection with such Acquisition, (vi) the
aggregate fair market value of all other consideration given by the
Borrower or any Subsidiary in connection with such Acquisition, and
(vii) out of pocket transaction costs for the services and expenses of
attorneys, accountants and other consultants incurred in effecting such
transaction, and other similar transaction costs so incurred. For
purposes of determining the Cost of Acquisition for any transaction, (A)
the capital stock of the Borrower shall be valued (I) in the case of
capital stock that is then designated as a national market system
security by the National Association of Securities Dealers, Inc.
("NASDAQ") or is listed on a national securities exchange, the average
of the last reported closing quotations for the ten previous Business
Days prior to issuance (so long as the public announcement of Borrower's
intent to consummate such Acquisition precedes such ten day period), and
(II) with respect to shares that are not freely tradeable, as determined
by the Board of Directors of the Borrower and, if requested by the
Agent, determined to be a reasonable valuation by the independent public
accountants referred to in SECTION 6.6(A), (B) the capital stock of any
Subsidiary shall be valued as determined by the Board of Directors of
such Subsidiary and, if requested by the Agent, determined to be a
reasonable valuation by the Borrower's investment advisors, and (C) with
respect to any Acquisition accomplished pursuant to the exercise of
options or warrants or the conversion of securities, the Cost of
Acquisition shall include both the cost of acquiring such option,
warrant or convertible security as well as the cost of exercise or
conversion.
"Credit Party" means, collectively, the Borrower and each
Guarantor.
"Default" means any event or condition which, with the giving or
receipt of notice or lapse of time or both, would
constitute an Event of Default as described in ARTICLE IX hereof.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate of
two percent (2%) above the Eurodollar Rate applicable to such Loan, and
thereafter at a rate of interest per annum which shall be two percent
(2%) above the Base Rate, (ii) with respect to Base Rate Loans, at a
rate of interest per annum which shall be two percent (2%) above the
Base Rate and (iii) in any case, the maximum rate permitted by
applicable law, if lower.
"Distribution Agreements" means, collectively, the following
agreements between Rheem and the Borrower or a Subsidiary of the
Borrower pertaining to the distribution of Rheem products, true and
complete copies of which have been furnished to the Agent on or prior to
the Closing Date: Gemaire Distributors, Inc. and Rheem dated December
30, 1988 as amended February 6, 1996, December 30, 1988 and January 4,
1991, Heating & Cooling Supply, Inc. and Rheem dated October 15, 1990 as
amended February 6, 1996 and August 23, 1994, Comfort Supply, Inc. and
Rheem dated May 25, 1993 as amended February 6, 1996, and Central Air
Conditioning Distributors, Inc. and Rheem dated January 2, 1991, as the
same may be amended, supplemented or modified from time to time.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States
of America.
"Dunhill" means Dunhill Personnel System, Inc., a Delaware
corporation and a Subsidiary of the Borrower as of the Closing Date.
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized under the
laws of any state of the United States of America or under the
laws of any other nation, payable in the United States of
America, expressed to mature not later than 92 days following the
date of issuance thereof and rated in an investment grade rating
category by either S&P or ▇▇▇▇▇'▇;
(c) interest bearing demand or time deposits issued by any
Lender or certificates of deposit maturing within one year from
the date of issuance thereof and issued by a bank or trust
company organized under the laws of the United States or of any
state thereof having capital surplus and undivided profits
aggregating at least $200,000,000 and being rated "A-3" or better
by S&P or "A" or better by ▇▇▇▇▇'▇;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in obligations
described in paragraphs (a) through (f) above, the shares of
which mutual funds are at all times rated "AAA" by S&P;
(h) tax-exempt or taxable adjustable rate preferred stock
issued by a Person having a rating of its long term unsecured
debt of "A" or better by S&P or "A-3" or better by ▇▇▇▇▇'▇;
(i) asset-backed remarketed certificates of participation
representing a fractional undivided interest in the assets of a
trust, which certificates are rated at least "A-1" by S&P and
"P-1" by ▇▇▇▇▇'▇; and
(j) subject to the limitation set forth in SECTION 6.11,
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.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for
employees of the Borrower or any of its ERISA Affiliates or is assumed
by the Borrower or any of its ERISA Affiliates in connection with any
Acquisition or (ii) has at any time been maintained for the employees of
the Borrower or any current or former ERISA Affiliate.
"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act, the Toxic Substances Control
Act, as amended, the Clean Air Act, as amended, the Clean Water Act, as
amended, any other "Superfund" or "Superlien" law or any other federal,
or applicable state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any Hazardous Material.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute and all rules
and regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any Person or
trade or business which is a member of a group which is under common
control with the Borrower, who together with the Borrower, is treated as
a single employer within the meaning of Section 414(b) and (c) of the
Code.
"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = INTERBANK OFFERED RATE + Applicable
Rate -------------------------------- Margin
1- Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means, for any day, that
percentage (expressed as a decimal) which is in effect from time to time
under Regulation D or any successor regulation, as the maximum reserve
requirement (including any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to Eurocurrency liabilities
as that term is defined in Regulation D (or against any other category
of liabilities that includes deposits by reference to which the interest
rate of Eurodollar Rate Loans is determined), whether or not the Agent
or any Lender has any Eurocurrency liabilities subject to such
requirements, without benefits of credits or proration, exceptions or
offsets that may be available from time to time to the Agent or any
Lender. The Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" means any of the occurrences set forth as
such in SECTION 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Facility Guaranty" means each Guaranty and Suretyship Agreement
between one or more Guarantors and the Agent for the benefit of the
Lenders, delivered as of the Closing Date and otherwise pursuant to
SECTION 7.19, as the same may be amended, modified or supplemented.
"Facility Termination Date" means the date on which the Revolving
Credit Termination Date shall have occurred and the Borrower shall have
fully, finally and irrevocably paid and satisfied all Obligations.
"Federal Funds Effective Rate" means, for any day, the rate per
annum (rounded upward to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day, PROVIDED that (a)
if such day is not a Business Day, the Federal Funds Effective Rate for
such day shall be such rate on such transactions on the next preceding
Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Effective Rate for such day
shall be the average rate quoted to the Agent on such day on such
transaction as determined by the Agent.
"Fiscal Year" means the twelve month fiscal period of the
Borrower and its Subsidiaries commencing on January 1 of each calendar
year and ending on December 31 of each calendar year.
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign nation
or any province, state, territory, protectorate or other political
subdivision thereof regulating, relating to, or imposing liability or
standards of conduct concerning, any Employee Benefit Plan.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Borrower and its Subsidiaries, taken together as
one accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants
or which have other substantial authoritative support and are applicable
in the circumstances as of the date of a report.
"Gemaire" means Gemaire Distributors, Inc., a Florida corporation
and a Subsidiary of the Borrower, and its successors.
"Government Securities" means 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.
"Governmental Authority" shall mean any Federal, state,
municipal, 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.
"Guaranties" means all obligations of the Borrower or any
Subsidiary directly or indirectly guaranteeing, or in effect
guaranteeing, any Indebtedness or other obligation of any other Person.
"Guarantors" means, at any date, the Subsidiaries who are
required to be parties to a Facility Guaranty at such date.
"Hazardous Material" means and includes any hazardous, toxic or
dangerous waste, substance or material, the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Law.
"Heating & Cooling" means Heating & Cooling Supply, Inc., a
California corporation and a Subsidiary of the Borrower, and its
successors.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property or arising under Rate
Hedging Obligations, all Indebtedness secured by any Lien on the
property of such Person whether or not such indebtedness is assumed, all
liability of such Person by way of endorsements (other than for
collection or deposit in the ordinary course of business), all
Guaranties, and other items which in accordance with GAAP are required
to be classified as Indebtedness; but excluding all accounts payable and
accrued expenses in the ordinary course of business so long as payment
therefor is due within one year; provided that in no event shall the
term Indebtedness include surplus and retained earnings, lease
obligations (other than pursuant to Capital Leases which are accounted
for as Indebtedness in accordance with GAAP), reserves for deferred
income taxes
and investment credits, amounts payable pursuant to deferred
compensation arrangements which are expensed in accordance with GAAP,
other deferred credits or reserves.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money
borrowed, including without limitation all Capital Leases which are
accounted for as Indebtedness in accordance with GAAP and the deferred
purchase price of any property or asset, evidenced by a promissory note,
bond, debenture or similar written obligation for the payment of money
(including conditional sales or similar title retention agreements),
other than trade payables or accrued expenses incurred in the ordinary
course of business so long as payment therefor is due within one year.
"Issuing Bank" means initially NationsBank and thereafter any
Lender which is successor to NationsBank as issuer of Letters of Credit
under ARTICLE III.
"Interbank Offered Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750
(or any successor page) as the London interbank offered rate for
deposits prior to the first day of such Interest Period for a term
comparable to such Interest Period. If, for any reason, such rate is not
available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Loan for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on a
Reuters Screen LIBOR Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; PROVIDED, HOWEVER, if more than one
rate is specified on Reuters Screen LIBOR Page, the applicable rate
shall be the arithmetic mean of all such rates.
"Interest Period" means, for each Eurodollar Rate Loan, a period
commencing on the date such Eurodollar Rate Loan is made or converted
and ending, at the Borrower's option, on the date one, two, three or six
months or, upon specific
request therefor by the Borrower and with the consent of the Agent and
the Lenders in their discretion, one year, thereafter as notified to the
Agent by the Authorized Representative three (3) Business Days, or in
the case of an Interest Period of one year, four (4) Business Days,
prior to the beginning of such Interest Period; provided, that,
(i) if the Authorized Representative fails to notify the
Agent of the length of an Interest Period three (3) (or four (4),
if applicable) Business Days prior to the first day of such
Interest Period, the Loan for which such Interest Period was to
be determined shall be deemed to be a Base Rate Loan as of the
first day thereof;
(ii) if an Interest Period for a Eurodollar Rate Loan
would end on a day which is not a Business Day, such Interest
Period shall be extended to the next Business Day (unless such
extension would cause the applicable Interest Period to end in
the succeeding calendar month, in which case such Interest Period
shall end on the next preceding Business Day);
(iii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of a
calendar month;
(iv) no Interest Period shall extend past the Facility
Termination Date; and
(v) there shall not be more than six (6) Interest Periods
in effect on any day.
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the
election of a subsequent Interest Period for any Eurodollar Rate Loan or
the conversion of any Eurodollar Rate Loan into a Base Rate Loan or the
conversion of any Base Rate Loan into a Eurodollar Rate Loan in the form
of EXHIBIT E.
"LC Account Agreement" means the LC Account Agreement dated as of
the date hereof between the Borrower and the Agent, as amended, modified
or supplemented from time to time.
"Lending Office" means, as to each Lender, the Lending Office of
such Lender designated on the signature pages hereof or in an Assignment
and Acceptance or such other office of such Lender (or of an affiliate
of such Lender) as such Lender may from time to time specify to the
Authorized Representative and the Agent as the office by which its Loans
are to be made and maintained.
"Letter of Credit" means a standby letter of credit issued by the
Issuing Bank for the account of the Borrower in favor of a Person
advancing credit or securing an obligation on behalf of the Borrower.
"Letter of Credit Commitment" means, with respect to each Lender,
the obligation of such Lender to acquire Participations in respect of
Letters of Credit and Reimbursement Obligations up to an aggregate
amount at any one time outstanding equal to such Lender's Applicable
Commitment Percentage of the Total Letter of Credit Commitment as the
same may be increased or decreased from time to time pursuant to this
Agreement.
"Letter of Credit Facility" means the facility described in
ARTICLE III hereof providing for the issuance by the Issuing Bank for
the account of the Borrower of Letters of Credit in an aggregate stated
amount at any time outstanding not exceeding the Total Letter of Credit
Commitment.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount remaining undrawn under all Letters
of Credit plus Reimbursement Obligations then outstanding.
"Lien" means 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 Borrower 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.
"Loan", "Revolving Loan", "Swing Line Loan", "Loans", "Revolving
Loans" or "Swing Line Loans" means any borrowing pursuant to an Advance
under the Revolving Credit Facility, including the Swing Line.
"Loan Documents" means this Agreement, the Notes, the Facility
Guaranties, the LC Account Agreement, the Applications and Agreements
for Letter of Credit, and all other instruments and documents heretofore
or hereafter executed or delivered to or in favor of any Lender or the
Agent in connection with the Loans made and transactions contemplated
under this Agreement, as the same may be amended, supplemented or
replaced from the time to time.
"Major Subsidiaries" means, collectively, (i) Comfort Supply,
Gemaire, Central Air Conditioning Distributors, Inc., Three States
Supply, Inc. and Heating & Cooling, and (ii) any other Subsidiary
meeting the conditions set forth in SECTION 7.19 after the Closing Date.
"Material Adverse Effect" means a material adverse effect on (i)
the business, properties, operations or condition, financial or
otherwise, of the Borrower and its Subsidiaries and any other Credit
Parties taken as a whole, (ii) the ability of any Credit Parties taken
as a whole to pay or perform their obligations, liabilities and
indebtedness under the Loan Documents as such payment or performance
becomes due in accordance with the terms thereof, or (iii) the rights,
powers and remedies of the Agent or any Lender under any Loan Document
or the validity, legality or enforceability thereof (including for
purposes of clauses (ii) and (iii) the imposition of burdensome
conditions on the Agent or the Lenders in enforcing such rights, powers
and remedies).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate
is making, or is accruing an obligation to make, contributions or has
made, or been obligated to make, contributions within the preceding six
(6) Fiscal Years.
"Municipal Obligations" means general obligations issued by, and
supported by the full taxing authority of, any state of the United
States of America or of any municipal corporation or other public body
organized under the laws of any such state which are rated in the
highest investment rating category by both S&P and Moody's.
"NCMI" means NationsBanc Capital Markets, Inc. and its
successors.
"Net Proceeds" from the issuance of equity or Indebtedness means
cash payments received therefrom as and when received, net of all legal,
accounting, banking, underwriting, title and recording fees and
expenses, commissions, discounts and other issuance expenses incurred in
connection therewith and all taxes required to be paid or accrued as a
consequence of such transaction.
"Notes" means, collectively, the Revolving Notes and the Swing
Line Notes of the Borrower executed and delivered to the Lenders and
NationsBank, respectively, pursuant to SECTION 2.5, as the same may be
amended.
"Obligations" means the obligations, liabilities and Indebtedness
of the Borrower with respect to (i) the principal and interest on the
Loans as evidenced by the Notes, (ii) the Reimbursement Obligations and
otherwise in respect of the Letters of Credit, (iii) the payment of
fees, expenses, indemnification obligations arising under the Loan
Documents, (iv) all liabilities of Borrower to any Lender which arise
under a Swap Agreement, and (v) the payment and
performance of all other obligations, liabilities and Indebtedness of
the Borrower to the Lenders, the Agent or NCMI hereunder, under any one
or more of the other Loan Documents or with respect to the Loans.
"Outstandings" means, collectively, at any date, the Letter of
Credit Outstandings, Swing Line Outstandings and Revolving Credit
Outstandings on such date.
"Participation" means, (i) with respect to any Lender (other than
the Issuing Bank) and a Letter of Credit, the extension of credit
represented by the participation of such Lender hereunder in the
liability of the Issuing Bank in respect of a Letter of Credit issued by
the Issuing Bank in accordance with the terms hereof and (ii) with
respect to any Lender (other than the Issuing Bank) and a Swing Line
Loan, the extension of credit represented by the participation of such
Lender hereunder in the liability of NationsBank in respect of a Swing
Line Loan made by NationsBank in accordance with the terms hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which
is subject to the provisions of Title IV of ERISA or Section 412 of the
Code and which (i) is maintained for employees of the Borrower or any of
its ERISA Affiliates or is assumed by the Borrower or any of its ERISA
Affiliates in connection with any Acquisition or (ii) has at any time
been maintained for the employees of the Borrower or any current or
former ERISA Affiliate.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government
or agency or political subdivision thereof.
"Pre-Refunded Municipal Obligations" means obligations of any
state of the United States of America or of any municipal corporation or
other public body organized under the laws of any such state which are
rated, based on the
escrow, in the highest investment rating category by both S&P and
Moody's and which have been irrevocably called for redemption and
advance refunded through the deposit in escrow of Government Securities
or other debt securities which are (i) not callable at the option of the
issuer thereof prior to maturity, (ii) irrevocably pledged solely to the
payment of all principal and interest on such obligations as the same
becomes due and (iii) in a principal amount and bear such rate or rates
of interest as shall be sufficient to pay in full all principal of,
interest, and premium, if any, on such obligations as the same becomes
due as verified by a nationally recognized firm of certified public
accountants.
"Preferred Stock" means the 6.5% Series A Preferred Stock issued
by Heating and Cooling, a Subsidiary of the Borrower, of which 2,000
shares are authorized, issued and outstanding and 2,000 of such shares
are owned of record by Rheem.
"Prime Rate" means the rate of interest per annum announced
publicly by the Agent as its prime rate from time to time. The Prime
Rate is not necessarily the best or the lowest rate of interest offered
by the Agent.
"Principal Office" means the office of the Agent at NationsBank,
National Association, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇-▇▇-▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Agency Services, or such
other office and address as the Agent may from time to time designate.
"Prior Credit Agreements" means, collectively the following
agreements pursuant to which the Borrower and its Subsidiaries obtained
revolving credit facilities prior to the Closing Date: (i) Credit
Agreement dated as of September 23, 1993 between Comfort Supply, Inc.
and NationsBank of Florida, N.A. pursuant to which a $12,000,000 line of
credit facility was made available, (ii) Second Amended and Restated
Revolving Credit Agreement dated as of March 10, 1995 among Gemaire
Distributors, Inc., ▇.▇. ▇▇▇▇▇ Distributors, Inc. and NationsBank of
Florida, N.A. pursuant to which a $27,000,000 revolving credit facility
and a $1,600,000 term loan facility was made available, (iii)
Revolving Credit Agreement dated as of October 26, 1995 between CAC
Acquisition, Inc. and NationsBank of Florida, N.A. pursuant to which a
$8,000,000 revolving credit facility was made available and (iv) a
Business Loan Agreement dated September 28, 1995 between Heating &
Cooling Supply, Inc. and Bank of America National Trust and Savings
Association pursuant to which a revolving credit and line of credit was
made available.
"Prior Credit Facilities" means, collectively, the credit
facilities made available under the Prior Credit Agreements.
"Prior Credit Facilities Liens" means all Liens on property of
the Borrower or any of its Subsidiaries securing or purporting to secure
obligations or liabilities arising in connection with the Prior Credit
Facilities.
"Prior Credit Facilities Loan Documents" shall mean the
agreements, notes, security instruments and other documents executed in
connection with the Prior Credit Facilities, including those creating
Prior Credit Facilities Liens.
"Prior Credit Facilities Managers" means, collectively, the agent
(including any collateral agent), trustee or facilities manager, as the
case may be, acting on behalf of the lenders (or if there shall be no
such Person serving in such capacity in connection with a Prior Credit
Facility, then the lender(s) under such Prior Credit Facility), under
the Prior Credit Agreements.
"Private Placement Debt" means unsecured Indebtedness for Money
Borrowed issued by the Borrower in a private placement transaction;
provided that all of the following conditions shall be satisfied:
(i) no portion of principal thereof shall be payable
or required to be purchased (whether by scheduled
installment, mandatory prepayment or redemption,
or the exercise of any put right) prior to the
Stated Termination Date;
(ii) the instruments and agreements evidencing such
Indebtedness, and any agreement under which such
Indebtedness is created, shall provide that the
right to payment of the holders or owners of
Private Placement Debt (including any trustee or
agent acting on behalf of such holders or owners,
collectively "Private Placement Debt Holders")
shall either be subordinate to or rank PARI PASSU
in all respects with the rights of the Lenders and
the Agent to payment and performance of the
Obligations on terms reasonably acceptable to the
Agent;
(iii) both immediately prior to and immediately after
giving effect to the issuance of such Indebtedness,
there shall not have occurred and be continuing any
Default or Event of Default;
(iv) the Borrower shall furnish to the Agent, not later
than the earliest date of delivery thereof to any
actual or prospective Private Placement Debt
Holder, copies of (A) all preliminary placement
memoranda and final placement memoranda relating to
such Indebtedness and (B) drafts of all documents
and agreements under which such Indebtedness is to
be created or governed; and
(v) not later than ten (10) days prior to the
issuance of such Indebtedness, the Borrower shall
deliver to the Agent a certificate in the form of
EXHIBIT H, executed by an Authorized Representative
and containing calculations giving historical pro
forma effect to the issuance of such Indebtedness
as of and for the Four-Quarter Period ending at the
end of most recent fiscal quarter of the Borrower
preceding the date of such issuance (assuming for
such purpose that the initial rate or rates of
interest provided for therein (and giving effect to
any
increase in rates of interest therein provided)
remained in effect for such Four-Quarter Period),
which certificate shall demonstrate that the
issuance of such Indebtedness does not cause,
create or result in a Default or Event of Default
on a historical pro forma basis.
"Prospectus" means the Prospectus of the Borrower dated March 4,
1996 pertaining to the sale of 1,800,000 shares of the common stock, par
value $.50 per share, of the Borrower.
"Rate Hedging Obligations" means any and all obligations of the
Borrower or any Subsidiary, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange transactions,
including, but not limited to, Dollar-denominated or cross-currency
interest rate exchange agreements, forward currency exchange agreements,
interest rate cap or collar protection agreements, forward rate currency
or interest rate options, puts, warrants and those commonly known as
interest rate "swap" agreements; and (ii) any and all cancellations,
buybacks, reversals, terminations or assignments of any of the
foregoing.
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Regulatory Change" means any change effective after the Closing
Date in United States federal or state laws or regulations (including
Regulation D and capital adequacy regulations) or foreign laws or
regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes any of the Lenders, under any United States federal or
state or foreign laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof or compliance
by any Lender with any request or directive regarding capital adequacy,
including those relating to "highly leveraged transactions," whether or
not having the force of law, and whether or not failure to comply
therewith would be unlawful and whether or not published or proposed
prior to the date hereof.
"Reimbursement Obligation" shall mean at any time, the obligation
of the Borrower with respect to any Letter of Credit to reimburse the
Issuing Bank and the Lenders to the extent of their respective
Participations (including by the receipt by the Issuing Bank of proceeds
of Loans pursuant to SECTION 3.2) for amounts theretofore paid by the
Issuing Bank pursuant to a drawing under such Letter of Credit.
"Repurchase Agreement" means a repurchase agreement entered into
with any financial institution whose debt obligations or commercial
paper are rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1"
by Moody's.
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating at least (i) if
there shall be fewer than three (3) Lenders, 100% of the aggregate
Credit Exposures of all Lenders on such date, and (ii) if there shall be
three (3) or more Lenders, 66-2/3% of the aggregate Credit Exposures of
all the Lenders on such date. For purposes of the preceding sentence,
the amount of the "CREDIT EXPOSURE" of each Lender shall be equal to the
aggregate principal amount of the Loans owing to such Lender plus the
aggregate unutilized amounts of such Lender's Revolving Credit
Commitment (without regard to any Swing Line Outstandings) plus the
amount of such Lender's Applicable Commitment Percentage of Letter of
Credit Outstandings; provided that, (i) if any Lender shall have failed
to honor its obligation to make all or a portion of any Advance it shall
not be deemed to have any Credit Exposure, (ii) if any Lender shall have
failed to pay to the Issuing Bank its Applicable Commitment Percentage
of any drawing under any Letter of Credit resulting in an outstanding
Reimbursement Obligation, such Lender's Credit Exposure attributable to
Letters of Credit and Reimbursement Obligations shall be deemed to be
held by the Issuing Bank for purposes of this definition and (iii) if
any Lender shall have failed to pay to NationsBank its Applicable
Commitment Percentage of any Swing Line Loan, such Lender's Credit
Exposure attributable to all Swing Line Outstandings shall be deemed to
be held by NationsBank for purposes of this definition.
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of
Borrower or any of its Subsidiaries (other than those payable or
distributable solely to the Borrower) now or hereafter outstanding,
except a dividend payable solely in shares of a class of stock to the
holders of that class; (b) any redemption, conversion, exchange,
retirement or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of stock of Borrower or
any of its Subsidiaries (other than those payable or distributable
solely to the Borrower) now or hereafter outstanding; (c) any payment
made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of
Borrower or any of its Subsidiaries now or hereafter outstanding; and
(d) any issuance and sale of capital stock of any Subsidiary of the
Borrower (or any option, warrant or right to acquire such stock) other
than to the Borrower.
"Revolving Credit Commitment" means, with respect to each Lender,
the obligation of such Lender to make Loans to the Borrower up to an
aggregate principal amount at any one time outstanding equal to such
Lender's Applicable Commitment Percentage of the Total Revolving Credit
Commitment.
"Revolving Credit Facility" means the facility described in
Article II hereof providing for Loans to the Borrower by the Lenders in
the aggregate principal amount of the Total Revolving Credit Commitment
less the aggregate amount of outstanding Swing Line Loans.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Loans then
outstanding and all interest accrued thereon.
"Revolving Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lenders'
obligations pursuant to SECTION 9.1 upon the occurrence of an Event of
Default, or (iii) such date as the Borrower may voluntarily and
permanently terminate the Revolving Credit Facility by payment in full
of all Revolving Credit Outstandings, Swing Line Outstandings and Letter
of Credit Outstandings and cancellation of all Letters of Credit.
"Revolving Loan" means any borrowing pursuant to an Advance under
the Revolving Credit Facility in accordance with Section 2.1.
"Revolving Notes" means the promissory notes of the Borrower
evidencing Revolving Loans executed and delivered to the Lenders
substantially in the form of EXHIBIT F-1.
"Rheem" means Rheem Manufacturing Company, a New York corporation
and its successors.
"S&P" means Standard & Poor's Ratings Group, a division of
▇▇▇▇▇▇-▇▇▇▇.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which the Borrower or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA and
which is not a Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair valuation
and at present fair saleable value on an orderly basis) is in
excess of the total amount of its liabilities, including
Contingent Obligations; and
(ii) it is then able and expects to be able to pay its
debts as they mature; and
(iii) it has capital sufficient to carry on its business
as conducted and as proposed to be conducted.
"Stated Termination Date" means September 30, 2001.
"Subsidiary" means any corporation or other entity in which 50%
or more of its outstanding voting stock or 50% or more of all equity
interests is owned directly or indirectly by the Borrower and/or by one
or more of the Borrower's Subsidiaries.
"Swap Agreement" means one or more agreements between the
Borrower and any Person with respect to Indebtedness evidenced by any or
all of the Notes, on terms mutually acceptable to Borrower and such
Person and approved by the Required Lenders, which agreements create
Rate Hedging Obligations; PROVIDED, HOWEVER, that no such approval of
the Lenders shall be required to the extent such agreements are entered
into between the Borrower and any Lender.
"Swing Line" means the revolving line of credit established by
NationsBank in favor of the Borrower pursuant to SECTION 2.13.
"Swing Line Loans" means Loans made by NationsBank to the
Borrower pursuant to SECTION 2.13.
"Swing Line Note" means the promissory note of the Borrower
evidencing Swing Line Loans executed and delivered to NationsBank
substantially in the form of EXHIBIT F-2.
"Termination Event" means: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the
notice requirement has been waived by applicable regulation); or (ii)
the withdrawal of the Borrower or any ERISA Affiliate from a Pension
Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA or was deemed such under Section
4068(f) of ERISA; or (iii) the termination of a Pension Plan, the filing
of a notice of intent to terminate a Pension Plan or the treatment of a
Pension Plan amendment as a termination under Section 4041 of ERISA; or
(iv) the institution of proceedings to terminate a Pension Plan by the
PBGC; or (v) any other event or condition which would constitute grounds
under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; or (vi) the
partial or complete withdrawal of the Borrower or any ERISA Affiliate
from a Multiemployer Plan; or (vii) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA; or (viii) any event or
condition which results in the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or (ix) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA.
"Total Letter of Credit Commitment" means an amount not to exceed
$5,000,000.
"Total Revolving Credit Commitment" means a principal amount
equal to $130,000,000, as reduced from time to time in accordance with
SECTION 2.7.
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders of
which are ordinarily, in the absence of contingencies or other voting
trusts or agreements, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even if the right
so to vote has been suspended by the happening of such a contingency.
I.2. RULES OF INTERPRETATION.
(a) All accounting terms not specifically defined herein shall
have the meanings assigned to such terms and shall be interpreted in
accordance with GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the Florida Uniform
Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code of
another jurisdiction is
controlling, in which case such terms shall have the meaning given in
the Uniform Commercial Code of the applicable jurisdiction.
(c) The headings, subheadings and table of contents used herein
or in any other Loan Document are solely for convenience of reference
and shall not constitute a part of any such document or affect the
meaning, construction or effect of any provision thereof.
(d) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits
and schedules are references to articles, sections, paragraphs, clauses,
annexes, appendices, exhibits and schedules in or to this Agreement.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such
defined term, and all references to the masculine gender shall include
reference to the feminine or neuter gender, and VICE VERSA, as the
context may require.
(f) When used herein or in any other Loan Document, words such as
"hereunder", "hereto", "hereof" and "herein" and other words of like
import shall, unless the context clearly indicates to the contrary,
refer to the whole of the applicable document and not to any particular
article, section, subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting
the generality of any description preceding such term, and for purposes
hereof the rule of EJUSDEM GENERIS shall not be applicable to limit a
general statement, followed by or referable to an enumeration of
specific matters, to matters similar to those specifically mentioned.
(h) All dates and times of day specified herein shall refer to
such dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and their counsel
have reviewed and revised, or requested (or had the opportunity to
request) revisions to, the Loan Documents, and any rule of construction
that ambiguities are to be
resolved against the drafting party shall be inapplicable in the
construing and interpretation of the Loan Documents and all exhibits,
schedules and appendices thereto.
(j) Any reference to an officer of the Borrower or any other
Person by reference to the title of such officer shall be deemed to
refer to each other officer of such Person, however titled, exercising
the same or substantially similar functions.
(k) All references to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such
document or agreement, as the case may be, as amended, modified or
supplemented from time to time only as and to the extent permitted
therein and in the Loan Documents.
I.3. ACCOUNTING CHANGES. Except as otherwise expressly provided herein,
all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Lenders hereunder shall be prepared, in accordance with GAAP,
applied on a Consistent Basis. All financial statements delivered to the Lenders
hereunder shall be accompanied by a statement from the Borrower that GAAP has
not changed since the most recent financial statements delivered by the Borrower
to the Lenders or if GAAP has changed describing such changes in detail and
explaining how such changes affect the financial statements. All calculations
made for the purposes of determining compliance with this Credit Agreement shall
(except as otherwise expressly provided herein) be made by application of GAAP
applied on a basis consistent with the most recent annual or quarterly financial
statements delivered pursuant to SECTION 7.1 (or, prior to the delivery of the
first financial statements pursuant to SECTION 7.1, consistent with the
financial statements dated December 31, 1995; provided, however, if (a) the
Borrower shall object to determining such compliance on such basis at the time
of delivery of such financial statements due to any change in GAAP or the rules
promulgated with respect thereto or (b) the Agent or the Required Lenders shall
so object in writing within 60 days after delivery of such financial statements
(or after the Lenders have been informed of the change in GAAP affecting such
financial statements, if later), then such calculations shall be
made on a basis consistent with the most recent financial statements delivered
by the Borrower to the Lenders as to which no such objection shall have been
made.
ARTICLE II
THE REVOLVING CREDIT FACILITY
II.1. REVOLVING LOANS.
(a) COMMITMENT. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower under
the Revolving Credit Facility from time to time from the Closing Date until the
Revolving Credit Termination Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding the Revolving Credit Commitment of
such Lender, PROVIDED, however, that the Lenders will not be required and shall
have no obligation to make any such Advance (i) so long as a Default or an Event
of Default has occurred and is continuing or (ii) if the Agent has accelerated
the maturity of any of the Notes as a result of an Event of Default; and
PROVIDED further, however, that immediately after giving effect to each such
Advance, the principal amount of Outstandings shall not exceed the Total
Revolving Credit Commitment. Within such limits, the Borrower may borrow, repay
and reborrow under the Revolving Credit Facility on any Business Day from the
Closing Date until, but (as to borrowings and reborrowings) not including, the
Revolving Credit Termination Date; PROVIDED, however, that (y) no Revolving Loan
that is a Eurodollar Rate Loan shall be made which has an Interest Period that
extends beyond the Stated Termination Date and (z) each Revolving Loan that is a
Eurodollar Rate Loan may, subject to the provisions of SECTION 2.8, be repaid
only on the last day of the Interest Period with respect thereto unless such
payment is accompanied by the additional payment, if any, required by SECTION
4.4.
(b) AMOUNTS. Except as otherwise permitted by the Lenders from
time to time, the aggregate unpaid principal amount of the Outstandings shall
not exceed at any time the Total Revolving Credit Commitment, and, in the event
there shall be outstanding any such excess, the Borrower shall immediately make
such payments and prepayments as shall be necessary to comply with this
restriction. Each Loan hereunder and each conversion under SECTION 2.8, shall be
in an amount of at least $2,500,000,
and, if greater than $2,500,000, an integral multiple of $500,000.
(c) ADVANCES. (i)An Authorized Representative shall give the
Agent (1) at least three (3) Business Days' (or if an Interest Period of one
year is being requested, four (4) Business Days') irrevocable written notice by
telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt, of
each Loan that is a Eurodollar Rate Loan (whether representing an additional
borrowing hereunder or the conversion of a borrowing hereunder from Base Rate
Loans to Eurodollar Rate Loans) prior to 10:30 A.M. and (2) irrevocable written
notice by telefacsimile transmission of a Borrowing Notice or Interest Rate
Selection Notice (as applicable) with appropriate insertions, effective upon
receipt, of each Loan that is a Base Rate Loan (whether representing an
additional borrowing hereunder or the conversion of borrowing hereunder from
Eurodollar Rate Loans to Base Rate Loans) prior to 10:30 A.M. on the day of such
proposed Loan. Each such notice shall specify the amount of the borrowing, the
type of Loan (Base Rate or Eurodollar Rate), the date of borrowing and, if a
Eurodollar Rate Loan, the Interest Period to be used in the computation of
interest. If a one year Interest Period is being requested by the Borrower with
respect to any Loan, the Borrowing Notice or Interest Rate Selection Notice
shall so indicate. Notice of receipt of such Borrowing Notice or Interest Rate
Selection Notice, as the case may be, together with the amount of each Lender's
portion of an Advance requested thereunder and, in the event that the Borrower
has requested an Interest Period of one year for any Eurodollar Rate Loan,
notice of such request, shall be provided by the Agent to each Lender by
telefacsimile transmission with reasonable promptness, but (provided the Agent
shall have received such notice by 10:30 A.M.) not later than 1:00 P.M. on the
same day as the Agent's receipt of such notice. Each Lender who receives notice
from the Agent that the Borrower has requested under this ARTICLE II an Interest
Period of one year for any Eurodollar Rate Loan as provided above shall, not
later than 3:00 P.M. on the date of receipt of such notice, notify the Agent by
telefacsimile transmission whether such Lender is willing to make available the
requested Interest Period of one year. Notwithstanding anything to the contrary
herein contained, in the event that all Lenders do not consent to the requested
one year Interest Period as to a
requested Eurodollar Rate Loan, then the Borrower shall be deemed to have
requested an Interest Period of six months with respect to such Eurodollar Rate
Loan.
(ii) Not later than 2:00 P.M. on the date specified for each borrowing
under this SECTION 2.1, each Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of the Advance or Advances to
be made by it on such day available by wire transfer to the Agent in the amount
of its pro rata share, determined according to such Lender's Applicable
Commitment Percentage of the Loan or Loans to be made on such day. Such wire
transfer shall be directed to the Agent at the Principal Office and shall be in
the form of Dollars constituting immediately available funds. The amount so
received by the Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower by delivery of the proceeds thereof
to the Borrower's Account or otherwise as shall be directed in the applicable
Borrowing Notice by the Authorized Representative and reasonably acceptable to
the Agent.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to convert the Loans in
accordance with SECTION 2.8. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, PROVIDED, HOWEVER, there shall not be outstanding
at any one time Eurodollar Rate Loans having more than six (6) different
Interest Periods. If the Agent does not receive a Borrowing Notice or an
Interest Rate Selection Notice giving notice of election of the duration of an
Interest Period or of conversion of any Loan to or continuation of a Loan as a
Eurodollar Rate Loan by the time prescribed by SECTION 2.1(C) OR 2.8, or if a
Default or Event of Default shall exist, the Borrower shall be deemed to have
elected to convert such Loan to (or continue such Loan as) a Base Rate Loan
until the Borrower notifies the Agent in accordance with SECTION 2.8.
(iv) Notwithstanding the foregoing, if a drawing is made under any
Letter of Credit, such drawing is honored by the Issuing Bank prior to the
Revolving Credit Termination Date, and the Borrower shall not immediately fully
reimburse the Issuing Bank in respect of such drawing, (A) provided that the
conditions to making a Revolving Loan as herein provided shall then be
satisfied, the Reimbursement Obligation arising from such drawing
shall be paid to the Issuing Bank by the Agent without the requirement of notice
to or from the Borrower from immediately available funds which shall be advanced
as a Base Rate Refunding Loan by each Lender under the Revolving Credit Facility
in an amount equal to such Lender's Applicable Commitment Percentage of such
Reimbursement Obligation, and (B) if the conditions to making a Revolving Loan
as herein provided shall not then be satisfied, each of the Lenders shall fund
by payment to the Agent (for the benefit of the Issuing Bank) in immediately
available funds the purchase from the Issuing Bank of their respective
Participations in the related Reimbursement Obligation based on their respective
Applicable Commitment Percentages of the Total Letter of Credit Commitment. If a
drawing is presented under any Letter of Credit in accordance with the terms
thereof and the Borrower shall not immediately reimburse the Issuing Bank in
respect thereof, then notice of such drawing or payment shall be provided
promptly by the Issuing Bank to the Agent and the Agent shall provide notice to
each Lender by telephone or telefacsimile transmission. If notice to the Lenders
of a drawing under any Letter of Credit is given by the Agent at or before 12:00
noon on any Business Day, each Lender shall, pursuant to the conditions
specified in this SECTION 2.1(C)(IV), either make a Base Rate Refunding Loan or
fund the purchase of its Participation in the amount of such Lender's Applicable
Commitment Percentage of such drawing or payment and shall pay such amount to
the Agent for the account of the Issuing Bank at the Principal Office in Dollars
and in immediately available funds before 2:30 P.M. on the same Business Day. If
notice to the Lenders of a drawing under a Letter of Credit is given by the
Agent after 12:00 noon on any Business Day, each Lender shall, pursuant to the
conditions specified in this SECTION 2.1(C)(IV), either make a Base Rate
Refunding Loan or fund the purchase of its Participation in the amount of such
Lender's Applicable Commitment Percentage of such drawing or payment and shall
pay such amount to the Agent for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds before 12:00 noon
on the next following Business Day. Any such Base Rate Refunding Loan shall be
advanced as, and shall continue as, a Base Rate Loan unless and until the
Borrower converts such Base Rate Loan in accordance with the terms of SECTION
2.8.
II.2. PAYMENT OF INTEREST. (a) The Borrower shall pay interest to the
Agent for the account of each Lender on the
outstanding and unpaid principal amount of each Loan made by such Lender for the
period commencing on the date of such Loan until such Loan shall be due at the
then applicable Base Rate for Base Rate Loans or applicable Eurodollar Rate for
Eurodollar Rate Loans, as designated by the Authorized Representative pursuant
to SECTION 2.1; PROVIDED, however, that if any amount shall not be paid when due
(at maturity, by acceleration or otherwise), all amounts outstanding hereunder
shall bear interest thereafter at the Default Rate.
(b) Interest on each Loan shall be computed on the basis of a
year of 360 days and calculated in each case for the actual number of days
elapsed. Interest on each Loan shall be paid (i) quarterly in arrears on the
last Business Day of each June, September, December and March, commencing
September 30, 1996 for each Base Rate Loan, (ii) on the last day of the
applicable Interest Period for each Eurodollar Rate Loan and, if such Interest
Period extends for more than three (3) months, at intervals of three (3) months
after the first day of such Interest Period, and (iii) upon payment in full of
the principal amount of such Loan.
II.3. PAYMENT OF PRINCIPAL. The principal amount of each Loan shall be
due and payable to the Agent for the benefit of each Lender in full on the
Revolving Credit Termination Date, or earlier as specifically provided herein.
The principal amount of any Base Rate Loan may be prepaid in whole or in part at
any time. The principal amount of any Eurodollar Rate Loan may be prepaid only
at the end of the applicable Interest Period unless the Borrower shall pay to
the Agent for the account of the Lenders the additional amount, if any, required
under SECTION 4.4. All prepayments of Loans made by the Borrower shall be in the
amount of $2,500,000 or such greater amount which is an integral multiple of
$500,000, or the amount equal to all Revolving Credit Outstandings, or such
other amount as necessary to comply with SECTION 2.1(B) or SECTION 2.8. The
Borrower shall notify the Agent of its intent to pay the principal amount of a
Loan not later than 10:30 A.M. on the date of such payment.
II.4. NON-CONFORMING PAYMENTS. (a) Each payment of principal (including
any prepayment) and payment of interest and fees, and any other amount required
to be paid to the Lenders with respect to the Loans, shall be made to the Agent
at the
Principal Office, for the account of each Lender, in Dollars and in immediately
available funds before 12:30 P.M. on the date such payment is due. The Agent
may, but shall not be obligated to, debit the amount of any such payment which
is not made by such time against any ordinary deposit account, if any, of the
Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower hereunder that is not made both in Dollars and in immediately available
funds and prior to 12:30 P.M. to be a non-conforming payment. Any such payment
shall not be deemed to be received by the Agent until the later of (i) the time
such funds become available funds and (ii) the next Business Day. Any
non-conforming payment may constitute or become a Default or Event of Default.
Interest shall continue to accrue on any principal as to which a non-conforming
payment is made until the later of (x) the date such funds become available
funds or (y) the next Business Day at the Default Rate from the date such amount
was due and payable.
(c) In the event that any payment hereunder or under the Notes becomes
due and payable on a day other than a Business Day, then such due date shall be
extended to the next succeeding Business Day unless provided otherwise under
clause (ii) of the definition of "Interest Period"; PROVIDED that interest shall
continue to accrue during the period of any such extension and PROVIDED further,
that in no event shall any such due date be extended beyond the Revolving Credit
Termination Date.
II.5. NOTES. (a) Revolving Loans made by each Lender shall be evidenced
by the Revolving Note payable to the order of such Lender in the respective
amount of its Applicable Commitment Percentage of the Revolving Credit
Commitment, which Revolving Note shall be dated the Closing Date or a later date
pursuant to an Assignment and Acceptance and shall be duly completed, executed
and delivered by the Borrower.
(b) The Swing Line Loans of NationsBank shall be evidenced by the Swing
Line Note which Swing Line Note shall be dated the Closing Date.
II.6. PRO RATA PAYMENTS. Except as otherwise provided herein, (a) each
payment on account of the principal of and
interest on the Loans (other than Swing Line Loans) and the fees described in
SECTION 2.10 shall be made to the Agent for the account of the Lenders pro rata
based on their Applicable Commitment Percentages, (b) all payments to be made by
the Borrower for the account of each of the Lenders on account of principal,
interest and fees, shall be made without diminution, setoff, recoupment or
counterclaim, and (c) the Agent will promptly distribute to the Lenders in
immediately available funds payments received in fully collected, immediately
available funds from the Borrower.
II.7. REDUCTIONS. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than five (5) Business Days' written
notice to the Agent, effective upon receipt, to reduce the Total Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business Day
of receipt of such notice, telefacsimile notice, or telephonic notice (confirmed
in writing), of such reduction. Each such reduction shall be in the aggregate
amount of $5,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Revolving Credit Commitment, and shall
permanently reduce the Total Revolving Credit Commitment. Each reduction of the
Total Revolving Credit Commitment shall be accompanied by payment of the Loans
to the extent that the amount of Outstandings exceeds the Total Revolving Credit
Commitment after giving effect to such reduction, together with accrued and
unpaid interest on the amounts prepaid. No such reduction shall result in the
payment of any Eurodollar Rate Loan other than on the last day of the Interest
Period of such Eurodollar Rate Loan unless such prepayment is accompanied by
amounts due, if any, under SECTION 4.4.
II.8. CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS. Provided
that no Default or Event of Default shall have occurred and be continuing and
subject to the limitations set forth below and in ARTICLE IV, the Borrower may
(subject, in the case of Eurodollar Rate Loans requested to have an Interest
Period of one year, to the consent of the Lenders as hereinabove provided):
(a) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M. on
any Business Day, convert all or a part of Eurodollar Rate Loans to Base Rate
Loans on the last day of the Interest Period for such Eurodollar Rate Loans; and
(b) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M.
three (3) Business Days (or in the case of Eurodollar Rate Loans requested to
have an Interest Period of one year, four (4) Business Days) prior to the date
of such election or conversion:
(i) elect a subsequent Interest Period for all or a
portion of Eurodollar Rate Loans to begin on the last day of the
then current Interest Period for such Eurodollar Rate Loans; and
(ii) convert Base Rate Loans to Eurodollar Rate Loans on
any Business Day.
Each election and conversion pursuant to this SECTION 2.8 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the definition
of "Interest Period" herein and in SECTIONS 2.1, 2.3 and ARTICLE IV. Notice of
receipt of each such election or conversion, together with, in the event that
the Borrower has requested an Interest Period of one year for any Eurodollar
Rate Loan, notice of such request, shall be provided by the Agent to each Lender
by telefacsimile transmission with reasonable promptness, but (provided the
Agent shall have received such notice by 10:30 A.M.) not later than 1:00 P.M. on
the same day as the Agent's receipt of such notice. All such continuations or
conversions of Loans shall be effected pro rata based on the Applicable
Commitment Percentages of the Lenders.
II.9. [RESERVED]
II.10. UNUSED FEES. For the period beginning on the Closing Date and
ending on the Revolving Credit Termination Date, the Borrower agrees to pay to
the Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, an unused fee equal to the Applicable Unused Fee
multiplied by the average daily amount by which the Total Revolving Credit
Commitment exceeds the sum of (i) Revolving Credit Outstandings plus (ii) Letter
of Credit Outstandings. Swing Line Loans shall not be outstanding Loans for
purposes of determining such fee. Such fees shall be due in arrears on the last
Business Day of each June, September, December and March commencing December 31,
1996 to and on the Revolving Credit Termination Date. Notwithstanding the
foregoing, so long as any Lender fails to make available any portion of its
Revolving Credit Commitment when requested, such Lender shall not be entitled to
receive payment of its pro rata share of such fee until such Lender shall make
available such portion. Such fee shall be calculated on the basis of a year of
360 days for the actual number of days elapsed.
II.11. DEFICIENCY ADVANCES. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to make
any Loan hereunder nor shall the Revolving Credit Commitment of any Lender
hereunder be increased as a result of such default of any other Lender. Without
limiting the generality of the foregoing, in the event any Lender shall fail to
advance funds to the Borrower as herein provided, the Agent may in its
discretion, but shall not be obligated to, advance under the Revolving Note in
its favor as a Lender all or any portion of such amount or amounts (each, a
"deficiency advance") and shall thereafter be entitled to payments of principal
of and interest on such deficiency advance in the same manner and at the same
interest rate or rates to which such other Lender would have been entitled had
it made such advance under its Revolving Note; provided that, upon payment to
the Agent from such other Lender of the entire outstanding amount of each such
deficiency advance, together with accrued and unpaid interest thereon, from the
most recent date or dates interest was paid to the Agent by the Borrower on each
Loan comprising the deficiency advance at the interest rate per annum for
overnight borrowing by the Agent from the Federal Reserve Bank, then such
payment shall be credited against the Revolving Note of the Agent in full
payment of such deficiency advance and the Borrower shall be deemed to have
borrowed the amount of such deficiency advance from such other Lender as of the
most recent date or dates, as the case may be, upon which any payments of
interest were made by the Borrower thereon.
II.12. USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower (i) to repay
in full the Prior Credit Facilities, (ii) for working capital needs, and (iii)
for general corporate purposes, including the making of Acquisitions permitted
hereunder.
2.13 SWING LINE. Notwithstanding any other provision of this Agreement
to the contrary, in order to administer the Revolving Credit Facility in an
efficient manner and to minimize the transfer of funds between the Agent and the
Lenders, NationsBank shall make available Swing Line Loans to the Borrower at
the election of Borrower prior to the Revolving Credit Termination Date.
NationsBank shall not make any Swing Line Loan pursuant hereto (i) if the
Borrower is not in compliance with all
the conditions to the making of Revolving Loans set forth in this Agreement,
(ii) if after giving effect to such Swing Line Loan, the outstanding Swing Line
Loans exceed $10,000,000, or (iii) if after giving effect to such Swing Line
Loan, the sum of the Revolving Credit Outstandings and outstanding Swing Line
Loans and Letter of Credit Outstandings exceeds the Total Revolving Credit
Commitment. Loans made pursuant to this SECTION 2.13 shall be limited to Loans
bearing interest at the Base Rate or such other rate of interest as agreed upon
by the Borrower and NationsBank.
(i) the Borrower may borrow, repay and reborrow under this
SECTION 2.13. Borrowings under the Swing Line may be made in amounts of
$100,000 or greater upon telephonic (confirmed in writing) or
telefacsimile request by an Authorized Representative of the Borrower
made to NationsBank not later than 12:00 noon Charlotte, North Carolina
time on the Business Day of the requested borrowing. Each repayment of a
Swing Line Loan shall be in integral multiples of $100,000 or the unpaid
amount of the Swing Line Loan Outstandings. The minimum outstanding
amount of Swing Line Loans shall be $100,000.
(ii) If the Borrower instructs NationsBank to debit its demand
deposit account in an amount of any payment with respect to a Swing Line
Loan, or NationsBank otherwise receives repayment after 2:00 P.M.
Charlotte, North Carolina time, on a Business Day, such payment shall be
deemed received on the next Business Day.
(iii) The Borrower and each Lender which is or may become a party
hereto acknowledge that all Swing Line Loans are to be made solely by
NationsBank to the Borrower but that such Lender shall share the risk of
loss with respect to such Advances in an amount equal to such Lender's
Applicable Commitment Percentage of such Swing Line Loan. Upon demand
made by NationsBank, each Lender (including NationsBank) shall,
according to its Lender's Applicable Commitment Percentage of such Swing
Line Loan, promptly provide to NationsBank its purchase price therefor
in an amount equal to its Participation therein, in which case such
Swing Line Loan shall be deemed from and after such date (to the extent
Borrower has not converted such loan
pursuant to SECTION 2.8) a Base Rate Refunding Loan made in accordance
with this Agreement. The obligation of each Lender to so provide its
purchase price to NationsBank shall be absolute and unconditional and
shall not be affected by the occurrence of an Event of Default or any
other occurrence or event.
(iv) The Borrower at its option may request an Advance as a
Revolving Loan pursuant to SECTION 2.1 in an amount sufficient to repay
any or all Swing Line Loans on any date (subject to three (3) Business
Days prior notice in the case of Eurodollar Rate Loans and four (4)
Business Days prior notice in the case of a Eurodollar Rate Loan having
a one year Interest Period) and the Agent shall upon the receipt of such
Advance, provide to NationsBank the amount necessary to repay such Swing
Line Loan or Loans (which NationsBank shall then apply to such
repayment) and credit any balance of the Revolving Loan in immediately
available funds to the Borrower's Account. The proceeds of such Advances
shall be paid to NationsBank for application to the outstanding Swing
Line Loans and the Lenders shall then be deemed to have made Revolving
Loans in the amount of such Advances. The obligation of NationsBank to
fund the Swing Line shall cease upon the earlier of (i) the occurrence
of a Default, or (ii) the Revolving Credit Termination Date; provided
that when a Default is no longer continuing NationsBank shall be
obligated to provide Swing Line Loans provided all other conditions to
making Loans are satisfied.
ARTICLE III
LETTERS OF CREDIT
III.1. LETTERS OF CREDIT. The Issuing Bank agrees, subject to the terms
and conditions of this Agreement, upon request of the Borrower to issue from
time to time for the account of the Borrower Letters of Credit upon delivery to
the Issuing Bank of an Application and Agreement for Letter of Credit relating
thereto in form and content acceptable to the Issuing Bank; PROVIDED, that (i)
the Borrower is in compliance with all the conditions to the making of Revolving
Loans set forth in this Agreement; (ii) the Letter of Credit Outstandings shall
not exceed the Total Letter of Credit Commitment and (iii) no Letter of Credit
shall be issued if, after giving effect thereto, Letter of Credit Outstandings
plus Revolving Credit Outstandings plus Swing Line Outstandings shall exceed the
Total Revolving Credit Commitment. No Letter of Credit shall have an expiry date
(including all rights of the Borrower or any beneficiary named in such Letter of
Credit to require renewal) or payment date occurring later than the earlier to
occur of one year after the date of its issuance or the fifth Business Day prior
to the Stated Termination Date.
III.2. REIMBURSEMENT.
(a) The Borrower hereby unconditionally agrees to pay to the
Issuing Bank immediately on demand at the Principal Office all amounts required
to pay all drafts (or purported drafts) drawn under the Letters of Credit and
all reasonable expenses incurred by the Issuing Bank in connection with draws
made under the Letters of Credit, and in any event and without demand to place
in possession of the Issuing Bank (which shall include Advances under the
Revolving Credit Facility if permitted by SECTION 2.1 and Swing Line Loans if
permitted by SECTION 2.13) sufficient funds to pay all debts and liabilities
arising under any Letter of Credit. The Issuing Bank agrees to give the Borrower
prompt notice of any request for a draw under a Letter of Credit. The Issuing
Bank may charge any account the Borrower may have with it for any and all
amounts the Issuing Bank pays under a Letter of Credit, plus charges and
reasonable expenses as from time to time agreed to by the Issuing Bank and the
Borrower; provided that to the extent permitted by SECTION 2.1(C)(IV) and
SECTION 2.13, amounts shall be paid pursuant to Advances under the Revolving
Credit Facility or, if the Borrower shall elect, by Swing Line Loans. The
Borrower agrees to pay the Issuing Bank interest on any Reimbursement
Obligations not paid when due hereunder at the Base Rate plus two percent
(2.0%), or the maximum rate permitted by applicable law, if lower, such rate to
be calculated on the basis of a year of 360 days for actual days elapsed.
(b) In accordance with the provisions of SECTION 2.1(C), the
Issuing Bank shall notify the Agent of any drawing under any Letter of Credit
promptly following the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank) shall automatically
acquire on the date of issuance thereof, a Participation in the liability of the
Issuing Bank in respect of each Letter of Credit in an amount equal to such
Lender's Applicable Commitment Percentage of such liability, and to the extent
that the Borrower is obligated to pay the Issuing Bank under SECTION 3.2(A),
each Lender (other than the Issuing Bank) thereby shall absolutely,
unconditionally and irrevocably assume, and shall be unconditionally obligated
to pay to the Issuing Bank as hereinafter described, its Applicable Commitment
Percentage of the liability of the Issuing Bank under such Letter of Credit.
(i) Each Lender (including the Issuing Bank in its
capacity as a Lender) shall, subject to the terms and conditions of
ARTICLE II, pay to the Agent for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds, an
amount equal to its Applicable Commitment Percentage of any drawing
under a Letter of Credit, such funds to be provided in the manner
described in SECTION 2.1(C)(IV).
(ii) Simultaneously with the making of each payment by a
Lender to the Issuing Bank pursuant to SECTION 2.1(C)(IV)(B), such
Lender shall, automatically and without any further action on the part
of the Issuing Bank or such Lender, acquire a Participation in an amount
equal to such payment (excluding the portion thereof constituting
interest accrued prior to the date the Lender made its payment) in the
related Reimbursement Obligation of the Borrower. The
Reimbursement Obligations of the Borrower shall be immediately due and
payable whether by Advances made in accordance with SECTION 2.1(C)(IV),
Swing Line Loans made in accordance with SECTION 2.13, or otherwise.
(iii) Each Lender's obligation to make payment to the
Agent for the account of the Issuing Bank pursuant to SECTION 2.1(C)(IV)
and this SECTION 3.2(C), and the right of the Issuing Bank to receive
the same, shall be absolute and unconditional, shall not be affected by
any circumstance whatsoever and shall be made without any offset,
abatement, withholding or reduction whatsoever. If any Lender is
obligated to pay but does not pay amounts to the Agent for the account
of the Issuing Bank in full upon such request as required by SECTION
2.1(C)(IV) or this SECTION 3.2(C), such Lender shall, on demand, pay to
the Agent for the account of the Issuing Bank interest on the unpaid
amount for each day during the period commencing on the date of notice
given to such Lender pursuant to SECTION 2.1(C) until such Lender pays
such amount to the Agent for the account of the Issuing Bank in full at
the interest rate per annum for overnight borrowing by the Agent from
the Federal Reserve Bank.
(iv) In the event the Lenders have acquired Participations
in any Reimbursement Obligation as set forth in clause (ii) above, then
at any time payment (in fully collected, immediately available funds) of
such Reimbursement Obligation, in whole or in part, is received by
Issuing Bank from the Borrower, Issuing Bank shall promptly pay to each
Lender an amount equal to its Applicable Commitment Percentage of such
payment from the Borrower.
(d) Promptly following the end of each calendar quarter, the
Issuing Bank shall deliver to the Agent a notice describing the aggregate
undrawn amount of all Letters of Credit at the end of such quarter. Upon the
request of any Lender from time to time, the Issuing Bank shall deliver to the
Agent, and the Agent shall deliver to such Lender, any other information
reasonably requested by such Lender with respect to each Letter of Credit
outstanding.
(e) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in ARTICLE V, be
subject to the conditions that such Letter of Credit be in such form and contain
such terms as shall be reasonably satisfactory to the Issuing Bank consistent
with the then current practices and procedures of the Issuing Bank with respect
to similar letters of credit, and the Borrower shall have executed and delivered
such other instruments and agreements relating to such Letters of Credit as the
Issuing Bank shall have reasonably requested consistent with such practices and
procedures and shall not be in conflict with any of the express terms herein
contained. All Letters of Credit shall be issued pursuant to and subject to the
Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 and all subsequent
amendments and revisions thereto.
(f) The Borrower agrees that Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other documents otherwise in order which may be signed or issued
by an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, attorney in fact or
other legal representative of a party who is authorized under such Letter of
Credit to draw or issue any drafts or other documents.
(g) Without limiting the generality of the provisions of SECTION
11.9, the Borrower hereby agrees to indemnify and hold harmless the Issuing
Bank, each other Lender and the Agent from and against any and all claims and
damages, losses, liabilities, reasonable costs and expenses which the Issuing
Bank, such other Lender or the Agent may incur (or which may be claimed against
the Issuing Bank, such other Lender or the Agent) by any Person by reason of or
in connection with the issuance or transfer of or payment or failure to pay
under any Letter of Credit; provided that the Borrower shall not be required to
indemnify the Issuing Bank, any other Lender or the Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, (i) caused by the willful misconduct or gross negligence of the party to
be indemnified or (ii) caused by the failure of the Issuing Bank to pay under
any Letter of Credit after the presentation to it of a request for payment
strictly
complying with the terms and conditions of such Letter of Credit, unless such
payment is prohibited by any law, regulation, court order or decree. The
indemnification and hold harmless provisions of this SECTION 3.2(G) shall
survive repayment of the Obligations, occurrence of the Revolving Credit
Termination Date and expiration or termination of this Agreement.
(h) Without limiting Borrower's rights as set forth in SECTION
3.2(G), the obligation of the Borrower to immediately reimburse the Issuing Bank
for drawings made under Letters of Credit and the Issuing Bank's right to
receive such payment shall be absolute, unconditional and irrevocable, and that
such obligations of the Borrower shall be performed strictly in accordance with
the terms of this Agreement and such Letters of Credit and the related
Applications and Agreement for any Letter of Credit, under all circumstances
whatsoever, including the following circumstances:
(i) any lack of validity or enforceability of the Letter
of Credit, the obligation supported by the Letter of Credit or any other
agreement or instrument relating thereto (collectively, the "Related LC
Documents");
(ii) any amendment or waiver of or any consent to or
departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense (other
than the defense of payment in accordance with the terms of this
Agreement) or other rights which the Borrower may have at any time
against any beneficiary or any transferee of a Letter of Credit (or any
persons or entities for whom any such beneficiary or any such transferee
may be acting), the Agent, the Lenders or any other Person, whether in
connection with the Loan Documents, the Related LC Documents or any
unrelated transaction;
(iv) any breach of contract or other dispute between the
Borrower and any beneficiary or any transferee of a Letter of Credit (or
any persons or entities for whom such beneficiary or any such transferee
may be acting), the Agent, the Lenders or any other Person;
(v) any draft, statement or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(vi) any delay, extension of time, renewal, compromise or
other indulgence or modification granted or agreed to by the Agent, with
or without notice to or approval by the Borrower in respect of any of
Borrower's Obligations under this Agreement; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
III.3. LETTER OF CREDIT FACILITY FEES. The Borrower shall pay to the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a fee on the aggregate amount available to be drawn on
each outstanding Letter of Credit at a rate equal to the Applicable Margin for
Eurodollar Rate Loans. In addition, the Borrower shall pay to NationsBank a fee
equal to one-eighth of one percent (1/8%) per annum of Letter of Credit
Outstandings. Such fees shall be due with respect to each Letter of Credit
quarterly in arrears on the last day of each June, September, December and
March, the first such payment to be made on the first such date occurring after
the date of issuance of a Letter of Credit. The fees described in this SECTION
3.3 shall be calculated on the basis of a year of 360 days for the actual number
of days elapsed.
III.4. ADMINISTRATIVE FEES. The Borrower shall pay to the Issuing Bank
such administrative fee and other similar fees, if any, in connection with the
Letters of Credit in such amounts and at such times as the Issuing Bank and the
Borrower shall agree from time to time. ARTICLE IV ARTICLE IV
YIELD PROTECTION AND ILLEGALITY
IV.1. ADDITIONAL COSTS. (a) The Borrower shall promptly (but no later
than 10 days after receiving notice and supporting documentation referred to
herein from the Agent) pay to the Agent for the account of a Lender from time to
time, without duplication, such amounts as such Lender may reasonably
determine to be necessary to compensate it for any costs incurred by such Lender
which it reasonably determines are attributable to its making or maintaining any
Loan or its obligation to make any Loans, or the issuance or maintenance by the
Issuing Bank of or any other Lender's Participation in any Letter of Credit
issued or Swing Line Loan extended, or any reduction in any amount receivable by
such Lender under this Agreement or the Notes in respect of any of such Loans,
including reductions in the rate of return on a Lender's capital (such increases
in costs and reductions in amounts receivable and returns being herein called
"Additional Costs"), resulting from any Regulatory Change which: (i) changes the
basis of taxation of any amounts payable to such Lender under this Agreement or
the Notes in respect of any of such Loans (other than taxes imposed on or
measured by the income, revenues or assets); or (ii) imposes or modifies any
reserve, special deposit, or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, such
Lender (other than any such reserve, deposit or requirement reflected in the
Prime Rate, Federal Funds Effective Rate or the Interbank Offered Rate, in each
case computed in accordance with the respective definitions of such terms set
forth in SECTION 1.1); or (iii) has the effect of reducing the rate of return on
capital of any such Lender to a level below that which the Lender could have
achieved but for such Regulatory Change (taking into consideration such Lender's
policies with respect to capital adequacy); or (iv) imposes any other condition
adversely affecting the Agent or the Lenders under this Agreement or the Notes
or the issuance or maintenance of, or any Lender's Participation in, the Letters
of Credit or Swing Line Loans (or any of such extensions of credit or
liabilities). Each Lender will notify the Authorized Representative and the
Agent of any event occurring after the Closing Date which would entitle it to
compensation pursuant to this SECTION 4.1(A) as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation.
(b) Without limiting the effect of the foregoing provisions of
this SECTION 4.1, in the event that, by reason of any Regulatory Change, any
Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of the Lender which includes deposits by reference to which the
interest rate on Eurodollar Rate Loans is determined as provided
in this Agreement or a category of extensions of credit or other assets of any
Lender which includes Eurodollar Rate Loans or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets which it
may hold, then, if the Lender so elects by notice to the other Lenders, the
obligation hereunder of such Lender to make, and to convert Base Rate Loans
into, Eurodollar Rate Loans that are the subject of such restrictions shall be
suspended until the date such Regulatory Change ceases to be in effect and the
Borrower shall, on the last day(s) of the then current Interest Period(s) for
outstanding Eurodollar Rate Loans convert such Eurodollar Rate Loans into Base
Rate Loans; PROVIDED, HOWEVER, that the suspension of such obligation and the
conversion of any Eurodollar Rate Loans into Base Rate Loans shall apply only to
any Lender who is affected by such restrictions and who has provided such notice
to the other Lenders, and the obligation of the other Lenders to make, and to
convert Base Rate Loans into, Eurodollar Rate Loans shall not be affected by
such restrictions. In the event that the obligation of some, but not all, of the
Lenders to make, or to convert Base Rate Loans into, Eurodollar Rate Loans is
suspended, then any request by the Borrower during the pendency of such
suspension for a Eurodollar Rate Loan shall be deemed a request for such
Eurodollar Rate Loan from the Lender(s) not subject to such suspension and for a
Base Rate Loan from the Lender(s) who are subject to such suspension, in each
case in the respective amounts based on the Lenders' respective Applicable
Commitment Percentages.
(c) Determinations by any Lender for purposes of this SECTION 4.1
of the effect of any Regulatory Change on its costs of making or maintaining, or
being committed to make Loans, or by NationsBank as issuer of any Letter of
Credit to issue Letters of Credit or the effect of any Regulatory Change on its
costs in connection with the issuance or maintenance of, or any other Lender's
Participation in, any Letter of Credit issued or Swing Line Loan extended
hereunder, or the effect of any Regulatory Change on amounts receivable by any
Lender in respect of Loans or Letters of Credit, and of the additional amounts
required to compensate the Lender in respect of any Additional Costs, shall be
made taking into account such Lender's policies, or the policies of the parent
corporation of such Lender, as to the allocation of capital, costs and other
items and shall be conclusive absent manifest error. The Lender requesting such
compensation shall furnish to the Authorized Representative and the Agent within
one hundred eighty (180) days of the incurrence of any Additional Costs for
which compensation is sought an explanation of the Regulatory Change and
calculations, in reasonable detail, setting forth such Lender's determination of
any such Additional Costs. Notwithstanding any other terms in this SECTION 4.1,
no Lender, Issuing Bank or Agent shall be entitled to payment of any
compensation for, and Borrower shall not be required to pay any amounts to such
party for Additional Cost if (i) such Lender, Issuing Bank or Agent has not
furnished to the Authorized Representative within one hundred eighty days (180)
of the incurrence of any Additional Cost for any compensation which is sought an
explanation of the Regulatory Change and calculations, in reasonable detail,
setting forth such Lender's determination of such Additional Cost, or (ii) such
Lender, Issuing Bank of Agent makes a request for compensation more than 180
days after the Revolving Credit Termination Date.
IV.2. SUSPENSION OF LOANS. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any interest rate for
any Eurodollar Rate Loan for any Interest Period, the Agent determines (which
determination made on a reasonable basis shall be conclusive absent manifest
error) that:
(a) quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Rate" in SECTION 1.1 are
not being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest for such
Eurodollar Rate Loan as provided in this Agreement; or
(b) the relevant rates of interest referred to in the definition
of "Interbank Offered Rate" in SECTION 1.1 upon the basis of which the
Eurodollar Rate for such Interest Period is to be determined do not
adequately reflect the cost to the Lenders of making or maintaining such
Eurodollar Rate Loan for such Interest Period;
then the Agent shall give the Authorized Representative prompt notice thereof,
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make Eurodollar Rate Loans that are subject to such condition, or
to convert Base Rate Loans into Eurodollar Rate Loans that are subject to such
conditions, and the Borrower shall on the last day(s) of the then current
Interest Period(s) for outstanding Eurodollar Rate Loans, as applicable, convert
such Eurodollar Rate Loans into another Eurodollar Rate Loan if such Eurodollar
Rate Loan is not subject to the same or similar condition, or Base Rate Loans,
if available hereunder. The Agent shall give the Authorized Representative
notice describing in reasonable detail any event or condition described in this
SECTION 4.2 promptly following the determination by the Agent that the
availability of Eurodollar Rate Loans is, or is to be, suspended as a result
thereof.
IV.3. ILLEGALITY. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender to honor its obligation to
make or maintain Eurodollar Rate Loans hereunder, then such Lender shall
promptly notify the Borrower thereof (with a copy to the Agent) and such
Lender's obligation to make or continue Eurodollar Rate Loans, or to convert
Base Rate Loans into Eurodollar Rate Loans, shall be suspended until such time
as such Lender may again make and maintain Eurodollar Rate Loans, and such
Lender's outstanding Eurodollar Rate Loans shall be converted into Base Rate
Loans in accordance with SECTION 2.8 or earlier if required by applicable law.
The conversion of any Eurodollar Rate Loans into Base Rate Loans shall apply
only to any Lender who is affected by such restrictions and who has provided the
notice described above, and the obligation of the other Lenders to make, and to
convert Base Rate Loans into, Eurodollar Rate Loans shall not be affected by
such restrictions. In the event that the obligation of some, but not all, of the
Lenders to make, or to convert Base Rate Loans into, Eurodollar Rate Loans is so
suspended, then any request by the Borrower during the pendency of such
suspension for a Eurodollar Rate Loan shall be deemed a request for such
Eurodollar Rate Loan from the Lender(s) not subject to such suspension and for a
Base Rate Loan from the Lender(s) who are subject to such suspension, in each
case in the respective amounts based on the Lenders' respective Applicable
Commitment Percentages.
IV.4. COMPENSATION. The Borrower shall promptly pay to each Lender, upon
the request of such Lender, such amount or amounts as shall be sufficient (in
the reasonable determination of Lender) to compensate it for any loss, cost or
expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Rate
Loan on a date other than the last day of the Interest Period for such
Eurodollar Rate Loan, including without limitation any conversion
required pursuant to SECTIONS 4.1, 4.2 OR 4.3; or
(b) any failure by the Borrower to borrow or convert a Eurodollar
Rate Loan on the date for such borrowing or conversion specified in the
relevant Borrowing Notice or Interest Rate Selection Notice under
ARTICLE II;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (i) the amount of interest which would have accrued on the principal
amount so paid, prepaid or converted or not borrowed for the period from the
date of such payment, prepayment or conversion or failure to borrow or convert
to the last day of the then current Interest Period for such Loan (or, in the
case of a failure to borrow or convert, the Interest Period for such Loan which
would have commenced on the date scheduled for such borrowing or conversion) at
the applicable rate of interest for such Eurodollar Rate Loan provided for
herein over (ii) the Interbank Offered Rate (as reasonably determined by the
Agent) for Dollar deposits of amounts comparable to such principal amount and
maturities comparable to such period. A determination of a Lender as to the
amounts payable pursuant to this SECTION 4.4 shall be conclusive, provided that
such determinations are made on a reasonable basis. The Lender requesting
compensation under this SECTION 4.4 shall promptly furnish to the Authorized
Representative and the Agent calculations in reasonable detail setting forth
such Lender's determination of the amount of such compensation.
IV.5. ALTERNATE LOAN AND LENDER. In the event any Lender suspends the
making of any Eurodollar Rate Loan pursuant to this ARTICLE IV (herein a
"Restricted Lender"), the Restricted Lender's Commitment Percentage of any
Eurodollar Rate Loan shall bear interest at the Base Rate or the Eurodollar Rate
for which
the suspension does not apply, as selected by Borrower, until the Restricted
Lender once again makes available the applicable Eurodollar Rate Loan.
Notwithstanding the provisions of SECTION 2.2(B), interest shall be payable to
the Restricted Lender in respect of Loans to which the suspension applies at the
time and manner as paid to those Lenders making available Eurodollar Rate Loans.
If any Lender shall continue to be a Restricted Lender for sixty (60)
consecutive days, the Borrower may request such Restricted Lender to assign its
interest under this Agreement as provided in SECTION 11.1 to another financial
institution and such Restricted Lender hereby agrees to comply with such
requested assignment so long as all Obligations due it are paid in full.
IV.6. TAXES. (a) All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future excise, stamp
or other taxes, fees, duties, levies, imposts, charges, deductions, withholdings
or other charges of any nature whatsoever imposed by any United States taxing
authority, but excluding (i) franchise taxes, (ii) any taxes (other than
withholding taxes) that would not be imposed but for a connection between a
Lender or the Agent and the jurisdiction imposing such taxes (other than a
connection arising solely by virtue of the activities of such Lender or the
Agent pursuant to or in respect of this Agreement or any other Loan Document),
(iii) any taxes imposed on or measured by any Lender's assets, net income,
receipts or branch profits, and (iv) any taxes arising after the Closing Date
solely as a result of or attributable to a Lender changing its designated
lending office after the date such Lender becomes a party hereto (such
non-excluded items being collectively called "Taxes"). In the event that any
withholding or deduction from any payment to be made by the Borrower hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then the Borrower will
(x) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(y) promptly forward to the Agent a copy of the official receipt
or other documentation satisfactory to the Agent evidencing such payment
to such authority; and
(z) pay to the Agent for the account of each Lender such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required.
In the event that any payments are made by the Borrower to any taxing authority
pursuant to this SECTION 4.6 and, it is subsequently determined that such
payments were not required to have been paid, any such amounts refunded or
returned with respect to such payments by any such taxing authority shall be
paid to the Borrower by the Lender, Agent or Issuing Bank on whose behalf such
amounts were paid promptly following receipt of such funds by such Lender, Agent
or Issuing Bank.
(b) Prior to the date that any Lender or participant organized under the
laws of a jurisdiction outside the United States becomes a party hereto, such
Person shall deliver to the Borrower and the Agent such certificates, documents
or other evidence, as required by the Code or Treasury Regulations issued
pursuant thereto, properly completed, currently effective and duly executed by
such Lender or participant establishing that payments to it hereunder and under
the Notes are (i) not subject to United States Federal backup withholding tax
and (ii) not subject to United States Federal withholding tax under the Code
because such payment is either effectively connected with the conduct by such
Lender or participant of a trade or business in the United States or totally
exempt from United States Federal withholding tax by reason of the application
of the provisions of a treaty to which the United States is a party or such
Lender is otherwise exempt.
(c) If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lender, the required receipts or other required documentary evidence,
the Borrower shall indemnify the Lenders for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of any such failure.
For purposes of this SECTION 4.6, a distribution hereunder by the Agent or any
Lender to or for the account of any Lender shall be deemed a payment by or on
behalf of the Borrower.
ARTICLE V
CONDITIONS TO MAKING LOANS
V.1. CONDITIONS OF INITIAL ADVANCE. The obligation of the Lenders to
make the initial Advance under the Revolving Credit Facility, and of the Issuing
Bank to issue any Letter of Credit and of NationsBank to make any Swing Line
Loan, is subject to the conditions precedent that:
(a) the Agent shall have received on the Closing Date, in form
and substance satisfactory to the Agent and Lenders, the following:
(i) executed originals of each of this Agreement, the
Notes, the initial Facility Guaranties and the other Loan
Documents, together with all schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with
respect to the Loan Documents and the transactions contemplated
thereby of ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇ PLLC, special counsel to the
Credit Parties, dated the Closing Date, addressed to the Agent
and the Lenders and satisfactory to ▇▇▇▇▇ ▇▇▇▇▇ Mulliss & ▇▇▇▇▇,
L.L.P., special counsel to the Agent, substantially in the form
of EXHIBIT H;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee
thereof) of each Credit Party certified by its secretary or
assistant secretary as of the Closing Date, approving and
adopting the Loan Documents to be executed by such Person, and
authorizing the execution and delivery thereof;
(iv) specimen signatures of officers of each Credit Party
executing the Loan Documents on behalf of such Credit Party,
certified by the secretary or assistant secretary of such Credit
Party;
(v) the charter documents of each Credit Party certified
as of a recent date by the Secretary of State of its state of
organization;
(vi) the bylaws of each Credit Party certified as of the
Closing Date as true and correct by its secretary or assistant
secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of formation
of each Credit Party as to the due existence and good standing of
each Credit Party;
(viii) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to
conduct business under assumed name, issued in respect of each
Credit Party as of a recent date by the Secretary of State or
comparable official of each jurisdiction in which the failure to
be qualified to do business or authorized so to conduct business
could have a Material Adverse Effect;
(ix) notice of appointment of the initial Authorized
Representative(s);
(x) certificate of an Authorized Representative dated the
Closing Date demonstrating compliance with the financial
covenants contained in SECTIONS 8.1(A) through 8.1(D), 8.2, 8.3
AND 8.9 as of the most recent fiscal quarter end, substantially
in the form of EXHIBIT H;
(xi) evidence of all insurance required by the Loan
Documents;
(xii) an initial Borrowing Notice, if any, and, if elected
by the Borrower, Interest Rate Selection Notice;
(xiii) copies of the Distribution Agreements, certified to
be true, complete and correct as of the
Closing Date by an officer of the Borrower, together with
evidence satisfactory to the Agent that no default exists under
the Distribution Agreements, the Distribution Agreements remain
in full force and effect;
(xiv) copies of any agreements among the Borrower and any
of its shareholders relating to the purchase or sale of capital
stock of the Borrower (other than pursuant to the Watsco, Inc.
Profit Sharing Retirement Plan & Trust, the Watsco, Inc. 1991
Stock Option Plan, the Watsco, Inc. 1983 Stock Option Plan or the
Watsco, Inc. Qualified Employee Stock Purchase Plan);
(xv) evidence satisfactory to the Agent, which may be
comprised of or include the written advice and undertaking of the
Prior Credit Facilities Managers, of (1) the aggregate amount of
obligations and liabilities required to be paid as of the Closing
Date to pay and satisfy in full the Prior Credit Facilities and
discharge the Borrower's and Subsidiaries' obligations under the
Prior Credit Facilities Loan Documents, and (2) the payment and
satisfaction in full of the Prior Credit Facilities, the
discharge of the Borrower's and Subsidiaries' obligations under
the Prior Credit Facilities Loan Documents (other than
liabilities in the nature of continuing indemnities expressly
provided for in the Prior Credit Facilities Loan Documents), and
the release and termination of all Prior Credit Facilities Liens
substantially simultaneously with the funding of the initial
Advance under the Revolving Credit Facility;
(xvi) evidence satisfactory to the Agent of the release
and termination of all prior Rheem Liens prior to or
substantially simultaneously with the funding of the initial
Advance under the Revolving Credit Facility;
(xvii) evidence satisfactory to the Agent of the payment
of the subordinated debt payable to Rheem;
(xviii) evidence that all fees payable by the Borrower on
the Closing Date to the Agent, NCMI and the Lenders have been
paid in full;
(xix) such other documents, instruments, certificates and
opinions as the Agent or any Lender may reasonably request on or
prior to the Closing Date in connection with the consummation of
the transactions contemplated hereby; and
(b) In the good faith judgment of the Agent and the Lenders:
(i) there shall not have occurred or become known to the
Agent or the Lenders any event, condition, situation or status
since the date of the information contained in the Prospectus
that has had or could reasonably be expected to result in a
Material Adverse Effect;
(ii) no litigation, action, suit, investigation or other
arbitral, administrative or judicial proceeding shall be pending
or threatened which could reasonably be likely to result in a
Material Adverse Effect; and
(iii) the Borrower and its Subsidiaries shall have
received all approvals, consents and waivers, and shall have made
or given all necessary filings and notices as shall be required
to consummate the transactions contemplated hereby without the
occurrence of any default under, conflict with or violation of
(A) any applicable law, rule, regulation, order or decree of any
Governmental Authority or arbitral authority or (B) any
agreement, document or instrument to which any of the Borrower or
any Subsidiary is a party or by which any of them or their
properties is bound.
V.2. CONDITIONS OF LOANS AND LETTERS OF CREDIT. The obligations of the
Lenders to make any Loans hereunder and the Issuing Bank to issue Letters of
Credit and NationsBank to make Swing Line Loans on or subsequent to the Closing
Date are subject to the satisfaction of the following conditions:
(a) the Agent, or NationsBank in the case of Swing Line Loans,
shall have received a Borrowing Notice if required by ARTICLE II;
(b) the representations and warranties of the Borrower and the
Subsidiaries set forth in ARTICLE VI and in each of the other Loan
Documents shall be true and correct in all material respects on and as
of the date of such Advance, Swing Line Loan or Letter of Credit
issuance or renewal, with the same effect as though such representations
and warranties had been made on and as of such date, except to the
extent that such representations and warranties expressly relate to an
earlier date and except that the financial statements referred to in
SECTION 6.6(A)(I) shall be deemed to be those financial statements most
recently delivered to the Agent and the Lenders pursuant to SECTION 7.1
from the date financial statements are delivered to the Agent and the
Lenders in accordance with such Section.
(c) in the case of the issuance of a Letter of Credit, the
Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letter of Credit in form and content
acceptable to the Issuing Bank together with such other instruments and
documents as it shall request in accordance with the terms hereof;
(d) at the time of (and after giving effect to) each Advance,
Swing Line Loan or the issuance of a Letter of Credit, no Default or
Event of Default specified in ARTICLE IX shall have occurred and be
continuing; and
(e) immediately after giving effect to:
(i) a Revolving Loan, the aggregate principal balance of
all outstanding Revolving Loans for each Lender shall not
exceed such Lender's Revolving Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the aggregate
principal balance of all outstanding Participations in
Letters of Credit and Reimbursement Obligations (or in the
case of the
Issuing Bank, its remaining interest after deduction of
all Participations in Letters of Credit and Reimbursement
Obligations of other Lenders) (x) for each Lender shall
not exceed such Lender's Letter of Credit Commitment or
(Y) for all Lenders in the aggregate shall not exceed the
Total Letter of Credit Commitment;
(iii) a Swing Line Loan, the Swing Line Outstandings shall
not exceed $10,000,000; and
(iv) a Revolving Loan, Swing Line Loan or a Letter of
Credit or renewal thereof, the sum of the Outstandings
shall not exceed the Total Revolving Credit Commitment.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants with respect to itself and to its
Subsidiaries (which representations and warranties shall survive the delivery of
the documents mentioned herein, including the Loan Documents, and the making of
Loans), that:
VI.1. ORGANIZATION AND AUTHORITY.
(a) The Borrower and each Subsidiary is a corporation duly
organized and validly existing under the laws of the jurisdiction of
its formation;
(b) The Borrower and each Subsidiary (x) has the requisite
corporate power and authority to own its properties and assets and to
carry on its business as now being conducted and as contemplated in the
Loan Documents, and (y) is qualified to do business in every
jurisdiction in which failure so to qualify would have a Material
Adverse Effect;
(c) The Borrower has the corporate power and authority to
execute, deliver and perform this Agreement and the Notes, and to borrow
hereunder, and to execute, deliver and perform each of the other Loan
Documents to which it is a party;
(d) Each Credit Party other than the Borrower has the corporate
power and authority to execute, deliver and perform the Facility
Guaranty and each of the other Loan Documents to which it is a party;
and
(e) When executed and delivered, each of the Loan Documents to
which the Borrower or any other Credit Party is a party will be the
legal, valid and binding obligation or agreement, as the case may be, of
the Borrower or such Credit Party, enforceable against the Borrower or
such Credit Party in accordance with its terms, subject to the effect of
any applicable bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of creditors' rights
generally and to the
effect of general principles of equity (whether considered in a
proceeding at law or in equity);
VI.2. LOAN DOCUMENTS. The execution, delivery and performance by the
Borrower and each other Credit Party of each of the Loan Documents to which it
is a party:
(a) have been duly authorized by all requisite corporate action
(including any required shareholder approval) of the Borrower and each
other Credit Party required for the lawful execution, delivery and
performance thereof;
(b) do not violate any provisions of (i) applicable law, rule or
regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority
binding on the Borrower or any Subsidiary or its properties, or (iii)
the charter documents or bylaws of the Borrower or any other Credit
Party;
(c) does not and will not be in conflict with, result in a breach
of or constitute an event of default, or an event which, with notice or
lapse of time or both, would constitute an event of default, under any
contract, indenture, agreement or other instrument or document to which
Borrower or any other Credit Party is a party, or by which the
properties or assets of Borrower or any other Credit Party are bound;
and
(d) does not and will not result in the creation or imposition
of any Lien upon any of the properties or assets of Borrower or any
other Credit Party;
VI.3. SOLVENCY. The Borrower and each other Credit Party is and will be
Solvent after giving effect to the transactions contemplated by the Loan
Documents;
VI.4. SUBSIDIARIES AND STOCKHOLDERS. The Borrower has no Subsidiaries
other than those Persons listed as Subsidiaries in SCHEDULE 6.4 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
SECTION 7.19; SCHEDULE 6.4 states as of the date hereof the organizational form
of each
Subsidiary, the authorized and issued capitalization of each Subsidiary listed
thereon, the number of shares or other equity interests of each class of capital
stock or interest issued and outstanding of each such Subsidiary and the number
and/or percentage of outstanding shares or other equity interest (including
options, warrants and other rights to acquire any interest) of each such class
of capital stock or other equity interest owned by Borrower or by any such
Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable; and Borrower and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in SCHEDULE
6.4, free and clear of any Lien;
VI.5. OWNERSHIP INTERESTS. Borrower owns no equity investments in any
Person other than the Persons listed in SCHEDULE 6.4, equity investments in
Persons not constituting Subsidiaries permitted under SECTION 8.7 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
SECTION 7.19. Borrower does not have any obligation to purchase capital stock of
Rheem.
VI.6. FINANCIAL CONDITION.
(a) The Borrower has heretofore furnished to each Lender an
audited consolidated balance sheet of the Borrower and its Subsidiaries
as at December 31, 1995 and the notes thereto and the related
consolidated statements of income, shareholders' equity and cash flows
for the Fiscal Year then ended as examined and certified by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, and unaudited consolidated interim financial statements of
the Borrower and its Subsidiaries consisting of a consolidated balance
sheet and related consolidated statements of income, shareholders'
equity and cash flows, in each case with the notes related thereto, for
and as of the end of the six month period ending June 30, 1996. Except
as set forth therein, such financial statements (including the notes
thereto) present fairly the consolidated financial condition of the
Borrower and its Subsidiaries as of the end of such Fiscal Year and six
month period and results of their consolidated operations and the
changes in its consolidated stockholders' equity for the Fiscal Year and
interim period then ended, all in conformity with GAAP applied on a
Consistent Basis, subject however, in the case of unaudited interim
statements to year end audit adjustments;
(b) since June 30, 1996 there has been no material adverse change
in the condition, financial or otherwise, of the Borrower and its
Subsidiaries taken as a whole or in the businesses, properties,
performance, prospects or operations of the Borrower and its
Subsidiaries taken as a whole, nor have such businesses or properties
been materially adversely affected (taken as a whole) as a result of any
fire, explosion, earthquake, accident, strike, lockout, combination of
workers, flood, embargo or act of God; and
(c) except as set forth in the Prospectus, the financial
statements referred to in SECTION 6.6(A), or SCHEDULE 6.6 or permitted
by SECTION 8.5, neither Borrower nor any Subsidiary has incurred, other
than in the ordinary course of business, any Indebtedness, Contingent
Obligation or other commitment or liability which remains outstanding or
unsatisfied, which is material to Borrower and its Subsidiaries taken as
a whole;
VI.7. TITLE TO PROPERTIES. The Borrower and each of its Subsidiaries and
each other Credit Party has good and marketable title to all its real and
personal properties, subject to no transfer restrictions or Liens of any kind,
except for the transfer restrictions and Liens described in SCHEDULE 6.7 and
Liens permitted by SECTION 8.4;
VI.8. TAXES. Except as set forth in SCHEDULE 6.8, the Borrower and each
of its Subsidiaries has filed or caused to be filed all federal, state and local
tax returns which are required to be filed by it and, except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which reserves reflected in the financial statements
described in SECTION 6.6(A) and satisfactory to the Borrower's independent
certified public accountants have been established, have paid or caused to be
paid all taxes as shown on said returns or on any assessment received by it, to
the extent that such taxes have become due;
VI.9. OTHER AGREEMENTS. Neither the Borrower nor any Subsidiary is
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect; or
(b) in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any
agreement or instrument to which the Borrower or any Subsidiary is a
party, which default has, or if not remedied within any applicable grace
period could reasonably be expected to have, a Material Adverse Effect;
VI.10. LITIGATION. Except as set forth in SCHEDULE 6.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
best knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or affecting the Borrower or any Subsidiary or any properties or
rights of the Borrower or any Subsidiary, which if adversely
determined could reasonably be expected to have a Material Adverse Effect;
VI.11. MARGIN STOCK. The proceeds of the borrowings made hereunder will
be used by the Borrower only for the purposes expressly authorized herein. None
of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor any
agent acting in its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof;
VI.12. INVESTMENT COMPANY. Neither the Borrower nor any other Credit
Party is an "investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms are defined
in the Investment Company Act of 1940, as amended (15 U.S.C. ss. 80a-1, et
seq.). The application of the proceeds of the Loans and repayment thereof by the
Borrower and the performance by the Borrower and the other Credit Parties of the
transactions contemplated by the Loan Documents will not violate any provision
of said Act, or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder, in each case as in effect on the date hereof;
VI.13. PATENTS, ETC. The Borrower and each Subsidiary owns or has the
right to use, under valid license agreements or otherwise, all material patents,
licenses, franchises, trademarks, trademark rights, trade names, trade name
rights, trade secrets and copyrights necessary to or used in the conduct of its
businesses as now conducted and as contemplated by the Loan Documents, without
known conflict with any patent, license, franchise, trademark, trade secret,
trade name, copyright, other proprietary right of any other Person;
VI.14. NO UNTRUE STATEMENT. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of the Borrower or any other Credit Party in accordance with or pursuant to any
Loan Document nor (b) any information provided to the Agent in connection with
the negotiation or preparation of the Loan Documents, including, without
limitation, the Prospectus, contains any misrepresentation or untrue statement
of material fact or omits to state a material fact necessary, in light of the
circumstance under which it was made, in order to make any such warranty,
representation or statement contained therein not misleading;
VI.15. NO CONSENTS, ETC. Neither the respective businesses or properties
of the Borrower or any Subsidiary, nor any relationship between the Borrower or
any Subsidiary and any other Person, nor any circumstance in connection with the
execution, delivery and performance of the Loan Documents and the transactions
contemplated thereby, is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any Governmental Authority or
any other Person on the part of the Borrower or any Subsidiary as a condition to
the execution, delivery and performance of, or consummation of the transactions
contemplated by the Loan Documents, which, if not obtained or effected, would or
could be reasonably likely to have a Material Adverse Effect, or if so, such
consent, approval, authorization, filing, registration or qualification has been
duly obtained or effected, as the case may be;
VI.16. EMPLOYEE BENEFIT PLANS.
(a) The Borrower and each ERISA Affiliate is in compliance with
all applicable provisions of ERISA and the regulations and published
interpretations thereunder and in compliance with all Foreign Benefit
Laws with respect to all Employee Benefit Plans except for any required
amendments for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired and except for circumstances
where the failure to comply could not reasonably be expected to have a
Material Adverse Effect. Each Employee Benefit Plan that is intended to
be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified, and each trust
related to such plan has been determined to be exempt under Section
501(a) of the Code. No material liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i) engaged
in a nonexempt prohibited transaction described in Section 4975 of the
Code or Section 406 of ERISA affecting any of the Employee Benefit Plans
or the trusts created thereunder which could subject any such Employee
Benefit Plan or trust to a material tax or penalty on prohibited
transactions imposed under Internal Revenue Code Section 4975 or ERISA,
(ii) incurred any accumulated funding deficiency with respect to any
Employee Benefit Plan, whether or not waived, or any other liability to
the PBGC which remains outstanding, other than the payment of premiums
and there are no premium payments which are due and unpaid which could
reasonably be expected to have a Material Adverse Effect, (iii) failed
to make a required contribution or payment to a Multiemployer Plan, or
(iv) failed to make a required installment or other required payment
under Section 412 of the Code, Section 302 of ERISA or the terms of such
Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably expected
to occur with respect to any Pension Plan or Multiemployer Plan, and
neither the Borrower nor any ERISA Affiliate has incurred any unpaid
withdrawal liability with respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits under each
Employee Benefit Plan which is subject to Title IV of ERISA, did not, as
of the most recent valuation date for each such plan, exceed the then
current value of the assets of such Employee Benefit Plan allocable to
such benefits;
(e) To the best of the Borrower's knowledge, after due inquiry,
each Employee Benefit Plan subject to Title IV of ERISA, maintained by
the Borrower or any ERISA Affiliate, has been administered in accordance
with its terms in all respects and is in compliance in all respects with
all
applicable requirements of ERISA and other applicable laws,
regulations and rules, except for circumstances where the failure to
comply or accord could not reasonably be expected to have a Material
Adverse Effect;
(f) The consummation of the Loans and the issuance of the Letters
of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or investigation
exists or, to the best knowledge of the Borrower after due inquiry, is
threatened concerning or involving any Employee Benefit Plan;
VI.17. NO DEFAULT. As of the date hereof, there does not exist any
Default or Event of Default hereunder;
VI.18. HAZARDOUS MATERIALS. The Borrower and each Subsidiary is in
compliance with all applicable Environmental Laws in all material respects.
Neither the Borrower nor any Subsidiary has been notified of any action, suit,
proceeding or investigation which, and neither the Borrower nor any Subsidiary
is aware of any facts which, (i) calls into question, or could reasonably be
expected to call into question, compliance by the Borrower or any Subsidiary
with any Environmental Laws, (ii) which seeks, or could reasonably be expected
to form the basis of a meritorious proceeding, to suspend, revoke or terminate
any license, permit or approval necessary for the generation, handling, storage,
treatment or disposal of any Hazardous Material, or (iii) seeks to cause, or
could reasonably be expected to form the basis of a meritorious proceeding to
cause, any property of the Borrower or any Subsidiary to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Law to which the Borrower or such Subsidiary is not currently
subject;
VI.19. EMPLOYMENT MATTERS. (a) Except as set forth in SCHEDULE 6.19,
none of the employees of the Borrower or any Subsidiary is subject to any
collective bargaining agreement and there are no strikes, work stoppages,
election or decertification petitions or proceedings, unfair labor charges,
equal opportunity proceedings, or other material labor/employee related
controversies or proceedings pending or, to the best knowledge of the Borrower,
threatened against the Borrower or any Subsidiary or between the Borrower or any
Subsidiary and any of its employees, other than employee grievances arising in
the ordinary course of business which could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance would not have
a Material Adverse Effect, the Borrower and each Subsidiary is in compliance in
all respects with all applicable laws, rules and regulations pertaining to labor
or employment matters, including without limitation those pertaining to wages,
hours, occupational safety and taxation and there is neither pending or
threatened any litigation, administrative proceeding nor, to the knowledge of
the Borrower, any investigation, in respect of such matters which, if decided
adversely, could or would reasonably be likely, individually or in the
aggregate, to have a Material Adverse Effect; and
VI.20. RICO. Neither the Borrower nor any Subsidiary is engaged in or
has engaged in any course of conduct that could or would reasonably be expected
to subject any of their respective properties to any Lien, seizure or other
forfeiture under any criminal law, racketeer influenced and corrupt
organizations law (civil or criminal) or other similar laws.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will cause
each Subsidiary to:
VII.1. FINANCIAL REPORTS, ETC. (a) As soon as practical and in any event
within 90 days after the end of each Fiscal Year of the Borrower, deliver or
cause to be delivered to the Agent (i) consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such Fiscal Year, and the notes
thereto, and the related consolidated statements of income, shareholders' equity
and cash flows, and the respective notes thereto, for such Fiscal Year, setting
forth comparative financial statements for the preceding Fiscal Year, all
prepared in accordance with GAAP applied on a Consistent Basis and containing,
with respect to the consolidated financial statements, opinions of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, or other such independent certified public accountants selected by
the Borrower and acceptable to the Agent, which are unqualified as to the scope
of the audit performed and as to the "going concern" status of the Borrower and
without any exception not acceptable to the Lenders, and (ii) a certificate of
an Authorized Representative demonstrating compliance with SECTIONS 8.1(A)
through 8.1(D), 8.2, 8.3 and 8.9, which certificate shall be in the form of
EXHIBIT H;
(b) as soon as practical and in any event within 45 days after
the end of each fiscal quarter (except the last fiscal quarter of the Fiscal
Year), deliver to the Agent (i) consolidated balance sheets of the Borrower and
its Subsidiaries as at the end of such fiscal quarter, and the related
consolidated statements of income, shareholders' equity and cash flows for such
fiscal quarter and for the period from the beginning of the then current Fiscal
Year through the end of such reporting period, and accompanied by a certificate
of an Authorized Representative to the effect that such financial statements
present fairly the financial position of the Borrower and its Subsidiaries as of
the end of such fiscal period and the results of their operations and the
changes in their financial position for such fiscal period, in conformity with
the standards
set forth in SECTION 6.6(a) with respect to interim financial statements, and
(ii) a certificate of an Authorized Representative containing computations for
such quarter comparable to that required pursuant to SECTION 7.1(A)(II);
(c) promptly upon their becoming available to the Borrower, the Borrower
shall deliver to the Agent a copy of (i) all regular or special reports or
effective registration statements which Borrower or any Subsidiary shall file
with the Securities and Exchange Commission (or any successor thereto) or any
securities exchange, (ii) any proxy statement distributed by the Borrower or any
Subsidiary to its shareholders, bondholders or the financial community in
general, and (iii) any management letters submitted to the Borrower or any
Subsidiary by independent accountants in connection with the annual audit of the
Borrower or any Subsidiary; and
(d) promptly, from time to time, deliver or cause to be delivered to the
Agent such other information regarding Borrower's and any Subsidiary's
operations, business affairs and financial condition as the Agent or any Lender
may reasonably request;
The Agent and the Lenders are hereby authorized to deliver a copy of any
such financial or other information delivered hereunder to the Lenders (or any
affiliate of any Lender) or to the Agent, to any Governmental Authority having
jurisdiction over the Agent or any of the Lenders pursuant to any written
request therefor or in the ordinary course of examination of loan files, or,
subject to Section 11.14 to any other Person who shall acquire or consider the
assignment of, or acquisition of any participation interest in, any Obligation
permitted by this Agreement.
VII.2. MAINTAIN PROPERTIES. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens all
trademarks, trade names, patents, copyrights, trade secrets, know-how, and other
intellectual property and proprietary information (or adequate licenses
thereto), in each case as are reasonably necessary to conduct its business as
currently conducted or as contemplated
hereby, all in accordance with customary and prudent business practices.
VII.3. EXISTENCE, QUALIFICATION, ETC. Except as otherwise expressly
permitted under SECTION 8.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary.
VII.4. REGULATIONS AND TAXES. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's independent certified public accountants have been established
unless and until any Lien resulting therefrom attaches to any of its property
and becomes enforceable against its creditors.
VII.5. INSURANCE. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are customarily
insured against by similar businesses owning similarly situated properties, (b)
maintain general public liability insurance at all times with responsible
insurance carriers licensed in the state where the property is located against
liability on account of damage to persons and property, and (c) maintain
insurance under all applicable workers' compensation laws (or in the
alternative, maintain required reserves if self-insured for workers'
compensation purposes) and against loss by reason by business interruption such
policies of insurance to have such limits, deductibles, exclusions, co-insurance
and other provisions providing no less coverages than that specified in SCHEDULE
7.5, such insurance policies to be in form reasonably satisfactory to the Agent.
Each of the policies of insurance described in this SECTION 7.5 shall provide
that the insurer shall give the Agent not less than thirty (30) days' prior
written notice before any such policy shall be terminated, lapse or be altered
in any manner.
VII.6. TRUE BOOKS. Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and transactions in
accordance with GAAP, and set up on its books such reserves as may be required
by GAAP consistently applied with respect to doubtful accounts and all taxes,
assessments, charges, levies and claims and with respect to its business in
general, and include such reserves in interim as well as year-end financial
statements.
VII.7. RIGHT OF INSPECTION. Permit any Person designated by any Lender
or the Agent to visit and inspect any of the properties, corporate books and
financial reports of the Borrower or any Subsidiary and to discuss its affairs,
finances and accounts with its principal officers and independent certified
public accountants, all at reasonable times, at reasonable intervals and with
reasonable prior notice to the Borrower.
VII.8. OBSERVE ALL LAWS. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business.
VII.9. GOVERNMENTAL LICENSES. Obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents.
VII.10. COVENANTS EXTENDING TO OTHER PERSONS. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower in SECTIONS 7.2 through 7.9, and 7.18
inclusive.
VII.11. OFFICER'S KNOWLEDGE OF DEFAULT. Upon the Chief Executive
Officer, President, Vice President or Treasurer of the Borrower obtaining
knowledge of any Default or Event of Default hereunder or under any other
obligation of the Borrower or any other Credit Party to any Lender, cause such
officer or an Authorized Representative to promptly notify the Agent of the
nature thereof, the period of existence thereof, and what action
the Borrower or other Credit Party proposes to take with respect thereto.
VII.12. SUITS OR OTHER PROCEEDINGS. Upon the Chief Executive Officer,
President, Vice President or Treasurer of the Borrower obtaining knowledge of
any litigation or other proceedings being instituted by any Person against the
Borrower or any Subsidiary or other Credit Party, or any attachment, levy,
execution or other process being instituted against any assets of the Borrower
or any Subsidiary or other Credit Party, making a claim or claims in an
aggregate amount greater than $1,000,000 not otherwise covered by insurance,
promptly deliver to the Agent written notice thereof stating the nature and
status of such litigation, dispute, proceeding, levy, execution or other
process.
VII.13. NOTICE OF DISCHARGE OF HAZARDOUS MATERIAL OR ENVIRONMENTAL
COMPLAINT. Promptly provide to the Agent true, accurate and complete copies of
any and all notices, complaints, orders, directives, claims, or citations
received by the Borrower or any Subsidiary and of which the Chief Executive
Officer, President, Vice President or Treasurer is aware relating to any (a)
violation or alleged violation by the Borrower or any Subsidiary of any
applicable Environmental Law; (b) release or threatened release by the Borrower
or any Subsidiary, or at any facility or property owned or leased or operated by
the Borrower or any Subsidiary, of any Hazardous Material, except where
occurring legally; or (c) liability or alleged liability of the Borrower or any
Subsidiary for the costs of cleaning up, removing, remediating or responding to
a release of Hazardous Materials.
VII.14. ENVIRONMENTAL COMPLIANCE. If the Borrower or any Subsidiary
shall receive any letter, notice, complaint, order, directive, claim or citation
alleging that the Borrower or any Subsidiary has violated any Environmental Law
or is liable for the costs of cleaning up, removing, remediating or responding
to a release of Hazardous Materials, and Borrower or such Subsidiary is not
contesting such letter, notice, compliant, order, directive, claim or citation
by appropriate proceedings, the Borrower shall, within the time period permitted
by the applicable Environmental Law or the Governmental Authority responsible
for enforcing such Environmental Law, remove or
remedy, or cause the applicable Subsidiary to remove or remedy, such violation
or release or satisfy such liability as required by applicable Environmental
Law.
VII.15. INDEMNIFICATION. Without limiting the generality of SECTION
11.9, the Borrower hereby agrees to indemnify and hold the Agent, the Lenders
and NCMI, and their respective officers, directors, employees and agents,
harmless from and against any and all claims, losses, penalties, liabilities,
damages and expenses (including reasonable assessment and cleanup costs and
reasonable attorneys' fees and disbursements) arising directly or indirectly
from, out of or by reason of (a) the violation of any Environmental Law by the
Borrower or any Subsidiary or with respect to any property owned, operated or
leased by the Borrower or any Subsidiary or (b) the handling, storage,
treatment, emission or disposal of any Hazardous Materials by or on behalf of
the Borrower or any Subsidiary or on or with respect to property owned or leased
or operated by the Borrower or any Subsidiary. The provisions of this SECTION
7.15 shall survive for a period of one year after the Facility Termination Date
and expiration or termination of this Agreement.
VII.16. FURTHER ASSURANCES. At the Borrower's cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, and certificates,
and do and cause to be done such further acts that may be reasonably necessary
or advisable in the reasonable opinion of the Agent to carry out more
effectively the provisions and purposes of this Agreement and the other Loan
Documents.
VII.17. EMPLOYEE BENEFIT PLANS
(a) With reasonable promptness, and in any event within thirty (30) days
thereof, give notice to the Agent of (a) the establishment of any new
Pension Plan (which notice shall include a copy of such plan), (b) the
commencement of contributions to any Employee Benefit Plan to which the
Borrower or any of its ERISA Affiliates was not previously contributing,
(c) any material increase in the benefits of any existing Employee
Benefit Plan, (d) each funding waiver request filed with respect to any
Employee Benefit Plan and all communications received or sent by the
Borrower or any ERISA Affiliate with respect to such request and (e) the
failure of the Borrower or any ERISA Affiliate to make a required
installment or payment under Section 302 of ERISA or Section 412 of the
Code by the due date;
(b) Promptly and in any event within fifteen (15) days of becoming aware
of the occurrence or forthcoming occurrence of any (a) Termination Event
or (b) nonexempt "prohibited transaction," as such term is defined in
Section 406 of ERISA or Section 4975 of the Code, in connection with any
Pension Plan or any trust created thereunder, deliver to the Agent a
notice specifying the nature thereof, what action the Borrower or any
ERISA Affiliate has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect
thereto; and
(c) With reasonable promptness but in any event within fifteen (15) days
for purposes of clauses (a), (b) and (c), deliver to the Agent copies of
(a) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under
Section 401(a) of the Code, (b) all notices received by the Borrower or
any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan
or to have a trustee appointed to administer any Pension Plan, and (c)
all notices received by the Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA. The Borrower
will notify the Agent in writing within fifteen
(15) days of the Borrower or any ERISA Affiliate obtaining knowledge or
reason to know that the Borrower or any ERISA Affiliate has filed or
intends to file a notice of intent to terminate any Pension Plan under a
distress termination within the meaning of Section 4041(c) of ERISA.
VII.18. CONTINUED OPERATIONS. Continue at all times to conduct its
business in all material respects and engage principally in the same line or
lines of business substantially as heretofore conducted.
VII.19. NEW SUBSIDIARIES. As soon as practicable but in any event within
thirty (30) days of any acquisition or substantive beginning of operations for
any newly created Subsidiary, cause to be delivered to the Agent for the benefit
of the Lenders each of the following:
(i) a Facility Guaranty executed by such Subsidiary substantially
in the form of EXHIBIT I;
(ii) an opinion of counsel to the Subsidiary dated as of the date
of delivery of the Facility Guaranty provided for in this SECTION 7.19
and addressed to the Agent and the Lenders, in form and substance
reasonably acceptable to the Agent (which opinion may include
assumptions and qualifications of similar effect to those contained in
the opinions of counsel delivered pursuant to SECTION 5.1(A)), to the
effect that:
(A) such Subsidiary is duly incorporated (or in the case
of a recently formed subsidiary, duly organized) organized,
validly existing and in good standing in the jurisdiction of its
formation, has the requisite power and authority to own its
properties and conduct its business as then owned and then
conducted;
(B) the execution, delivery and performance of the
Facility Guaranty described in this SECTION 7.19 to which such
Subsidiary is a signatory has been duly authorized by all
requisite corporate or partnership action (including any required
shareholder or partner approval), such agreement has been duly
executed and delivered and constitutes the valid and binding
agreement of such Subsidiary, enforceable against such Subsidiary
in accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of creditors'
rights generally and to the effect of general principles of
equity (whether considered in a proceeding at law or in equity);
and
(C) neither the execution or delivery of, nor performance
by such Subsidiary of its obligations under, the Facility
Guaranty described in this SECTION 7.19 to which such Subsidiary
is a signatory (a) does or will conflict with, violate or
constitute a breach of (i) the charter or partnership agreement
or bylaws of such Subsidiary, (ii) any laws, rules or regulations
applicable to such Subsidiary, (b) requires the prior consent of,
notice to, license from or filing with any Governmental Authority
which has not been duly obtained or made on or prior to the date
hereof.
(iii) current copies of the charter documents, including
partnership agreements and certificate of limited partnership, if
applicable, and bylaws of such Subsidiary, minutes of duly called and
conducted meetings (or duly effected consent actions) of the Board of
Directors, partners, or appropriate committees thereof (and, if required
by such charter documents, bylaws or by applicable law, of the
shareholders) of such Subsidiary authorizing the actions and the
execution and delivery of documents described in this SECTION 6.19 and
specimen signatures of the officers of such Subsidiary authorized to
execute and deliver such documents, all as certified by the secretary or
an assistance secretary or comparable representative of such Subsidiary.
VII.20. RHEEM RELATIONSHIP. Promptly upon the Chief Executive Office,
President, Vice President or Treasurer of the Borrower becoming aware thereof,
give written notice to the Agent of 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 of
the Distribution Agreements, 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 Rheem 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 the
Distribution Agreements, which notice shall be accompanied
by a copy of any notice of default sent or received in
connection therewith, a summary of the circumstances
relating thereto, and an explanation of what action, if
any, any Credit Party intends to take with respect
thereto; and
(iii) the assertion by any Person, whether in a proceeding
before a Governmental Authority or otherwise, that any
Distribution Agreement is void, invalid, unenforceable or
subject to rejection, avoidance, rescission or reformation
in any material respect, 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.
ARTICLE VIII
NEGATIVE COVENANTS
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, nor will it permit any
Subsidiary to:
VIII.1. FINANCIAL COVENANTS.
(a) CONSOLIDATED NET WORTH. Permit Consolidated Net Worth to be less
than (i) $97,125,000 at the Closing Date and (ii) as at the last day of each
succeeding fiscal quarter of the Borrower and until (but excluding) the last day
of the next following fiscal quarter of the Borrower, the sum of (A) the amount
of Consolidated Net Worth required to be maintained pursuant to this SECTION
8.1(A) as at the end of the immediately preceding fiscal quarter, plus (B) 50%
of Consolidated Net Income (with no reduction for net losses during any period)
for the fiscal quarter of the Borrower ending on such day (adjusting the
computation of "Consolidated Net Income" for certain items, as provided for in
the definition of "Consolidated Net Income"), plus (C) 100% of the aggregate Net
Proceeds of the issuance of equity securities or other capital investments less
(D) an amount not exceeding $15,000,000 resulting from the sale or distribution
of Borrower's ownership interest in Dunhill.
(b) LEVERAGE RATIO. Permit the ratio of Consolidated Indebtedness to
Consolidated Total Capitalization as at the end of any fiscal quarter of the
Borrower to be greater than 0.625 to 1.00.
(c) CONSOLIDATED DEBT COVERAGE RATIO. Permit as at the end of any fiscal
quarter of the Borrower during the respective periods set forth below the
Consolidated Debt Coverage Ratio to be greater than that set forth opposite each
such period:
PERIOD DEBT COVERAGE RATIO MUST NOT EXCEED
------ -----------------------------------
Closing Date through
December 31, 1997 4.00 to 1.00
January 1, 1998 through
December 31, 1999 3.75 to 1.00
From January 1, 2000 and
thereafter 3.50 to 1.00
(d) CONSOLIDATED INTEREST COVERAGE RATIO. Permit the Consolidated
Interest Coverage Ratio as at the end of any Four-Quarter Period to be less than
2.25 to 1.00.
VIII.2. ACQUISITIONS. Enter into any agreement, contract, binding
commitment or other binding arrangement providing for any Acquisition, or
solicit the tender of securities or proxies in respect thereof in order to
effect any Acquisition, unless (i) the Person to be (or whose assets are to be)
acquired does not oppose such Acquisition and the line or lines of business of
the Person to be acquired are substantially the same as the Major Subsidiaries
and their lines of business, (ii) an Authorized Representative shall have
furnished the Agent with a certificate to the effect that no Default or Event of
Default shall have occurred and be continuing either immediately prior to or
immediately after giving effect to such Acquisition and, if the Cost of
Acquisition exceeds $10,000,000, the Borrower shall have furnished to the Agent
(A) pro forma historical financial statements as of the end of the most recently
completed fiscal period of the Borrower (whether quarterly or year end) giving
effect to such Acquisition and assuming that any Indebtedness incurred to effect
such Acquisition shall be deemed to have been outstanding during the
Four-Quarter Period preceding such Acquisition and to have borne a rate of
interest during such period equal to that rate in existence at the date of
determination and (B) a certificate in the form of EXHIBIT H prepared on a
historical pro forma basis giving effect to such Acquisition as of the most
recent fiscal quarter of the Borrower then ended, which certificate shall
demonstrate that no Default or Event of Default would exist immediately after
giving effect thereto, (iii) the Person acquired shall be a Subsidiary, or be
merged into or with the Borrower or one of its Subsidiaries, immediately upon
consummation of the Acquisition (or if assets are being acquired, the acquiror
shall be the Borrower or one of its Subsidiaries), and (iv) after giving effect
to such Acquisition, the sum of the aggregate Costs of Acquisition incurred in
any Fiscal Year (on a noncumulative basis, with the effect that amounts not
incurred in any Fiscal Year may not be
carried forward to a subsequent period) shall not exceed $50,000,000; PROVIDED
that in making the computation described in clause (iv) of this SECTION 8.2,
there shall be excluded from Costs of Acquisitions the value of common stock of
the Borrower paid for such Acquisition.
VIII.3. CAPITAL EXPENDITURES. Make or become committed to make Capital
Expenditures, which exceed in the aggregate in any Fiscal Year of the Borrower
(on a noncumulative basis, with the effect that amounts not expended in any
Fiscal Year may not be carried forward to a subsequent period), $7,500,000.
VIII.4. LIENS. Incur, create or permit to exist any Lien, charge or
other encumbrance of any nature whatsoever with respect to any property or
assets now owned or hereafter acquired by the Borrower or any Subsidiary, other
than
(a) Liens existing as of the date hereof and as set forth in
SCHEDULE 6.7;
(b) 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 GAAP and which Liens
do not constitute a prior or senior lien;
(c) 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
GAAP and which Liens do not constitute a prior or senior lien;
(d) 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 SECTION 7.4), 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
Indebtedness), statutory obligations and other similar obligations or
arising as a result of progress payments under government contracts;
(e) 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 Borrower 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 Borrower and its Subsidiaries taken as a whole;
and
(f) Liens securing Indebtedness permitted under SECTION 8.5(I)
provided that such Lien extends only to the property acquired with the
proceeds of such Indebtedness.
VIII.5. INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth in
SCHEDULE 8.5; PROVIDED, none of the instruments and agreements
evidencing or governing any such Indebtedness shall be amended, modified
or supplemented in any material respects after the Closing Date to
change any terms of subordination, repayment or rights of conversion,
put, exchange or other rights from such terms and rights as in effect on
the Closing Date;
(b) Indebtedness owing to the Agent or any Lender in connection
with this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) the Private Placement Debt;
(e) Indebtedness arising from Rate Hedging Obligations
permitted under SECTION 8.16;
(f) unsecured intercompany Indebtedness for loans and advances
made by the Borrower or any Guarantor to the Borrower or any Guarantor,
provided that such intercompany Indebtedness is evidenced by a
promissory note or similar written instrument acceptable to the Agent
which provides that such Indebtedness is subordinated to obligations,
liabilities and undertakings of the holder or owner thereof under the
Loan Documents on terms acceptable to the Agent;
(g) unsecured (other than by a Letter of Credit) Indebtedness,
subordinated (other than in those cases where supported by a Letter of
Credit) to the Obligations on terms acceptable to the Agent, in an
aggregate outstanding amount not to exceed $10,000,000, which
Indebtedness represents a portion of the Cost of Acquisition which is
payable to Persons selling an equity interest or assets to the Borrower
or one or more of its Subsidiaries; PROVIDED, HOWEVER, in computing such
$10 million amount, in the event that any such Indebtedness is secured
or enhanced by a Letter of Credit or by a guarantee of the Borrower or
one or more of its Subsidiaries, the amount of only the original
Indebtedness, but not such Letter of Credit or related obligations or
such guarantee, shall count towards the $10 million limitation; and
(i) Indebtedness incurred to purchase property, plant and
equipment in an aggregate outstanding amount not to exceed at any time
$7,500,000.
VIII.6. TRANSFER OF ASSETS. Sell, lease, transfer or otherwise dispose
of any assets of Borrower or any Subsidiary (including any ownership interest in
any Subsidiary) other than (a) dispositions of inventory in the ordinary course
of business, (b) dispositions of equipment or real property which, in the
aggregate during any Fiscal Year, have a fair market value or book value,
whichever is less, of $5,000,000 or less and is not replaced by equipment having
at least equivalent value, (c) dispositions of property that is substantially
worn, damaged, obsolete or, in the judgment of the Borrower, no longer best used
or useful in its business or that of any Subsidiary, (d) transfers of assets
necessary to give effect to merger or consolidation transactions permitted by
SECTION 8.8, (e) the disposition of Eligible Securities in the ordinary course
of management of the investment portfolio of the Borrower and its Subsidiaries,
and (f) the sale of all or substantially all of the capital stock or assets of
Dunhill and ▇.▇. ▇▇▇▇▇▇, Inc. for fair market value (upon which event the Agent
will, at the request and reasonable expense of the Borrower, execute such
documents as shall be acceptable to the Agent and its special counsel releasing
Dunhill and ▇.▇. ▇▇▇▇▇▇, Inc. from their obligations under the Facility Guaranty
to which each is a party).
VIII.7. INVESTMENTS. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any investment whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that Borrower may maintain investments or
invest in:
(a) securities of any Person acquired in an Acquisition
permitted hereunder;
(b) Eligible Securities;
(c) investments in Persons existing as of the date hereof and as
set forth in SCHEDULE 6.4;
(d) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities or other assets received
in satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss; and
(e) investments in Subsidiaries which are Guarantors;
(f) additional investments in other Persons provided that (i) the
aggregate costs incurred in making such investments (reduced by cash
dividends or other cash payments received on or in consideration of such
investments) shall not exceed $5,000,000 in the aggregate at any time
and (ii) prior to and immediately after giving
effect to such investment, no Default or Event of Default shall exist
and be continuing;
(g) loans and advances between or among the Borrower and the
Guarantors described in SECTION 8.5(G); and
(h) travel and entertainment advances made to employees of
Borrower or any of its Subsidiaries in the ordinary course of business.
VIII.8. MERGER OR CONSOLIDATION. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets; PROVIDED, HOWEVER, (i) any Subsidiary of the
Borrower may merge or transfer all or substantially all of its assets into or
consolidate with the Borrower or any wholly-owned Subsidiary of the Borrower,
and (ii) any other Person may merge into or consolidate with the Borrower or any
wholly-owned Subsidiary and any Subsidiary may merge into or consolidate with
any other Person in order to consummate an Acquisition permitted by SECTION 8.2,
PROVIDED FURTHER, that any resulting or surviving entity shall execute and
deliver such agreements and other documents, including a Facility Guaranty, and
take such other action as the Agent may require to evidence or confirm its
express assumption of the obligations and liabilities of its predecessor
entities under the Loan Documents; and provided further that Dunhill and/or P.E.
Del/Mar may merge with or into or consolidate with any other Person in
connection with the disposition of such Subsidiaries in accordance with SECTION
8.6 so long as as a result thereof the Borrower and/or its Subsidiaries shall
not be liable for or assume any liability or obligation of any Person who was
not immediately prior to such time a Subsidiary.
VIII.9. RESTRICTED PAYMENTS. Make any Restricted Payment or apply or set
apart any of their assets therefor or agree to do any of the foregoing;
PROVIDED, however, the Borrower may make the following Restricted Payments if
immediately prior and immediately after giving effect thereto no Default or
Event of Default shall exist or occur and be continuing:
(i) in any Fiscal Year (on a noncumulative basis, with the
effect that amounts not paid in any Fiscal Year may not be
carried over for payment in a subsequent period), cash
dividends and other cash distributions in respect of its
capital stock not to exceed 50% of Consolidated Net Income
for such Fiscal Year;
(ii) the cash redemption of Preferred Stock owned of record by
Rheem at a redemption price not to exceed $2,000,000 in
the aggregate;
(iii) the payment of dividends on Preferred Stock in an
aggregate amount not to exceed $130,000 during any Fiscal
Year on a cumulative basis (so that amounts not paid in
one Fiscal Year may be paid in a subsequent Fiscal Year);
(iv) redeem either class of outstanding registered common stock
of the Borrower for an aggregate purchase price of not to
exceed $10,000,000; provided that the amount spent to
purchase common stock during any Four-Quarter Period shall
not exceed Consolidated Net Income for such period; and
(v) distribute its ownership interest in, or all or a portion
of the proceeds upon the sale of, Dunhill to stockholders
of Borrower.
VIII.10. TRANSACTIONS WITH AFFILIATES. Other than transactions permitted
under SECTIONS 8.7 and 8.8, enter into any transaction after the Closing Date,
including, without limitation, the purchase, sale, lease or exchange of
property, real or personal, or the rendering of any service, with any Affiliate
of the Borrower, except (a) that such Persons may render services to the
Borrower or its Subsidiaries for compensation at the same rates generally paid
by Persons engaged in the same or similar businesses for the same or similar
services or as may otherwise be approved by a majority vote of Borrower's
shareholders, (b) that the Borrower or any Subsidiary may render services to
such Persons for compensation at the same rates generally charged by the
Borrower or such Subsidiary and
(c) in either case in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's (or any Subsidiary's) business
consistent with past practice of the Borrower and its Subsidiaries and upon fair
and reasonable terms no less favorable to the Borrower (or any Subsidiary) than
would be obtained in a comparable arm's-length transaction with a Person not an
Affiliate.
VIII.11. COMPLIANCE WITH ERISA. With respect to any Pension Plan,
Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a liability on the part of the Borrower or any ERISA Affiliate
to the PBGC; or
(b) permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any Multiemployer
Plan which the Borrower or any ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to Section
502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be
imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to the Borrower or any ERISA Affiliate or increase the
obligation of the Borrower or any ERISA Affiliate to a Multiemployer
Plan where such establishment or amendment would reasonably be expected
to result in a Material Adverse Effect; or
(g) fail, or permit the Borrower or any ERISA Affiliate to fail,
to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the
Code, all applicable Foreign Benefit Laws and all other applicable laws
and the regulations and interpretations thereof;
VIII.12. FISCAL YEAR. Change its Fiscal Year.
VIII.13. DISSOLUTION, ETC. Wind up, liquidate or dissolve (voluntarily
or involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to SECTION 8.8 or the sale of Dunhill and P.E./
▇▇▇▇▇▇, Inc. permitted by SECTION 8.6 or the dissolution of The Houston Ad
Company or Gemaire Caribe, Inc.
VIII.14. LIMITATIONS ON SALES AND LEASEBACKS. Except to the extent it
may sell property under SECTION 8.6(B)), enter into any arrangement with any
Person providing for the leasing by the Borrower or any Subsidiary of real or
personal property, whether now owned or hereafter acquired in a related
transaction or series of related transactions, which has been or is to be sold
or transferred by the Borrower or any Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or any
Subsidiary.
VIII.15. CHANGE IN CONTROL. Cause, suffer or permit to exist or occur
any Change of Control.
VIII.16. RATE HEDGING OBLIGATIONS. Incur any Rate Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to Rate
Hedging Obligations, except as otherwise agreed by the Borrower and the Required
Lenders for Rate Hedging Obligations incurred to limit risks of currency or
interest rate fluctuations to which the Borrower and its Subsidiaries are
otherwise subject by virtue of the operations of their businesses, and not for
speculative purposes; PROVIDED that the aggregate notional amount of all such
Rate Hedging Obligations shall at no time exceed $130,000,000,
VIII.17. NEGATIVE PLEDGE CLAUSES. Enter into or cause, suffer or permit
to exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or limits
the ability of any of the Borrower or any Subsidiary to create, incur, assume or
suffer to exist any Lien upon any of its property.
VIII.18. PREPAYMENTS, ETC. OF INDEBTEDNESS. (a) Prepay, redeem,
purchase, defease or otherwise satisfy prior to the scheduled maturity thereof
in any manner, or make any payment in violation of any subordination terms of,
the Private Placement Debt; or
(b) amend, modify or change in any manner any term or condition of any
Indebtedness described in SECTION 8.5(A) OR (D) so that the terms and conditions
thereof are less favorable to the Agent and the Lenders than the terms of such
Indebtedness as of the Closing Date.
ARTICLE IX
EVENTS OF DEFAULT AND ACCELERATION
IX.1. EVENTS OF DEFAULT. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment of
the principal of any Loan, Reimbursement Obligation or other Obligation,
when and as the same shall be due and payable whether pursuant to any
provision of ARTICLE II or ARTICLE III, at maturity, by acceleration or
otherwise; or
(b) if default shall be made in the due and punctual payment of
any amount of interest on any Loan, Reimbursement Obligation or other
Obligation or of any fees or other amounts payable to any of the
Lenders, the Agent or NCMI on the date on which the same shall be due
and payable; or
(c) if default shall be made in the performance or observance of
any covenant set forth in SECTION 7.7, 7.11, 7.19 or ARTICLE VIII;
(d) if a default shall be made in the performance or observance
of, or shall occur under, any covenant, agreement or provision contained
in this Agreement or the Notes (other than as described in clauses (a),
(b) or (c) above) and such default shall continue for 30 or more days
after the earlier of receipt of notice of such default by the Authorized
Representative from the Agent or the Chief Executive Officer, President,
Vice President or Treasurer of the Borrower becomes aware of such
default, or if a default shall be made in the performance or observance
of, or shall occur under, any covenant, agreement or provision contained
in any of the other Loan Documents (beyond any applicable grace period,
if any, contained therein) or in any instrument or document evidencing
or creating any obliga-
tion, guaranty, or Lien in favor of the Agent or any of the Lenders or
delivered to the Agent or any of the Lenders in connection with or
pursuant to this Agreement or any of the Obligations, or if any Loan
Document ceases to be in full force and effect (other than in accordance
with its terms in the absence of default or with the consent of the
Agent and the Lenders), or if without the written consent of the Agent
and the Lenders, this Agreement or any other Loan Document shall be
disaffirmed or shall terminate, be terminable or be terminated or become
void or unenforceable for any reason whatsoever (other than in
accordance with its terms in the absence of default or with the consent
of the Agent and the Lenders); or
(e) if there shall occur (i) a default, which is not waived, in
the payment of any principal, interest, premium or other amount with
respect to any Indebtedness (other than the Loans and other Obligations)
of the Borrower or any Subsidiary in an amount not less than $500,000 in
the aggregate outstanding, or (ii) a default, which is not waived, in
the performance, observance or fulfillment of any term or covenant
contained in any agreement or instrument under or pursuant to which any
such Indebtedness may have been issued, created, assumed, guaranteed or
secured by the Borrower or any Subsidiary, or (iii) any other event of
default as specified in any agreement or instrument under or pursuant to
which any such Indebtedness may have been issued, created, assumed,
guaranteed or secured by the Borrower or any Subsidiary, and in each
case described in (i), (ii) and (iii) above such default or event of
default shall continue for more than the period of grace, if any,
therein specified, or such default or event of default shall permit the
holder of any such Indebtedness (or any agent or trustee acting on
behalf of one or more holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report or
statement at any time furnished to the Agent or any Lender by or on
behalf of the Borrower or any other Credit Party pursuant to or in
connection with any Loan Document, or otherwise, shall be false or
misleading in any material respect when given; or
(g) if the Borrower or any Subsidiary shall be unable to pay its
debts generally as they become due; file a petition to take advantage of
any insolvency statute; make an assignment for the benefit of its
creditors; commence a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or any
substantial part of its property; file a petition or answer seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator
or conservator of the Borrower or any Subsidiary or of the whole or any
substantial part of its properties and such order, judgment or decree
continues unstayed and in effect for a period of sixty (60) days, or
approve a petition filed against the Borrower or any Subsidiary seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state, which petition is not dismissed
within sixty (60) days; or if, under the provisions of any other law for
the relief or aid of debtors, a court of competent jurisdiction shall
assume custody or control of the Borrower or any Subsidiary or of the
whole or any substantial part of its properties, which control is not
relinquished within sixty (60) days; or if there is commenced against
the Borrower or any Subsidiary any proceeding or petition seeking
reorganization, arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any state which proceeding or petition remains
undismissed for a period of sixty (60) days; or if the Borrower or any
Subsidiary takes any action to indicate its consent to or approval of
any such proceeding or petition; or
(i) if (i) one or more judgments or orders where the amount not
covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $1,000,000 is rendered against the Borrower
or any Subsidiary, or
(ii) there is any attachment, injunction or execution against any of
the Borrower's or Subsidiaries' properties for any amount in excess of
$1,000,000 in the aggregate; and such judgment, attachment, injunction
or execution remains unpaid, unappealed, unstayed, undischarged,
unbonded or undismissed for a period of sixty (60) days; or
(j) if the Borrower or any Major Subsidiary shall, other than in
the ordinary course of business (as determined by past practices),
suspend all or substantially all of its operations material to the
conduct of the business of the Borrower or such Subsidiary for a period
of more than 120 days; or
(k) if the Borrower or any Subsidiary shall breach any of the
material terms or conditions of any agreement under which any Rate
Hedging Obligations permitted hereby is created and such breach shall
continue beyond any grace period, if any, relating thereto pursuant to
the terms of such agreement, or if the Borrower or any Subsidiary shall
disaffirm or seek to disaffirm any such agreement or any of its
obligations thereunder; or
(l) if there shall occur and not be waived an Event of Default as
defined in any of the other Loan Documents; or
(m) if there shall occur any termination, expiration, lapse,
avoidance, rescission or rejection of any of the Distribution
Agreements, without the prior written consent of the Required Lenders;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived:
(_) Either or both of the following actions may be taken:
(i) the Agent, with the consent of the Required Lenders, may, and
at the direction of the Required Lenders shall, declare any
obligation of the Lenders and the Issuing Bank to make further
Loans or to issue additional Letters of Credit terminated,
whereupon the obligation of each Lender to make further Loans and
of the Issuing Bank to issue Letters of
Credit hereunder shall terminate immediately, and (ii) the Agent
shall at the direction of the Required Lenders, at their option,
declare by notice to the Borrower any or all of the Obligations
to be immediately due and payable, and the same, including all
interest accrued thereon and all other obligations of the
Borrower to the Agent and the Lenders, shall forthwith become
immediately due and payable without presentment, demand, protest,
notice or other formality of any kind, all of which are hereby
expressly waived, anything contained herein or in any instrument
evidencing the Obligations to the contrary notwithstanding;
provided, however, that notwithstanding the above, if there shall
occur an Event of Default under clause (g) or (h) above, then the
obligation of the Lenders to make Loans and of the Issuing Bank
to issue Letters of Credit hereunder shall automatically
terminate and any and all of the Obligations shall be immediately
due and payable without the necessity of any action by the Agent
or the Required Lenders or notice to the Agent or the Lenders;
and
(_) The Borrower shall, upon demand of the Agent or the
Required Lenders, deposit cash with the Agent in an amount equal
to the amount of any Letter of Credit Outstandings, as collateral
security for the repayment of any future drawings or payments
under such Letters of Credit, and such amounts shall be held by
the Agent pursuant to the terms of the LC Account Agreement; and
(_) The Agent and each of the Lenders shall have all of
the rights and remedies available under the Loan Documents or
under any applicable law.
IX.2. AGENT TO ACT. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
IX.3. CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
IX.4. NO WAIVER. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
IX.5. ALLOCATION OF PROCEEDS. If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant to
ARTICLE IX hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder, shall be applied by the Agent in the following order:
(a) amounts due to the Lenders and NationsBank pursuant to
SECTIONS 2.10, 3.3 AND 11.5;
(b) amounts due to the Agent and NationsBank pursuant to SECTION
10.11 and SECTION 3.4;
(c) payments of interest on Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of the
Lenders (with amounts payable in respect of Swing Line Outstandings
being included in such calculation and paid to NationsBank);
(d) payments of principal of Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of the
Lenders (with amounts payable in respect of Swing Line Outstandings
being included in such calculation and paid to NationsBank);
(e) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to SECTION 9.1;
(f) amounts due to the Lenders pursuant to SECTIONS 3,2(G), 7.15
and 11.9;
(g) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the Lenders;
(h) amounts due to any of the Lenders in respect of Obligations
consisting of liabilities under any Swap Agreement with any of the
Lenders on a pro rata basis according to the amounts owed; and
(i) any surplus remaining after application as provided for
herein, to the Borrower or otherwise as may be required by applicable
law.
ARTICLE X
THE AGENT
X.1. APPOINTMENT. Each Lender hereby irrevocably designates and appoints
NationsBank as the Agent for the Lenders under this Agreement, and each of the
Lenders hereby irrevocably authorizes NationsBank as the Agent for such Lender,
to take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers as are expressly delegated to
the Agent by the terms of this Agreement and such other Loan Documents, together
with such other powers as are reasonably incidental thereto. The Agent shall not
have any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any of the Lenders, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent.
X.2. ATTORNEYS-IN-FACT. The Agent may execute any of its duties under
the Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence, gross negligence or
willful misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
X.3. LIMITATION ON LIABILITY. Neither the Agent nor any of its officers,
directors, employees, agents or attorneys-in-fact shall be liable to the Lenders
for any action lawfully taken or omitted to be taken by it or them under or in
connection with the Loan Documents except for its or their own gross negligence
or willful misconduct. Neither the Agent nor any of its affiliates shall be
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower, any other Credit Party or
any officer or representative thereof contained in any Loan Document, or in any
certificate, report, statement or other document referred to or provided for in
or received by the Agent under or in connection with any Loan Document, or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of any Loan Document, or for any failure of the Borrower or any other Credit
Party to perform its obligations under any Loan Document, or for any recitals,
statements, representations or warranties made, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any collateral. The
Agent shall not be under any obligation to any of the Lenders to ascertain or to
inquire as to the observance or performance of any of the terms, covenants or
conditions of any Loan Document on the part of the Borrower or any other Credit
Party or to inspect the properties, books or records of the Borrower or any
other Credit Party.
X.4. RELIANCE. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent
certificate, affidavit, letter, cablegram, telegram, telefacsimile or telex
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to any Credit Party), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless an Assignment and Acceptance
shall have been filed with and accepted by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under the Loan Documents
unless it shall first receive advice or concurrence of the Lenders or the
Required Lenders as provided in this Agreement or it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, under the Loan Documents in accordance with a request of
the Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all present and
future holders of the Notes.
X.5. NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Lender, the Authorized Representative or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Agent receives such a notice, the Agent shall promptly give notice thereof
to the Lenders. The Agent shall take such action with respect to such Default or
Event of
Default as shall be reasonably directed by the Required Lenders; provided that,
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default as it shall deem advisable in the
best interests of the Lenders.
X.6. NO REPRESENTATIONS. Each Lender expressly acknowledges that neither
the Agent nor any of its affiliates has made any representations or warranties
to it and that no act by the Agent hereafter taken, including any review of the
affairs of the Borrower or any other Credit Party, shall be deemed to constitute
any representation or warranty by the Agent to any Lender. Each Lender
represents to the Agent that it has, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
financial condition, creditworthiness, affairs, status and nature of the
Borrower and each other Credit Party and made its own decision to enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under the Loan Documents and to make such investigation as it deems necessary to
inform itself as to the status and affairs, financial or otherwise, of the
Borrower and any other Credit Party. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Borrower or any other Credit Party which may come
into the possession of the Agent or any of its affiliates.
X.7. INDEMNIFICATION. Each of the Lenders agree to indemnify the Agent
in its capacity as such (to the extent not reimbursed by the Borrower or any
other Credit Party and without limiting any obligations of the Borrower or any
other Credit Party to do so), ratably according to the respective principal
amount of the Notes held by them (or, if no Notes are outstanding, ratably in
accordance with their respective Applicable Commitment Percentages as then in
effect) from and
against any and all liabilities, obligations, losses (excluding any losses
suffered by the Agent as a result of Borrower's failure to pay any fee owing to
the Agent), damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at any time (including
without limitation at any time following the payment of the Notes) be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of any Loan Document or any other document contemplated by or referred to
therein or the transactions contemplated thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the Facility
Termination Date and the termination of this Agreement.
X.8. LENDER. The Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower or
any other Credit Party as though it were not the Agent hereunder. With respect
to its Loans made or renewed by it and any Note issued to it, the Agent shall
have the same rights and powers under this Agreement as any Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity.
X.9. RESIGNATION. If the Agent shall resign as Agent under this
Agreement, then the Required Lenders may appoint, with the consent, so long as
there shall not have occurred and be continuing a Default or Event of Default,
of the Borrower, which consent shall not be unreasonably withheld or delayed, a
successor Agent for the Lenders, which successor Agent shall be a commercial
bank organized under the laws of the United States or any state thereof, having
a combined surplus and capital of not less than $500,000,000, whereupon such
successor Agent shall succeed to the rights, powers and duties of the former
Agent and the obligations of the former Agent shall be terminated and canceled,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement; PROVIDED, however, that the former Agent's
resignation shall not
become effective until such successor Agent has been appointed and has succeeded
of record to all right, title and interest in any collateral held by the Agent;
PROVIDED, FURTHER, that if the Required Lenders and, if applicable, the Borrower
cannot agree as to a successor Agent within ninety (90) days after such
resignation, the Agent shall appoint a successor Agent which satisfies the
criteria set forth above in this SECTION 10.9 for a successor Agent and the
parties hereto agree to execute whatever documents are necessary to effect such
action under this Agreement or any other document executed pursuant to this
Agreement; PROVIDED, however that in such event all provisions of the Loan
Documents, shall remain in full force and effect. After any retiring Agent's
resignation hereunder as Agent, the provisions of this ARTICLE X shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
X.10. SHARING OF PAYMENTS, ETC. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, set-off, counterclaim or
otherwise, obtain payment with respect to its Obligations (other than pursuant
to ARTICLE IV) which results in its receiving more than its pro rata share of
the aggregate payments with respect to all of the Obligations (other than any
payment expressly provided hereunder to be distributed on other than a pro rata
basis and payments pursuant to ARTICLE IV), then (a) such Lender shall be deemed
to have simultaneously purchased from the other Lenders a share in their
Obligations so that the amount of the Obligations held by each of the Lenders
shall be pro rata and (b) such other adjustments shall be made from time to time
as shall be equitable to insure that the Lenders share such payments ratably;
PROVIDED, however, that for purposes of this SECTION 10.10 the term "pro rata"
shall be determined with respect to the Revolving Credit Commitment of each
Lender and to the Total Revolving Credit Commitments after subtraction in each
case of amounts, if any, by which any such Lender has not funded its share of
the outstanding Loans and Obligations. If all or any portion of any such excess
payment is thereafter recovered from the Lender which received the same, the
purchase provided in this SECTION 10.10 shall be rescinded to the extent of such
recovery, without interest. The Borrower expressly consents to the foregoing
arrangements and agrees that each Lender so purchasing a portion of the other
Lenders' Obligations may exercise all rights of payment (including,
without limitation, all rights of set-off, banker's lien or counterclaim) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
X.11. FEES. The Borrower agrees to pay to the Agent, for its individual
account, an annual Agent's fee as from time to time agreed to by the Borrower
and Agent in writing.
ARTICLE XI
MISCELLANEOUS
XI.1. ASSIGNMENTS AND PARTICIPATIONS. (a) At any time after the Closing
Date each Lender may, with the prior written consent of the Agent and (so long
as no Default or Event of Default shall have occurred and be continuing) the
Borrower, which written consents shall not be unreasonably withheld, assign to
one or more banks or financial institutions all or a portion of its rights and
obligations under the Loan Documents (including, without limitation, all or a
portion of any Note payable to its order); PROVIDED, that (i) each such
assignment shall be of a constant and not a varying percentage of the assigning
Lender's rights and obligations under the Revolving Credit Facility and Letter
of Credit Facility, (ii) for each assignment involving the issuance and transfer
of a Note, the assigning Lender shall execute an Assignment and Acceptance and
the Borrower hereby agrees to execute a replacement Note to give effect to the
assignment, (iii) the amount of Revolving Credit Commitment which shall be
assigned is a minimum of $10,000,000, and, if greater, an amount which is an
integral multiple of $5,000,000, (iv) such assignee shall have an office located
in the United States, and (v) no consent of the Borrower or the Agent shall be
required in connection with any assignment by a Lender to another Lender or to
an affiliate of any Lender. Upon such execution, delivery, approval and
acceptance, from and after the effective date specified in each Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder or under any such Note have been
assigned or negotiated to it pursuant to such Assignment and Acceptance, have
the rights and obligations of a Lender hereunder and a holder of such Note and
(y) the assignor thereunder shall, to the extent that rights and obligations
hereunder or under such Note have been assigned or negotiated by it pursuant to
such Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement. Any Lender who makes an assignment shall pay
to the Agent a one-time administrative fee of $3,500 which fee shall not be
reimbursed by the Borrower.
(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) the assignment made under such Assignment and Acceptance is made
under such Assignment and Acceptance without recourse; (ii) such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any other Credit Party or
the performance or observance by the Borrower or any other Credit Party of any
of its obligations under any Loan Document or any other instrument or Document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
delivered pursuant to SECTION 6.6(A) or SECTION 7.1, as the case may be, and
such other Loan Documents and other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
any Loan Document; (v) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender and a holder of such Notes.
(c) The Agent shall maintain at its address referred to herein a copy of
each Assignment and Acceptance delivered to and accepted by it.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, the Agent shall give prompt notice thereof to Borrower.
(e) Nothing herein shall prohibit any Lender from pledging or assigning,
without notice to or consent of the Borrower and without the payment of the
administrative fee referred to in SECTION 11.1(A), any Note to any Federal
Reserve Bank in accordance with applicable law or to any affiliate of any such
Lender.
(f) Each Lender may sell participations at its expense to one or more
banks or other entities as to all or a portion of its rights and obligations
under this Agreement; PROVIDED, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any Note issued to it for the
purpose of this Agreement, (iv) such participations shall be in a minimum amount
of $5,000,000 and, if greater, an amount which is an integral multiple of
$1,000,000, (v) Borrower, the Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and with regard to any and all payments to be
made under this Agreement; PROVIDED, that the participation agreement between a
Lender and its participants may provide that such Lender will obtain the
approval of such participant prior to such Lender's agreeing to any amendment or
waiver of any provisions of any Loan Document which would (A) extend the
maturity of any Note, (B) reduce the interest rates hereunder or (C) increase
the Revolving Credit Commitment or Letter of Credit Commitment of the Lender
granting the participation, and (vi) the sale of any such participations which
require Borrower to file a registration statement with the United States
Securities and Exchange Commission or under the securities regulations or laws
of any state shall not be permitted.
(g) The Borrower may not assign, nor shall it cause, suffer or permit
any other Credit Party to assign any rights, powers, duties or obligations under
this Agreement or the other Loan Documents without the prior written consent of
all the Lenders.
XI.2. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto or otherwise received), in the case
of notice by telegram, telefacsimile or telex, respectively (where the receipt
of such message is verified by return), or (iii) on the fifth Business Day after
the day on which mailed, if sent prepaid by certified or registered
mail, return receipt requested, in each case delivered, transmitted or mailed,
as the case may be, to the address, telex number or telefacsimile number, as
appropriate, set forth below or such other address or number as such party shall
specify by notice hereunder:
(a) if to the Borrower:
Watsco, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Agent:
NationsBank, National Association (South)
Independence Center, ▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Agency Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile:(▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
NationsBank, National Association (South)
▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile:(▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Lenders:
At the addresses set forth on the signature pages hereof
and on the signature page of each Assignment and
Acceptance;
(d) if to any other Credit Party, at the address set forth on
the signature page of the Facility
Guaranty executed by such Credit Party, as the case may
be.
XI.3. SETOFF. The Borrower agrees that the Agent and each Lender shall
have a lien for all the Obligations of the Borrower upon all deposits or deposit
accounts, of any kind, or any interest in any deposits or deposit accounts
thereof, now or hereafter pledged, mortgaged, transferred or assigned to the
Agent or such Lender or otherwise in the possession or control of the Agent or
such Lender (other than for safekeeping) for any purpose for the account or
benefit of the Borrower and including any balance of any deposit account or of
any credit of the Borrower with the Agent or such Lender, whether now existing
or hereafter established, hereby authorizing the Agent and each Lender at any
time or times from and after the occurrence (but only during the continuance) of
an Event of Default with or without prior notice to apply such balances or any
part thereof to the Obligations of the Borrower to the Lenders and in such
amounts as they may elect, and whether or not the collateral or the
responsibility of other Persons primarily, secondarily or otherwise liable may
be deemed adequate. For the purposes of this paragraph, all remittances and
property shall be deemed to be in the possession of the Agent or such Lender as
soon as the same may be put in transit to it by mail or carrier or by other
bailee.
XI.4. SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the execution and delivery to the Lenders of this Agreement and the Notes and
shall continue in full force and effect so long as any of Obligations remain
outstanding or any Lender has any commitment hereunder or the Borrower has
continuing obligations hereunder unless otherwise provided herein. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party and all
covenants, provisions and agreements by or on behalf of the Borrower which are
contained in the Loan Documents shall inure to the benefit of the successors and
permitted assigns of the Lenders or any of them.
XI.5. EXPENSES. The Borrower agrees (a) to pay or reimburse the Agent
and NCMI for all its reasonable out-of-pocket
costs and expenses incurred in connection with the preparation, negotiation and
execution of, and any amendment, supplement or modification to, any of the Loan
Documents (including due diligence expenses and travel expenses relating to
closing), and the consummation of the transactions contemplated thereby,
including the reasonable fees and disbursements of counsel to the Agent and
NCMI, (b) to pay or reimburse the Agent and the Lenders for all their costs and
expenses incurred in connection with the enforcement or preservation of any
rights under the Loan Documents, including the reasonable fees and disbursements
of their counsel and any payments in indemnification or otherwise payable by the
Lenders to the Agent pursuant to the Loan Documents, and (c) to pay, indemnify
and hold the Agent and the Lenders harmless from any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
failure to pay or delay in paying, documentary, stamp, excise and other similar
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of any of the Loan Documents, or consummation of
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, any Loan Document; PROVIDED, HOWEVER, that the Borrower shall
have no obligation hereunder arising from (i) the willful misconduct, gross
negligence or the breach of the Loan Documents by the party seeking
indemnification, (ii) legal proceedings commenced against the Agent or any
Lender by any security holder or creditor thereof arising out of and based upon
rights afforded any such security holder or creditor solely in its capacity as
such, (iii) any taxes imposed upon the Agent or any Lender other than the
documentary, stamp, excise and similar taxes described in clause (c) above or
any tax resulting from any Regulatory Change, which tax should be payable to
Lenders by Borrower pursuant to ARTICLE IV hereof, or (iv) taxes imposed and
costs and expenses incurred as a result of a transfer or assignment of any Note,
Participation or assignment of a portion of its rights.
XI.6. AMENDMENTS. No amendment, modification or waiver of any provision
of any Loan Document and no consent by the Lenders to any departure therefrom by
the Borrower or any other Credit Party shall be effective unless such amendment,
modification or waiver shall be in writing and signed by the Agent, shall have
been approved by the Required Lenders through their written consent, and the
same shall then be effective only for the period
and on the conditions and for the specific instances and purposes specified in
such writing; PROVIDED, however, that, no such amendment, modification or waiver
(i) which changes, extends or waives any provision of
SECTION 2.6, SECTION 10.10 or this SECTION 11.6, the amount of or
the due date of any scheduled installment of or the rate of
interest payable on any Obligation or on the amount of any fees,
which changes the definition of "Required Lenders", which permits
an assignment by any Credit Party of its Obligations under any
Loan Document, which reduces the required consent of Lenders
provided hereunder, which increases, decreases (other than
pursuant to the express terms hereof) or extends (other than
pursuant to the express terms hereof) the Revolving Credit
Commitment or Letter of Credit Commitment of any Lender, or which
waives any condition to the making of any Loan, shall be
effective unless in writing and signed by each of the Lenders;
PROVIDED, HOWEVER, that the Required Lenders may waive any
Default or Event of Default other than those described in SECTION
9.1(A), (B), (G) and (H);
(ii) which releases any Facility Guaranty (other than
pursuant to the express terms hereof or thereof) shall be
effective unless with the written consent of each of the Lenders;
(iii) which affects the rights, privileges or obligations
of NationsBank as provider of Swing Line Loans, shall be
effective unless signed in writing by NationsBank;
(iv) which affects the rights, privileges or obligations
of the Issuing Bank as issuer of Letters of Credit, shall be
effective unless signed in writing by the Issuing Bank; or
(v) which affects the rights, privileges, immunities or
indemnities of the Agent shall be effective unless in writing and
signed by the Agent.
Notwithstanding any provision of the other Loan Documents to the contrary, as
between the Agent and the Lenders, execution by the Agent shall not be deemed
conclusive evidence that the Agent has obtained the written consent of the
Required Lenders. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances, except as otherwise expressly provided herein. No delay or
omission on any Lender's or the Agent's part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.
XI.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
XI.8. TERMINATION. The termination of this Agreement shall not affect
any rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower, the Lenders or the Agent, arising prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. The rights granted to the Agent for the benefit of the
Lenders under the Loan Documents shall continue in full force and effect,
notwithstanding the termination of this Agreement, until all of the Obligations
have been paid in full after the termination hereof (other than Obligations in
the nature of continuing indemnities or expense reimbursement obligations not
yet due and payable, which shall continue) or the Borrower has furnished the
Lenders and the Agent with an indemnification satisfactory to the Agent and each
Lender with respect thereto. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until payment
in full of the Obligations unless otherwise provided herein. Notwithstanding the
foregoing, if after receipt of any payment of all or any part of the
Obligations, any Lender is for any reason compelled to surrender such payment to
any Person because such payment is determined to be void or voidable as a
preference, impermissible
setoff, a diversion of trust funds or for any other reason, this Agreement shall
continue in full force and the Borrower shall be liable to, and shall indemnify
and hold the Agent or such Lender harmless for, the amount of such payment
surrendered until the Agent or such Lender shall have been finally and
irrevocably paid in full. The provisions of the foregoing sentence shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Agent or the Lenders in reliance upon such payment, and any such contrary
action so taken shall be without prejudice to the Agent or the Lenders' rights
under this Agreement and shall be deemed to have been conditioned upon such
payment having become final and irrevocable.
XI.9. INDEMNIFICATION; LIMITATION OF LIABILITY. In consideration of the
execution and delivery of this Agreement by the Agent, the Issuing Bank and each
Lender and the extension of credit under the Loans, the Borrower hereby
indemnifies, exonerates and holds the Agent, NCMI and each Lender and each of
their respective affiliates, officers, directors, employees, agents and advisors
(collectively, the "Indemnified Parties") free and harmless from and against any
and all claims, actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities") that are incurred by or awarded
against any Indemnified Party, in each case arising out of or in connection with
or by reason of, or in connection with the execution, delivery, enforcement,
performance or administration of this Agreement and the other Loan Documents, or
any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loan or Letter of Credit, whether or not
such action is brought against the Agent or any Lender, the shareholders or
creditors of the Agent or any Lender or an Indemnified Party or an Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated herein are consummated, except to the extent such claim, damage,
loss, liability or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law. If any claim or demand for which Borrower would be required to indemnify an
Indemnified Party if adversely determined is asserted against or sought to be
collected from such Indemnified Party by any Person, the Indemnified Party shall
with reasonable promptness notify in writing the Borrower of such claim or
demand stating with reasonable specificity the circumstances of the Indemnified
Party's claim for indemnification; PROVIDED, HOWEVER, that any failure to give
such notice promptly will not waive any rights of the Indemnified Party except
to the extent the rights of the Borrower are actually prejudice. After receipt
by the Borrower of such notice, then upon reasonable notice from the Borrower to
the Indemnified Party, the Borrower shall have the right to assume the control
of the defense and compromise of any such claim or demand, and shall not be
required to indemnify the Indemnified Party under this SECTION 11.9 if the
Indemnified Party compromises or settles such claim or demand without the
written consent of the Borrower or if the Indemnified Party does not reasonably
cooperate with Borrower in the defense, compromise or investigation of such
claim or demand. The Borrower agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to it,
any of its Subsidiaries, any Credit Party, or any security holders or creditors
thereof arising out of, related to or in connection with the transactions
contemplated herein, except to the extent that such liability is found in a
final non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct;
provided, however, in no event shall any Indemnified Party be liable for
consequential, indirect or special, as opposed to direct, damages.
XI.10. SEVERABILITY. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
XI.11. ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto.
XI.12. AGREEMENT CONTROLS. In the event that any term of any of the Loan
Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
XI.13. USURY SAVINGS CLAUSE. Notwithstanding any other provision herein,
the aggregate interest rate charged under any of the Notes, including all
charges or fees in connection therewith deemed in the nature of interest under
applicable law shall not exceed the Highest Lawful Rate (as such term is defined
below). If the rate of interest (determined without regard to the preceding
sentence) under this Agreement at any time exceeds the Highest Lawful Rate (as
defined below), the outstanding amount of the Loans made hereunder shall bear
interest at the Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due hereunder if
the stated rates of interest set forth in this Agreement had at all times been
in effect. In addition, if when the Loans made hereunder are repaid in full the
total interest due hereunder (taking into account the increase provided for
above) is less than the total amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect, then to the extent permitted by law, the Borrower shall
pay to the Agent an amount equal to the difference between the amount of
interest paid and the amount of interest which would have been paid if the
Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be canceled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
XI.14. CONFIDENTIALITY. The Agent, Issuing Bank, each Lender and any
participant in a Loan shall hold and cause its respective agents, officers,
employees and representatives to hold all non-public information obtained from
any Credit Party pursuant to the requirements of this Agreement or any Loan
Document in accordance with its customary procedures for handling confidential
information of similar nature but may, in any event, make disclosures reasonably
required in connection with the contemplated transfer or assignment of any of
the Loans or Participations or as required or requested by any legal process of
any applicable Governmental Authority.
XI.15. GOVERNING LAW; WAIVER OF JURY TRIAL.
(A) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE
SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE GOVERNED
BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE
TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(B) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF
MECKLENBURG, STATE OF NORTH CAROLINA, UNITED STATES OF AMERICA AND, BY
THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY
BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE
BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(C) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED
IN SECTION 10.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER
THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NORTH CAROLINA.
(D) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS
OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S PROPERTY
OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE
APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO
THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER
COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE
LAW.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE AGENT AND THE
LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY
SUCH ACTION OR PROCEEDING.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
made, executed and delivered by their duly authorized officers as of the day and
year first above written.
WATSCO, INC.
WITNESS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title: Vice President
NATIONSBANK, NATIONAL ASSOCIATION
(SOUTH),
as Agent for the Lenders
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President