REVOLVING CREDIT AGREEMENT
________________________________________________________________________________
BY AND BETWEEN
CAC ACQUISITION, INC.
- AND -
NATIONSBANK OF FLORIDA, N.A.
________________________________________________________________________________
DATED AS OF OCTOBER 26, 1995
TABLE OF CONTENTS
PAGE
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SECTION 1
DEFINITIONS........................ 1
1.1 DEFINED TERMS ............................................ 1
1.2 OTHER DEFINITIONAL PROVISIONS ............................ 4
SECTION 2
AMOUNT AND TERMS OF REVOLVING CREDIT ............ 5
2.1 REVOLVING CREDIT ......................................... 5
2.2 ADVANCES UNDER REVOLVING CREDIT .......................... 5
2.3 LIBOR OPTION ............................................. 6
2.4 NOTE ..................................................... 9
2.5 INTEREST ON THE NOTE ..................................... 9
2.6 MATURITY OF REVOLVING CREDIT ............................. 9
2.7 ACCESS TO REVOLVING CREDIT ............................... 9
2.8 INTEREST ................................................. 9
2.9 PAYMENTS ................................................. 10
2.10 STANDBY L/C AGREEMENT .................................... 10
SECTION 3
ADDITIONAL COSTS AND FEES ................ 10
3.1 ADDITIONAL COSTS ......................................... 10
3.2 FACILITY FEE ............................................. 11
SECTION 4
COLLATERAL ........................ 12
SECTION 5
GUARANTY ......................... 12
SECTION 6
REPRESENTATIONS AND WARRANTIES ............. 12
6.1 ORGANIZATION, STANDING, CORPORATE POWER, ETC ............. 12
6.2 AUTHORIZATION ............................................ 13
6.3 LITIGATION ............................................... 13
6.4 FINANCIAL STATEMENTS ..................................... 13
6.5 TAXES .................................................... 14
6.6 BURDENSOME RESTRICTIONS .................................. 14
6.7 CENTRAL OWNERSHIP ........................................ 14
6.8 PROPERTY AND ASSETS ...................................... 14
(i)
TABLE OF CONTENTS
(CONTINUED)
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6.9 PERMITS, LICENSES AND APPROVALS .......................... 14
6.10 ENFORCEABILITY ........................................... 14
6.11 DEFAULT .................................................. 15
6.12 REGULATION U ............................................. 15
6.13 ERISA .................................................... 15
6.14 INVESTMENT COMPANY ACT ................................... 15
6.15 USE OF PROCEEDS .......................................... 15
6.16 OTHER ASSETS ............................................. 15
SECTION 7
CONDITIONS PRECEDENT .................. 15
7.1 OPINION OF COUNSEL ....................................... 16
7.2 SUPPORTING DOCUMENTS ..................................... 16
7.3 CONDITIONS TO ALL ADVANCES AND STANDBY L/C'S ............. 17
SECTION 8
AFFIRMATIVE COVENANTS .................. 18
8.1 CORPORATE EXISTENCE ...................................... 18
8.2 INSURANCE ................................................ 19
8.3 OBLIGATIONS AND TAXES .................................... 19
8.4 NOTICE ................................................... 19
8.5 BOOKS AND RECORDS/AUDITS ................................. 19
8.6 COMPLIANCE WITH LAW ...................................... 19
8.7 TRANSACTIONS WITH AFFILIATES ............................. 20
8.8 CONTINGENT LIABILITIES ................................... 20
8.9 EXECUTION OF OTHER DOCUMENTS ............................. 20
8.10 REPORTING REQUIREMENTS - BORROWER ........................ 20
8.11 NET WORTH - BORROWER ..................................... 21
8.12 FUNDED DEBT/EARNINGS RATIO - BORROWER .................... 22
8.13 FIXED CHARGE COVERAGE RATIO - BORROWER ................... 22
8.14 DISTRIBUTORSHIP AGREEMENT - BORROWER ..................... 22
8.15 REPORTING REQUIREMENTS - GUARANTOR ....................... 22
8.16 TANGIBLE NET WORTH - GUARANTOR ........................... 24
8.17 LEVERAGE RATIO - GUARANTOR ............................... 24
8.18 MANAGEMENT - GUARANTOR ................................... 24
SECTION 9
NEGATIVE COVENANTS .................... 24
9.1 DEFAULT UNDER OTHER AGREEMENTS OR CONTRACTS .............. 24
9.2 ACCOUNTING PRACTICES ..................................... 25
9.3 GUARANTIES/DEBT ASSUMPTIONS - BORROWER ................... 25
9.4 SALE/LEASEBACK AND CAPITALIZED LEASE
TRANSACTIONS - BORROWER ................................. 25
9.5 DISPOSAL OF PROPERTY - BORROWER .......................... 25
(ii)
TABLE OF CONTENTS
(CONTINUED)
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9.6 OWNERSHIP - BORROWER ..................................... 25
9.7 ADDITIONAL INDEBTEDNESS - BORROWER ....................... 25
9.8 DIVIDENDS - BORROWER ..................................... 25
9.9 ADDITIONAL LIENS - BORROWER .............................. 26
9.10 CAPITAL EXPENDITURES - BORROWER .......................... 26
9.11 ADVANCES TO AFFILIATES ................................... 26
9.12 LIMITATION ON MERGERS AND SALE OF ASSETS ................. 26
9.13 CONTROL/NAME ............................................. 26
9.14 NOTES, ACCOUNTS RECEIVABLE ............................... 26
SECTION 10
(iii)
TABLE OF CONTENTS
(CONTINUED)
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DEFAULTS AND REMEDIES ................... 26
10.1 EVENTS OF DEFAULT AND REMEDIES ........................... 26
SECTION 11
MISCELLANEOUS ....................... 29
11.1 NOTICES .................................................. 29
11.2 SURVIVAL OF REPRESENTATIONS .............................. 30
11.3 EFFECT OF DELAY .......................................... 30
11.4 EXPENSES ................................................. 30
11.5 MODIFICATIONS AND WAIVERS ................................ 30
11.6 DISCLAIMER ............................................... 30
11.7 REMEDIES CUMULATIVE ...................................... 31
11.8 APPLICATION OF PAYMENTS .................................. 31
11.9 CONSTRUCTION ............................................. 31
11.10 SEVERABILITY OF PROVISIONS ............................... 31
11.11 HEADINGS ................................................. 31
11.12 SUCCESSORS AND ASSIGNS ................................... 31
11.13 INDEMNIFICATION .......................................... 32
11.14 TIME OF PAYMENTS ......................................... 32
11.15 MANDATORY ARBITRATION .................................... 32
(iv)
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (the "Agreement") is made and entered
into as of the 26th day of October, 1995, by and between:
CAC ACQUISITION, INC.,
a North Carolina corporation, which corporation shall
immediately change its name to CENTRAL AIR CONDITIONING
DISTRIBUTORS, INC. upon the acquisition described in
Section 5.15 herein
-and-
NATIONSBANK OF FLORIDA, N.A.,
(hereinafter the "Lender")
R E C I T A L S
A. The Borrower has requested Lender to provide a Revolving
Credit (as said term is defined herein) to the Borrower, as set forth herein.
B. The Lender is willing to provide the Revolving Credit to the
Borrower for the purposes, upon the terms, and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, and for other good and valuable consideration, it is agreed as
follows:
SECTION 1
DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the meanings set forth below:
"ADVANCE": an Advance to the Borrower pursuant to Section 2.2
herein.
"AFFILIATES": any Person that directly or indirectly through
one or more intermediaries controls or are controlled by or are under common
control with Borrower.
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"AGREEMENT": this Revolving Credit Agreement, as the same may
be amended, supplemented, modified or extended from time to time.
"BUSINESS DAY": a day other than a Saturday, Sunday or other
day on which commercial banks in the States of Florida and North Carolina are
authorized or required by law to close.
"CLOSING DATE": as of October 26, 1995.
"CODE": the Internal Revenue Code of 1986, as amended,
supplemented or modified from time to time.
"DEFAULT": any of the events specified in Section 10 herein,
whether or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied, provided such Default has not been waived in writing
by the Lender.
"DEFAULT RATE": an interest rate per annum equal to the lesser
of (i) two (2.0%) percent in excess of the Prime Rate; or (ii) the maximum rate
of interest permitted by law.
"ERISA": the Employee Retirement Income Security Act of 1974
and all related provisions of the Code, as the same may be amended, supplemented
or modified from time to time, together with all applicable rulings and
regulations issued under the provisions of either of them.
"EVENT OF DEFAULT": any of the events specified in Section 10
herein, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other conditions, has been satisfied.
"FUNDED DEBT": Indebtedness of Borrower other than trade
payables, accrued expenses incurred in the ordinary course of business, deferred
tax obligations and the Subordinated Indebtedness.
"GUARANTOR": Watsco, Inc., a Florida corporation.
"INDEBTEDNESS": at any date, any obligation for money borrowed
or other monetary obligations incurred, whether or not evidenced by notes,
bonds, debentures or other similar instruments, or any obligation under
conditional sale or other title retention agreements or capitalized leases or
any obligation issued or assumed as full or partial payment for property whether
or not secured by a purchase money mortgage or any guaranty of any of the
foregoing.
"LIABILITIES": at any date, all liabilities, direct and
indirect, contingent and absolute, computed in accordance
2
with generally accepted accounting principles applied on a consistent basis.
"LIBOR RATE": the rate at which United States Dollar deposits
are offered in the London Interbank Market, fully adjusted for any reserve
requirements established from time to time by the Board of Governors of the
Federal Reserve System.
"LIEN": any mortgage, pledge, hypothecation, assignment,
security interest, lien, charge or encumbrance, or preference, priority or other
security agreement or arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, and
the filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law or any jurisdiction).
"LINE AGREEMENT": that certain Amendment to Line of Credit
Agreement by and between the Lender and Guarantor dated as of April 30, 1994;
and that certain Second Amendment to Line of Credit Agreement by and
between the Lender and Guarantor dated as of June 23, 1995.
"LOAN DOCUMENTS": this Agreement, the Note, the Stock Pledge
Agreement, the Financing Statements, the Guaranty, the Solvency Certificate and
all documents, instruments and agreements executed in connection herewith or
therewith.
"MATURITY DATE": December 31, 1998.
"NET WORTH": (A) the aggregate amount of assets shown on the
balance sheet of Borrower at any particular date less (B) all Liabilities of
Borrower at such date; all as determined in accordance with generally accepted
accounting principals consistently applied.
"NOTE": as said term is defined in Section 2.4 herein.
"PERSON": an individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture or other entity or a governmental or any agency or
political subdivision thereof.
"PLAN": any plan of a type described in Section 4021(a) of
ERISA which may be established (or maintained by the Borrower in respect of
which the Borrower is an "employer" as defined in Section 3(5) of ERISA.
"PRIME RATE": the index rate of interest (but not necessarily
the best or lowest rate charged borrowing customers of the Lender) announced by
the Lender from time to time as its
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prime rate. Said rate is a reference rate for the information and use of the
Lender in establishing the actual rates to be charged to its borrowers.
"REPORTABLE EVENT": any of the events set forth in Section
4034(b) of ERISA or the regulations thereunder.
"REVOLVING CREDIT": as said term is defined in Section 2.1
herein.
"RHEEM": Rheem Manufacturing Company, a Delaware corporation.
"RHEEM AGREEMENT": the distributorship agreement by and
between Rheem and Borrower, together with all amendments thereto, which
agreement shall be in form and content acceptable to Lender.
"STANDBY L/C AGREEMENT": the Lender's current form of
Application and Agreement for Standby Letter of Credit attached hereto and made
a part hereof as Exhibit "A".
"SUBORDINATED INDEBTEDNESS": the subordinated indebtedness of
Borrower to Guarantor in the principal amount of ONE MILLION TWO HUNDRED
THOUSAND DOLLARS ($1,200,000.00) under that certain Subordination Agreement by
and among Lender, Borrower and Guarantor of even date herewith (the
"Subordination Agreement).
"TANGIBLE NET WORTH": the aggregate amount of assets shown on
the balance sheet of Guarantor on any particular date (but excluding from such
assets, capitalized organizational and development costs, capitalized interest,
debt discount and expense, goodwill, patents and trademarks, copyrights,
franchises, licenses, amounts due from officers, employees, directors,
stockholders and affiliates, and other assets as are properly classified as
intangible assets under generally accepted accounting principles), less
Liabilities of Guarantor at such date with the exception of those certain ten
percent (10%) Convertible Subordinated Debentures due 1996 under that certain
Indenture dated September 12, 1986, all computed in accordance with generally
accepted accounting principles applied on a consistent basis.
"TERMINATION DATE": the earlier of the Maturity Date or any
other date beyond which the Lender shall have no obligation hereunder to make
Advances, whether as a result of maturity, Default or otherwise.
1.2 OTHER DEFINITIONAL PROVISIONSOTHER DEFINITIONAL PROVISIONS.
(a) all terms defined in or incorporated into this Agreement shall have the
defined
4
meanings when used herein or in the Loan Documents or any certificate or other
instrument made or delivered pursuant hereto unless the context otherwise
requires; (b) each accounting term used but not defined herein shall have the
meaning given to it under generally accepted accounting principles.
SECTION 2
AMOUNT AND TERMS OF REVOLVING CREDIT
2.1 REVOLVING CREDIT.
(a) The Lender agrees, upon the terms and subject to the
conditions hereof, to extend a revolving credit facility to the Borrower (the
"Revolving Credit"), in an aggregate principal amount at any one time
outstanding not to exceed EIGHT MILLION DOLLARS ($8,000,000.00), to be used by
the Borrower in order to obtain loans and advances from the Lender ("Advances")
pursuant to the terms and provisions set forth in Section 2.2 herein and for the
issuance of two (2) standby letters of credit in the maximum aggregate face
amount of FOUR MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($4,250,000.00) (the
"Standby L/C's"). The aggregate principal amount of all Advances and the face
amount of the Standby L/C's outstanding at any one time under the Revolving
Credit shall not at any time exceed EIGHT MILLION DOLLARS ($8,000,000.00). The
Advances to the Borrower and issuance of the Standby L/C's on behalf of Borrower
shall at all times be conditioned upon there existing no Default or Event of
Default hereunder, and the Lender shall have no obligation to make Advances or
issue the Standby L/C's at any time that a Default or Event of Default exists
hereunder. Until the Termination Date, the Borrower may use the Revolving Credit
by borrowing, repaying in whole or in part, and reborrowing under the Revolving
Credit, all in accordance with this Agreement; provided, however, at the time of
each Advance or issuance of the Standby L/C's under the Revolving Credit, the
Borrower shall not be in Default hereunder, or in default under any other
agreement with or obligation to the Lender.
2.2 ADVANCES UNDER REVOLVING CREDIT.
(a) Subject to the terms and conditions hereof, from time to
time the Borrower may obtain Advances under the Revolving Credit in an aggregate
principal amount at any one time outstanding not to exceed EIGHT MILLION DOLLARS
($8,000,000.00). The Borrower may use Advances to pay or prepay any Advances
outstanding under such facility in whole or in part, subject to the terms and
conditions of this Agreement; provided that at the time of each such Advance,
the Borrower shall not be in Default hereunder, or in default under any other
agreement with or obligation to the Lender.
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(b) Interest on the Advances outstanding from time to time
under the Revolving Credit shall accrue at an annual rate to be selected by
Borrower equal to either: (i) a fixed rate equal to seventy-five (75) basis
points in excess of the LIBOR Rate for periods of thirty (30) days, sixty (60)
days, ninety (90) days, one hundred twenty (120) days, one hundred fifty (150)
days, one hundred eighty (180) days or one (1) year, but in any event not to
exceed the Maturity Date (the "LIBOR Option"); or (ii) a fluctuating rate equal
to the Prime Rate minus one and five-eighths of one percent (1 5/8%) (the "Prime
Option"). All interest shall be computed on a daily basis based on a 360-day
year. All interest accrued on Advances under the Revolving Credit shall be due
and payable quarterly on the fifth (5th) day of each month. If such day is not a
Business Day, the Business Day next succeeding such date shall be the date on
which interest shall be due and payable.
(c) The Borrower may request Advances on any Business Day,
provided that the Borrower shall give the Lender irrevocable telephonic notice
confirmed in writing (via facsimile or hand delivery) on Lender's usual and
customary form, substantially in the form attached hereto as Exhibit "B",
received by the Lender prior to 12:00 noon (Miami, Florida time) two (2)
Business Days prior to the borrowing date in the event an Advance subject to the
LIBOR Option is selected, specifying the amount to be borrowed and the borrowing
date. Upon fulfillment of the applicable conditions set forth herein, the Lender
shall make such funds available to the Borrower on the borrowing date by
crediting same to the Borrower's demand deposit account with Lender. Upon each
crediting of a sum to the account of the Borrower, the Borrower shall have
effected an Advance from the Lender under the Revolving Credit and shall be
indebted to the Lender for the amount thereof, plus interest thereon, in
accordance with the terms and conditions hereof. Lender shall incur no liability
to Borrower in acting upon any advice referred to above, whether oral or
written, which Lender believes in good faith to have been given by an officer or
other person authorized to borrow on behalf of Borrower. Further, all documents
required to be executed in conjunction with Advances under this Agreement may be
signed by any of the officers or other persons duly authorized by the general
borrowing resolution of Borrower, as such resolution may be amended from time to
time.
2.3 LIBOR OPTION. On the Closing Date, or at the expiration of any
Interest Period (as hereinafter defined), if Borrower selects the LIBOR Option,
it shall simultaneously advise Lender whether such selection is for a thirty
(30) day, sixty (60) day, ninety (90) day, one hundred twenty (120) day, one
hundred fifty (150) day, one hundred eighty (180) day or a one (1) year period
and the applicable interest rate shall remain
6
effective for the period selected (an "Interest Period"). If Borrower elects to
renew a LIBOR Option Advance, two (2) Business Days prior to the expiration of
any Interest Period, Borrower shall give telephone instructions to Lender
(confirmed in writing), of its election to renew the LIBOR Option Advance for a
subsequent Interest Period and failure to give such instructions shall
conclusively be presumed to be a selection by Borrower of the Prime Option. If
Borrower has selected the Prime Option with respect to any Advance, it may
elect, at any time, to change the interest rate to the LIBOR Option, by
telephonic notice (confirmed in writing) no later than two (2) Business Days
prior to the date the LIBOR Option selection is to become effective. Borrower
may select the LIBOR Option to be in effect with respect to all or specified
portions of the Revolving Credit, provided, however, Advances subject to the
LIBOR Option shall be in minimum increments of FIVE HUNDRED THOUSAND DOLLARS
($500,000.00) and no more than three (3) Advances shall be subject to the LIBOR
Option at any one time.
In the event Borrower has selected the LIBOR Option with
respect to the initial funding or any Interest Period, such selection shall be
subject to the following terms and conditions:
(1) If, at any time, Lender shall have
determined (which determination shall be final and
conclusive and binding on the parties hereto provided
Lender has made such determination in good faith)
that, as a result of any change in any applicable law
or governmental (federal, state or local, domestic or
foreign) rule, regulation or order or any
interpretation thereof (including without limitation,
the introduction of any new or revised law or
governmental rule, regulation or order) or its
compliance with any directive or request of any
central bank or other governmental authority (whether
or not having the force of law), the cost to Lender
of making, funding or maintaining the portion of the
Revolving Credit which then is subject to one or more
LIBOR Options (the "LIBOR Loan") has increased from
its cost at the time of the commencement of the
relevant Interest Period, then Lender shall promptly
so notify Borrower thereof by telephone (confirmed in
writing) and Borrower shall pay to Lender within
thirty (30) days an amount sufficient to indemnify
Lender against such increased cost.
(2) In the event that, at any time, Lender
shall have reasonably determined (which determination
shall be final and conclusive and binding upon the
parties hereto) that it has become unlawful for
7
Lender to obtain funds in the relevant offshore
interbank markets in order to make or maintain its
LIBOR Loan, Lender shall promptly give notice to
Borrower by telephone (confirmed in writing) of that
determination, whereupon the Prime Rate Option, or a
certificate of deposit based pricing option (the "CD
Option") to be made available to Borrower by Lender
upon such determination, shall be in effect for the
duration of the pending Interest Periods with respect
to the LIBOR Loan.
(3) If, on or before the date of commencement
of any Interest Period, Lender shall have determined
(which determination shall be final, conclusive and
binding on all the parties hereto) that (i) deposits
in United States dollars in amounts equal to the
portion of the Revolving Credit to be subject to the
LIBOR Option for that Interest Period are not being
offered to Lender in the relevant markets, or (ii) by
reason of changes affecting the relevant markets, the
LIBOR Option to be in effect for that period will not
adequately and fairly reflect the cost to Lender of
maintaining the LIBOR Loan for that period, Lender
shall promptly so notify Borrower by telephone
(confirmed in writing) whereupon the Prime Option, or
CD Option to be made available to Borrower by Lender
upon such determination, shall be in effect for that
period with respect to the LIBOR Loan;
(4) Borrower shall compensate Lender within
thirty (30) days of the written request of Lender
(which shall set forth in reasonable detail the basis
for requesting such compensation) for all reasonable
losses, expenses and liabilities (including without
limitation, any interest paid by Lender to lenders of
funds borrowed by it to carry its LIBOR Loan during
any Interest Period and for any loss sustained by
Lender in connection with the re-employment of such
funds) which Lender may sustain: (i) as a result of
Borrower's failure to borrow funds which had been
committed by Lender in advance, at Borrower's
request; or (ii) as a result of Borrower's prepayment
of any outstanding LIBOR Loan.
In the event Lender shall have determined (which determination shall be
binding and conclusive on Borrower) that, by reason of circumstances affecting
the relevant markets for the LIBOR Option, adequate and reasonable means do not
exist for
8
ascertaining the LIBOR Option with respect to (a) the continuation of the LIBOR
Option then in existence pursuant to a prior request of Borrower, or (b) any
request by Borrower to change the Prime Option then in existence, to the LIBOR
Option, Lender shall promptly notify Borrower by telephone (confirmed in
writing) of such determination. Upon receipt of such notice, the Prime Option,
or CD Option to be made available to Borrower by Lender upon such determination,
shall be in effect until Lender notifies Borrower that it may resume selection
of the LIBOR Option.
In any case where Borrower may select an interest rate option
and fails or neglects to do so, then the Prime Option shall apply.
2.4 NOTE.
(a) All obligations of the Borrower to the Lender under the
Revolving Credit shall be evidenced by a master revolving promissory note in
form and content acceptable to Lender, executed by Borrower payable to the order
of Lender dated of even date with this Agreement in the principal amount of
EIGHT MILLION DOLLARS ($8,000,000.00) (the "Note").
(b) The Note shall be deemed to reflect the aggregate unpaid
principal amount of all obligations created under the Revolving Credit,
including the aggregate outstanding principal balance of all Advances made
pursuant to Section 2.2 hereof, whether or not the face amount of the Note is in
excess of the amount actually outstanding from time to time, and whether or not
the indebtedness outstanding thereunder or any portion thereof is from time to
time repaid and reborrowed.
2.5 INTEREST ON THE NOTE.
(a) Except as otherwise provided in this Section 2.5, the
aggregate principal balance of the Advances outstanding from time to time shall
bear interest and shall be payable as set forth in Section 2.2 hereof.
(b) If the Borrower shall Default in the payment of the
principal of, or interest on, any Advances made pursuant to Section 2.2 hereof,
then in any such event the Borrower shall, on demand, pay interest on the amount
in Default from the date of such Default up to the date of actual payment, at
the Default Rate.
(c) Interest hereunder shall be charged only on the sums
outstanding and shall be computed from the date such indebtedness is incurred to
the date of repayment.
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2.6 MATURITY OF REVOLVING CREDIT. The outstanding principal
balance on the Revolving Credit, together with all accrued and unpaid interest
thereon, shall be due and payable on the earlier of the Revolving Credit
Maturity Date or the Termination Date.
2.7 ACCESS TO REVOLVING CREDIT. Until the Lender receives further
written notice from the Borrower, only X. Xxxxxx Xxxx, Jr., Xxxx Xxxx and Xxxxxx
X. Xxxxxx shall be the authorized signatories of the Borrower, authorized to
request Advances.
2.8 INTEREST. All interest hereunder shall be computed on a daily
basis, based on a 360-day year. In no event shall interest be due at a rate in
excess of the highest lawful rate in effect from time to time. It is not the
intention of the parties hereto to make any agreement which shall be violative
of the laws of the State of Florida or the United States of America relating to
usury. In no event shall Borrower pay or Lender accept or charge any interest
which, together with any other charges upon the principal or any portion
thereof, howsoever computed, after taking into account any requirement for
commitment and facility fees, shall exceed the maximum lawful rate of interest
allowable under the laws of the State of Florida or the United States of America
from time to time. Should any provision of this Agreement or any existing or
further notes, loan agreements or any other agreements between the parties be
construed to require the payment of interest which, together with any other
charges upon the principal or any portion thereof, after taking into account any
requirement for commitment and facility fees, shall exceed such maximum lawful
rate of interest, then any such excess shall not be charged to the Borrower and
shall be applied against the remaining principal balance.
2.9 PAYMENTS. All payments of principal and interest under the
Note shall be made to Lender at 000 X.X. Xxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000, in
immediately available funds.
2.10 STANDBY L/C AGREEMENT. (a) Lender will, upon Borrower's
application on the Standby L/C Agreement issue two (2) Standby L/C's on behalf
of Borrower in connection with purchase by Borrower of the assets of Central Air
Conditioning Distributors, Inc., a North Carolina corporation (the "Asset
Purchase") in the maximum aggregate face amount of FOUR MILLION TWO HUNDRED
FIFTY THOUSAND DOLLARS ($4,250,000.00). Lender will not issue any Standby L/C
unless such instrument shall have an expiration date of not later than September
30, 1996. The issuance of the Standby L/C's shall, immediately upon the issuance
thereof, reduce the amount of borrowing availability under the Revolving Credit
by an amount equal to the face amount of the Standby L/C's.
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(a) Upon a draw under any Standby L/C the Borrower shall
reimburse Lender in accordance with the terms and conditions of the Standby L/C
Agreement.
(b) In connection with each Standby L/C, Borrower shall pay to
Lender a fee equal to one percent (1.0%) per annum on the face amount of each
Standby L/C issued, together with all other costs and expenses incurred by
Lender in connection with the issuance of a Standby L/C (the "Standby L/C Fee").
The Standby L/C Fee shall be due and payable on the date of issuance of each
Standby L/C, and on the date of any subsequent renewal and/or extension thereof.
SECTION 3
ADDITIONAL COSTS AND FEES
3.1 ADDITIONAL COSTS. If at any time after the date hereof, and
from time to time, the Lender determines that the adoption or modification of
any applicable law, rule or regulation regarding taxation, the Lender's required
levels of reserves, deposits, deposit insurance or capital (including any
allocations of capital requirements or conditions), or similar requirements, or
any interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation,
administration or compliance of the Lender with any of such requirements, has or
would have the effect of (i) increasing the Lender's costs relating to the
Revolving Credit hereunder and (ii) reducing the yield or rate of return of the
Lender on the Revolving Credit, to a level below that which the Lender could
have achieved but for the adoption or modification of any such requirements,
then, the Borrower shall, upon ninety (90) days prior written notice from the
Lender, pay to the Lender such additional amounts as (in the Lender's sole
judgment, after good faith and reasonable computation, the written explanation
of which shall be presented to the Borrower) will compensate the Lender for such
increase in costs which results in reduction in yield or rate of return of the
Lender, said compensation to be calculated prospectively from the date of notice
from the Lender. No failure of the Lender to immediately demand payment of any
additional amounts payable hereunder shall constitute a waiver of the Lender's
right to demand payment of such amounts at any subsequent time. Nothing herein
contained shall be construed or so operate as to require the Borrower to pay any
interest, fees, costs or charges greater than is permitted by applicable law.
3.2 FACILITY FEE. In connection with the Revolving Credit, the
Borrower shall pay to the Lender an annual facility fee (the "Facility Fee")
equal to the amount of the Revolving Credit multiplied by sixteen and
sixty-seven one hundredths (16.67)
11
basis points per annum. The first annual payment of the Facility Fee shall be
made to the Lender upon the Closing Date of the Revolving Credit and each
subsequent payment of the Facility Fee shall be made on each anniversary of the
Closing Date; provided, however, the Facility Fee payable in the final year of
the Revolving Credit shall be reduced pro-rata based upon the number of months
remaining from the last anniversary date through the Maturity Date.
In the event the Revolving Credit is terminated by Borrower
prior to the Maturity Date, the Facility Fee shall be due and payable in full
upon said termination, calculated based upon the term of the Revolving Credit
minus any amounts previously paid. A restructure or renegotiation of the
Revolving Credit by and between Borrower and Lender shall not be considered a
termination by Borrower and any portion of the most recent installment of the
Facility Fee which has been paid in advance of the restructuring or
renegotiation of the Revolving Credit shall be credited to any new facility fee
due and payable in connection with said restructuring or renegotiation.
SECTION 4
COLLATERAL
In order to secure the full and timely payment of all Indebtedness
under the Revolving Credit, as well as any renewals, extensions or modifications
thereof, and to secure performance of all obligations of Borrower to Lender,
however and whenever created, and to protect the Lender's rights hereunder and
under the Revolving Credit, on or before the Closing Date, all of the holders of
the common stock of the Borrower shall execute a pledge agreement (the "Pledge
Agreement") wherein Guarantor, as one hundred percent (100%) shareholder of
Borrower, shall pledge in favor of the Lender its shares of common stock of the
Borrower. The Borrower shall cause to be delivered to the Lender all of the
stock certificates evidencing the Guarantor's ownership interest in the Borrower
(the "Stock Certificates"), together with undated executed stock powers related
thereto (the "Stock Powers") and a requisite UCC-1 financing statement (the
"UCC"), in order to perfect the Lender's first priority security interest in the
common stock of the Borrower, together with all proceeds thereof, said Pledge
Agreement and UCC-1 to be in form and content satisfactory to the Lender and its
counsel (all the foregoing hereinafter referred to as the "Collateral").
SECTION 5
GUARANTY
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All of the Borrower's obligations under the Revolving Credit, as well
as any renewals, modifications, amendments and extensions thereof, and all
obligations of the Borrower to the Lender, howsoever and whenever incurred shall
be unconditionally guaranteed by Watsco, Inc., a Florida corporation
(hereinafter the "Guarantor"), pursuant to a written guaranty (hereinafter the
"Guaranty") in form and content acceptable to Lender in its sole discretion.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the
Advances and issue the Standby L/C's contemplated hereby, Borrower and Guarantor
each represent and warrant to the Lender that:
6.1 ORGANIZATION, STANDING, CORPORATE POWER, ETC. It is duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has corporate power and authority to own
its properties and to carry on its business as now being conducted, in every
jurisdiction where it is conducting its business, and has corporate power and
authority to execute and perform this Agreement and to execute and deliver all
other documents, instruments and agreements provided for herein.
6.2 AUTHORIZATION. The execution and performance of this
Agreement, the borrowings hereunder and the execution and delivery of each of
the Loan Documents, and all other documents and instruments provided for herein:
(a) have been duly authorized by all requisite corporate
action, and do not require any consent or approval of any other Person,
including without limitation, any of its stockholders or creditors;
(b) will not violate any provision of law relating to it, or
its Articles of Incorporation or Bylaws, as amended to the date hereof; and
(c) will not violate or be in conflict with, result in a
breach of, or constitute a default under, any indenture, agreement and other
instrument to which it is a party or by which it or any of its properties is
bound, or any order, writ, injunction or decree of any court or governmental
institution, the result of which could have a material adverse effect on its
financial or business condition.
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6.3 LITIGATION. There are no actions, suits or proceedings
pending, or, to its knowledge, threatened against or adversely affecting it, at
law or in equity or before or by any federal agency or instrumentality, domestic
or foreign, which involve any of the transactions herein contemplated, or the
possibility of any judgment or liability which may result in any material
adverse change in the business, operations, prospects, properties or assets, or
in the condition, financial or otherwise, of Borrower or Guarantor or the
possible loss or forfeiture of any material license or permit. It is not in
default with respect to any judgment, order, writ, injunction, decree, or with
respect to any rule or regulation of any court, or federal, state, municipal or
other governmental department, the result of which could have a material adverse
effect on the financial or business condition of Borrower or Guarantor.
6.4 FINANCIAL STATEMENTS. It heretofore has furnished to the
Lender balance sheets, annual statements, and other financial information which,
to the best of its knowledge, fairly and accurately present in all material
respects the financial condition and the results of its operations as of the
dates and for the periods indicated, and said financial statements show all
known liabilities, direct or contingent material liabilities as of the dates
thereof, and have been prepared in accordance with generally accepted accounting
principles consistently applied. Since the date of the furnishing of the most
recent financial statements, there has been no material adverse change in its
financial or other condition.
6.5 TAXES. It has filed, or caused to be filed, all federal and
state tax returns which, to the knowledge of the officers thereof, are required
to be filed and has paid or caused to be paid all taxes as shown on said returns
or on any assessment received by it and not being contested in good faith, to
the extent that such taxes have become due.
6.6 BURDENSOME RESTRICTIONS. Except as are reflected on the most
recent financial statements, it is not a party to any material agreement or
instrument or subject to any charter or other corporate restrictions materially
and adversely affecting its business, properties or assets, operations or
condition, financial or otherwise.
6.7 CENTRAL OWNERSHIP. All of the issued and outstanding capital
stock of Borrower is owned one hundred percent (100%) by Guarantor.
6.8 PROPERTY AND ASSETS. It has good and indefeasible title to all
the property and assets reflected on the most recent financial statements
furnished by it to the Lender, except such as has been disposed of in the
ordinary course of business since
14
the date of said financial statements, and all such property and assets are free
and clear of any liens, except liens for taxes not yet due, liens being
contested in good faith, liens permitted elsewhere in this Agreement, liens on
personal or real property as reflected in the most recent financial statements,
and also except for liens, if any, on properties acquired subsequent to said
statements and prior to the date of this Agreement.
6.9 PERMITS, LICENSES AND APPROVALS. It possesses all material
permits, licenses or other governmental approvals required by any federal, state
or local governmental authority for the conduct of its business as now
conducted. Each such permit, license or other governmental approval is
unencumbered, in good standing and there are no proceedings pending or, to the
knowledge of it, threatened against it or any other party, which seek to
suspend, revoke or terminate, or otherwise question the right of it to the
benefits of any such permit, license or other governmental approval.
6.10 ENFORCEABILITY. This Agreement and each of the Loan Documents,
when delivered hereunder, will constitute legal, valid and binding obligations
of it, as applicable, enforceable against it in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, equitable principles or other laws affecting the rights of creditors
generally.
6.11 DEFAULT. It is not in default in any respect under, or with
respect to, any contract, agreement or other instrument to which it is a party
or by which it or its assets may be bound, the result of which default could
have a material adverse effect on its financial or business condition and no
Default or Event of Default under this Agreement has occurred and is continuing.
6.12 REGULATION U. It is not engaged nor will it principally engage, or
engage as one of its important activities, in the business of extending credit
for the purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any loans hereunder will be used
for "purchasing" or "carrying" "margin stock" as so defined or for any purpose
which violates, or would be inconsistent with, the provisions or Regulations G,
T, U or X of said Board or of any Regulations of such Board. Upon request, the
Borrower will furnish the Lender with a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in said Regulation U to the
foregoing effect.
15
6.13 ERISA. The Plan, if any, maintained by it complies with all
applicable requirements of ERISA and of the Code, and with all applicable
rulings and regulations issued under the provisions of ERISA and the Code. No
Reportable Event has occurred and is outstanding with respect to any Plan.
6.14 INVESTMENT COMPANY ACT. It is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
6.15 USE OF PROCEEDS. The proceeds of the Revolving Credit shall be
used to finance the Asset Purchase, and for Borrower's general working capital
requirements and Borrower will not use any portion of such proceeds for the
benefit of any other Person unless permission is granted by the Lender in
writing.
6.16 OTHER ASSETS. Except as reflected in the financial information
previously furnished to the Lender, it did not, as of the date of said financial
information, own all or any portion of the stock, property, or assets of any
Person.
SECTION 7
CONDITIONS PRECEDENT
The obligations of the Lender under this Agreement are subject to the
following conditions precedent:
7.1 OPINION OF COUNSEL. The Lender shall have received, on or
prior to the Closing Date, the opinion of counsel (the "Opinion of Counsel") to
Borrower and Guarantor dated the Closing Date, addressed to the Lender,
confirming:
(a) Borrower and Guarantor are duly organized, validly
existing and in good standing in their respective states of incorporation and
otherwise qualified to conduct business in the states such business is
conducted; that the party or parties signing all documents and instruments
required in connection with this Agreement are each duly authorized to do so;
that this Agreement and all agreements, documents and instruments related
hereto, when executed and delivered to the Lender, will be valid and binding
obligations of Borrower and Guarantor, as applicable, enforceable according to
their respective terms;
(b) that there is no Charter or By-Law provision nor any
agreement, contract, indenture, document or instrument to which Borrower or
Guarantor is a party, nor any law or regulation or any decree of any court,
governmental, authority, bureau or agency binding on Borrower or Guarantor which
would be contravened by the execution or delivery of this Agreement or any
16
of the Loan Documents or by the performance of any term, provision, covenant,
condition, agreement or obligation of Borrower or Guarantor contained herein or
therein;
(c) that no order, consent, permit, authorization or approval
is required by or from any governmental body, agency or authority, to validate
this Agreement or any of the Loan Documents or any action taken, or to be taken
by Borrower or Guarantor, hereunder or thereunder; and
(d) such other matters relating to Borrower and Guarantor
and/or this Agreement as the Lender or its counsel may reasonably require.
7.2 SUPPORTING DOCUMENTS. The Lender shall have received from
Borrower and Guarantor, as applicable, on or prior to the Closing Date or within
such other time period indicated:
(a) a certificate of the Secretary of Borrower and Guarantor
dated as of the Closing Date, certifying as to: (i) resolutions of its Board of
Directors authorizing the execution, delivery and performance of this Agreement,
the borrowings hereunder, and the execution and delivery to the Lender of each
of the Loan Documents, and the full force and effect of such resolutions on the
Closing Date; (ii) the incumbency and signature of each of the officers of
Borrower and Guarantor signing any of the Loan Documents;
(b) The executed Note;
(c) The executed Pledge Agreement;
(d) The executed Financing Statements;
(e) The executed Guaranty;
(f) The executed Solvency Certificate;
(g) The executed Subordination Agreement;
(h) The Opinion(s) of Counsel;
(i) Certified copies of the Articles of Incorporation and
Bylaws of Borrower and Guarantor and all amendments thereto, together with a
Certificate of Good Standing of Borrower and Guarantor and proof of
qualification to do business in each jurisdiction in which Borrower's and
Guarantor's business is conducted;
(j) Evidence or certification that, from the date of the
latest financial information furnished to Lender by Borrower
17
and Guarantor there has been no adverse change in the business or financial
condition of Borrower or Guarantor;
(k) Evidence or certification that there exists no pending or
threatened litigation, the result of which could have a material adverse effect
on the business or financial condition of Borrower or Guarantor;
(l) Evidence that the Collateral is owned free and clear of
all liens and encumbrances except those in favor of Lender;
(m) Evidence of the Rheem Agreement;
(n) All agreements, documents, instruments or certificates
required to be reviewed by Lender in connection with the Asset Purchase;
(o) On or before October 26, 1995, proof satisfactory to
Lender that the Asset Purchase has been closed;
(o) such additional supporting documents as the Lender or its
counsel may reasonably request.
7.3 CONDITIONS TO ALL ADVANCES AND STANDBY L/C'S. On the date of
each Advance and issuance of each Standby L/C hereunder:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in Section 6 hereof shall be true and correct in all
material respects on and as of such date with the same force and effect as
though such representations and warranties had been made on and as of such date;
(b) NO DEFAULT. Borrower and Guarantor shall have observed and
performed in all material respects all of the terms, conditions and agreements
set forth herein on their part to be observed or performed and no Default or
Event of Default shall have occurred and be continuing;
(c) FINANCIAL STATEMENTS. All financial statements,
information and other data furnished by Borrower and Guarantor to the Lender
shall be, in all material respects, accurate and correct; the financial
statements shall have been prepared in accordance with generally accepted
accounting principles consistently applied, and shall accurately represent the
financial condition of Borrower and Guarantor, as applicable; no material
adverse changes in the financial or other condition of Borrower or Guarantor
shall have occurred since the date of said statements; and no material
liabilities, contingent or otherwise, not shown on said financial statements,
shall exist;
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(d) LITIGATION. There shall be no actions, suits, proceedings
or claims pending or threatened against or affecting Borrower or Guarantor, the
result of which are likely to substantially and adversely affect Borrower's or
Guarantor's financial condition, business or operations.
Each request for an Advance or issuance of a Standby L/C by
the Borrower hereunder shall constitute a representation and warranty by
Borrower as of the date of request for each such Advance that the conditions of
paragraphs (a) through (d) above have been satisfied and that no Default or
Event of Default has occurred as of such date.
SECTION 8
AFFIRMATIVE COVENANTS
Borrower and Guarantor, as applicable, covenant and agree with the
Lender, that from the date hereof and so long as this Agreement remains in
effect, or any obligations under the Loan Documents remain outstanding and
unpaid, unless the Lender shall otherwise consent in writing, Borrower and
Guarantor will:
WITH RESPECT TO BORROWER AND GUARANTOR:
8.1 CORPORATE EXISTENCE. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its corporate
existence, and all rights, licenses, permits and franchises required at the date
hereof, or which may be required in the future conduct of its business, and
comply with all applicable laws and regulations that affect it, and conduct and
operate its business in the same lines and in substantially the same manner in
which presently conducted and operated (subject to changes in the ordinary
course of business), and at all times, maintain, preserve and protect, in the
ordinary course of its business, all franchises, trade names and all property
used or required in the conduct of its business, and maintain all such property
in good working order and condition.
8.2 INSURANCE. Maintain its insurable properties adequately
insured at all times by financially sound and reputable insurers, to such extent
and against such risks, including liability, comprehensive, and property damage
insurance, flood, earthquake and other risks in amounts as is customary with
companies in the same or similar location and business, and the Borrower shall
deliver certificates evidencing such insurance to Lender on or before the
Closing Date. The Borrower shall provide at least ten (10) days prior written
cancellation notice of intended policy cancellation, non-renewal or material
modification.
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8.3 OBLIGATIONS AND TAXES. Pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon it in respect of any
of its properties, before the same shall become in default, as well as all
lawful claims of labor, materials and supplies or otherwise which, if unpaid,
might become a lien or charge upon such properties or any part thereof;
provided, however, that it shall not be required to pay and discharge, or to
cause to be paid and discharged, any such tax, assessment, charge, levy or claim
so long as the validity thereof shall be contested in good faith by appropriate
proceedings and adequate reserves shall have been set aside and reflected on its
financial statements furnished to the Lender with respect to any such tax,
assessment, charge, levy or claim so contested.
8.4 NOTICE. Give prompt written notice to the Lender of all
Defaults or Events of Default of which it becomes aware, under any of the terms
and provisions of this Agreement or any of the Loan Documents, or of any default
or event of default under any other agreement, contract, indenture, document or
instrument entered, or to be entered into by it, or any changes in its current
management, and of any other matter which has resulted in, or might result in, a
materially adverse change in its financial condition or operations.
8.5 BOOKS AND RECORDS/AUDITS. Keep and maintain full and accurate
accounts, books and records of its operations according to generally accepted
accounting principles consistently applied. Borrower and Guarantor shall permit
the Lender or any of the Lender's designated officers, employees, agents and
representatives, to audit, examine and inspect, at all reasonable times,
Borrower's and Guarantor's operational procedures, systems, accounts receivable,
accounts payable, inventory, general ledger, books and records.
8.6 COMPLIANCE WITH LAW. Comply in all material respects with the
requirements of all applicable laws, rules, regulations, and orders of
governmental authorities relating to the conduct of its business.
8.7 TRANSACTIONS WITH AFFILIATES. Enter into all transactions with
Affiliates on an arms length basis, on substantially the same terms and
conditions as are customarily employed in transactions with non-affiliated
parties.
8.8 CONTINGENT LIABILITIES. Inform Lender of any material actual
or potential contingent liabilities.
8.9 EXECUTION OF OTHER DOCUMENTS. Promptly upon demand by the
Lender, execute all such additional agreements, contracts,
20
indentures, documents and instruments in connection with this Agreement as the
Lender may reasonably deem necessary.
WITH RESPECT TO BORROWER:
8.10 REPORTING REQUIREMENTS - BORROWER. Cause to be furnished to
the Lender:
(a) as soon as available, but in any event not later than one
hundred twenty (120) days after the close of fiscal year ending December 31,
1995, a management prepared financial statement of Borrower for such fiscal
year, including a balance sheet, related statements of income and retained
earnings and the related statements of changes in financial position and cash
flows, and all schedules thereto, all in reasonable detail, prepared in
accordance with generally accepted accounting principles consistently applied.
(b) as soon as available, an audited balance sheet dated as of
the Closing Date, and all schedules thereto, all in reasonable detail, prepared
in accordance with generally accepted accounting principles consistently
applied.
(c) commencing December 31, 1996, as soon as available, but in
any event no later than one hundred twenty (120) days after the close of each
fiscal year, with a copy of the unqualified audited (consolidated and/or
consolidating, if appropriate) financial statements of the Borrower for such
fiscal year, including a balance sheet for such fiscal year as at the end of
such fiscal year, and related statements of income and retained earnings and
changes in financial position and cash flows, and all schedules thereto, for
such fiscal year, setting forth in each case in comparative form, the
corresponding figures for the preceding fiscal year, all in reasonable detail,
prepared in accordance with generally accepted accounting principles applied on
a consistent basis, such financial statements to be audited by independent
certified public accountants of recognized standing selected by the Borrower and
acceptable to the Lender in its reasonable discretion (such certification not to
be qualified or limited because of any restricted or limited examination made by
such accountants);
(d) as soon as available, but in any event not later than
forty-five (45) days after the end of each of the first three (3) quarterly
periods of each fiscal year of the Borrower, with company prepared unaudited
financial statements of the Borrower, including a balance sheet as at the end of
such fiscal quarter, and related statements of income and retained earnings and
all schedules thereto, all for the period from the beginning of such fiscal year
to the end of such fiscal quarter, the financial statements setting forth in
each case corresponding figures for the like period of the preceding fiscal
year; all in
21
reasonable detail, prepared in accordance with generally accepted accounting
principles applied on a basis consistently maintained throughout the period
involved and with prior periods and certified by the President or Chief
Financial Officer of the Borrower;
(e) concurrently with the delivery of the financial statements
referred to in clauses (c) and (d) above, with a certificate of the President or
Chief Financial Officer of the Borrower containing: (i) certification that the
financial statements are true and correct; that, to the best of his or her
knowledge, during such period the Borrower has kept, observed, performed and
fulfilled each and every covenant and condition contained in this Agreement, and
that he or she has no knowledge of any Default or Event of Default hereunder
except as specifically indicated in such certificate; (ii) computations and
conclusions, in such detail as Lender may request, with respect to compliance
with this Agreement and all documents executed in connection therewith,
including computations of all quantitative covenants;
(f) promptly after the filing or receiving thereof, copies of
all reports and notices which Borrower files, or after the occurrence of a
Reportable Event or condition which might constitute grounds for the termination
of or for the appointment of a trustee or administrator of any Plan, under ERISA
or the United States Department of Labor;
(g) within ten (10) days after service of process or
equivalent notice, written notice of any litigation, including arbitrations and
of any proceeding by or before any governmental agency where the amount involved
or the nature of the proceeding, if adversely determined, may materially and
adversely affect Borrower's business, operations, prospects, properties, or
assets, or the Borrower's condition, financial or otherwise;
(h) promptly, from time to time, such other information
relating to Borrower's business, properties, or conditions or operations,
financial or otherwise, as the Lender may reasonably request.
8.11 NET WORTH - BORROWER. With respect to Borrower, (A) achieve a
Net Worth (hereinafter defined) as of December 31, 1995 equal to or greater than
Borrower's Net Worth as of the Closing Date, plus an amount equal to Borrower's
net income reported as of December 31, 1995, less any amount paid in dividends
to shareholders as permitted herein; (B) achieve a Net Worth as of June 30,
1996, equal to or exceeding Borrower's Net Worth reported as of December 31,
1995; (C) achieve a Net Worth as of September 30, 1996 equal to or exceeding
Borrower's Net Worth reported as of June 30, 1996; and (D) commencing December
31,
22
1996 and each fiscal year thereafter, Borrower shall achieve and maintain a Net
Worth equal to or exceeding Borrower's Net Worth reported as of the prior fiscal
year end plus an amount equal to Borrower's net income reported as of the end of
each respective fiscal year, less any amount paid in dividends to shareholders
as permitted herein.
8.12 FUNDED DEBT/EARNINGS RATIO - BORROWER. With respect to
Borrower, maintain at all times a Funded Debt/Earnings Ratio (hereinafter
defined) not to exceed 6.0 to 1.0 as of December 31, 1996; 5.0 to 1.0 commencing
as of December 31, 1997; and 4.0 to 1.0 commencing as of December 31, 1998. As
used herein, Funded Debt/Earnings Ratio shall be defined as the ratio determined
by comparing Borrower's: (A) Funded Debt; to (B) earnings before interest
expense, taxes and depreciation/amortization expense.
The Funded Debt/Earnings Ratio shall be determined each fiscal
quarter on a rolling four (4) quarter basis including the Borrower's financial
results for the immediately preceding four (4) fiscal quarters.
8.13 FIXED CHARGE COVERAGE RATIO - BORROWER. With respect to
Borrower, commencing December 31, 1996 and quarterly thereafter, maintain at all
times a Fixed Charge Coverage Ratio (hereinafter defined) of not less than
1.5:1.0. As used herein the Fixed Charge Coverage Ratio shall be defined as the
ratio determined by comparing Borrower's: (A) earnings before interest expense,
taxes and lease expense; to (B) interest expense and lease expense.
The Fixed Charge Coverage Ratio shall be determined each
fiscal quarter on a rolling four (4) quarter basis utilizing the Borrower's
financial results for the immediately preceding four (4) fiscal quarters.
8.14 DISTRIBUTORSHIP AGREEMENT - BORROWER. With respect to the
Borrower, maintain in full force and effect the Rheem Agreement.
WITH RESPECT TO GUARANTOR:
8.15 REPORTING REQUIREMENTS - GUARANTOR. Guarantor shall cause to
be furnished to the Lender:
(a) as soon as available, but in any event not later than one
hundred twenty (120) days after the close of each fiscal year of the Guarantor,
an audited consolidated balance sheet of the Borrower for such fiscal year as at
the end of such fiscal year, related audited statements of income and retained
earnings and the related consolidated statements of changes in financial
position, and cash flows, showing the cash inflows and cash
23
outflows of the Guarantor for such fiscal year, setting forth, in each case in
comparative form, the corresponding figures for the preceding fiscal year, all
in reasonable detail, prepared in accordance with generally accepted accounting
principles applied on a basis consistently maintained throughout the period
involved and the prior year; such financial statements to be certified by
independent certified public accountants selected by the Guarantor and
acceptable to the Lender (the "CPA") (such certification not to be qualified or
limited by such accountants) and certified by its chief financial officer; (the
Lender's acceptance of the CPA shall not be unreasonably withheld);
(b) as soon as available, but in any event not later than one
hundred twenty (120) days after the close of each fiscal year of the Guarantor,
consolidating financial statements of the Guarantor for such fiscal year,
including a consolidating balance sheet, related consolidating statements of
income and retained earnings, and schedules thereto, setting forth in each case
in comparative form, the corresponding figures for the preceding fiscal year,
all in reasonable detail, prepared in accordance with generally accepted
accounting principles consistently applied.
(c) within ten (10) days of the filing thereof with the
Securities and Exchange Commission ("SEC") each 10-K and 10-Q filed by the
Guarantor with the SEC, together with all schedules and exhibits filed
therewith, said statements to be prepared according to the standards set forth
by the SEC for such reports;
(d) concurrently with the delivery of the financial statements
referred to in clause (a), (b) and (c) above, if requested by Lender, a
certificate of the President or Chief Financial Officer of Guarantor containing:
(i) certification that the financial statements are true and correct; that, to
the best of his or her knowledge, during such period the Guarantor has kept,
observed, performed and fulfilled each and every covenant and condition
contained in this Agreement and that he or she has obtained no knowledge of any
Default or Event of Default hereunder except as specifically indicated in such
certificate; and (ii) computations and conclusions, in such detail as Lender may
request, with respect to compliance with this Agreement and all documents
executed in connection therewith, including computations of all quantitative
covenants;
(e) promptly after the same are sent, copies of all proxy
statements, financial statements and reports which the Guarantor sends to its
stockholders, and within ten (10) days after the same are filed, copies of all
regular, periodic and special reports (including but not limited to reports on
Forms 10-K, 10-Q and 8-K), and all registration statements which the Guarantor
files with the SEC or any governmental authority which
24
may be substituted therefor, or with any national securities exchange;
(f) promptly after the filing or receiving thereof, copies of
all reports and notices which the Guarantor files, after the occurrence of a
Reportable Event or condition which might constitute grounds for the termination
of or for the appointment of a trustee or administrator of any Plan, under ERISA
or the United States Department of Labor;
(g) within ten (10) days after service of process or
equivalent notice, written notice of any litigation, including arbitrations and
of any proceeding by or before any governmental agency where the amount involved
or the nature of the proceeding, if adversely determined, may materially and
adversely affect the Guarantor's business, operations, prospects, properties, or
assets, or the Guarantor's condition, financial or otherwise;
(h) promptly, from time to time, such other information
relating to Guarantor's business, properties, or conditions or operations,
financial or otherwise, as the Lender may reasonably request.
8.16 TANGIBLE NET WORTH - GUARANTOR. With respect to Guarantor,
achieve and maintain a Tangible Net Worth equal to at least THIRTY MILLION
DOLLARS ($30,000,000.00).
8.17 LEVERAGE RATIO - GUARANTOR. With respect to the Guarantor,
report a ratio of total Liabilities to Tangible Net Worth not to exceed 3.0 to
1.0 at all times.
8.18 MANAGEMENT - GUARANTOR. With respect to Guarantor, maintain
Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx in its active day to day control and
management.
SECTION 9
NEGATIVE COVENANTS
The Borrower and Guarantor, as applicable, covenant and agree with the
Lender that from the date hereof and so long as this Agreement remains in effect
or any obligations under the Loan Documents remain outstanding and unpaid,
unless the Lender shall otherwise consent in writing, the Borrower and Guarantor
will not:
WITH RESPECT TO BORROWER AND GUARANTOR:
9.1 DEFAULT UNDER OTHER AGREEMENTS OR CONTRACTS. Commit or do, or
fail to commit to do, any act or thing which would constitute a default under
any of the terms or provisions of any
25
other agreement, contract, indenture, document or instrument executed, or to be
executed by it if the effect of such default could materially and adversely
affect the business or financial condition of (i) the Borrower; (ii) Guarantor
and its subsidiaries taken as a whole;
9.2 ACCOUNTING PRACTICES. Change any of its accounting practices
or procedures, unless such change is in accordance with or permitted within
generally accepted accounting principles.
WITH RESPECT TO BORROWER:
9.3 GUARANTIES/DEBT ASSUMPTIONS - BORROWER. With respect to
Borrower, guarantee any obligations or assume any indebtedness, except that
Borrower shall be entitled to endorse instruments for collection in the ordinary
course of business.
9.4 SALE/LEASEBACK AND CAPITALIZED LEASE TRANSACTIONS - BORROWER.
With respect to Borrower, enter into any sale and lease-back or capitalized
lease obligation with respect to any of its fixed assets which would exceed TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) in the aggregate.
9.5 DISPOSAL OF PROPERTY - BORROWER. With respect to Borrower,
except for the sale of inventory in the ordinary course of business, sell
significant assets where the consideration or purchase price for such assets
would exceed TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) in the aggregate
during any fiscal year.
9.6 OWNERSHIP - BORROWER. With respect to Borrower, change in any
way its ownership.
9.7 ADDITIONAL INDEBTEDNESS - BORROWER. With respect to Borrower,
with the exception of (i) Indebtedness incurred in connection with the Asset
Purchase, in an amount not to exceed FOUR MILLION TWO HUNDRED FIFTY THOUSAND
DOLLARS ($4,250,000.00), and including the Subordinated Indebtedness; and (ii)
Indebtedness to Guarantor, advanced by Guarantor to Borrower to support short
term working capital needs of Borrower in an amount not to exceed TWO MILLION
DOLLARS ($2,000,000.00) outstanding at any time; incur, create, assume or permit
to exist any additional Indebtedness for borrowed money, secured or unsecured,
or in the form of purchase money obligations or capitalized leases in an amount
exceeding FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) in the aggregate at any
one time outstanding.
9.8 DIVIDENDS - BORROWER. With respect to Borrower, pay or declare
dividends to shareholders in excess of one hundred percent (100%) of net profit
after taxes for the immediately preceding fiscal year end.
26
9.9 ADDITIONAL LIENS - BORROWER. With respect to Borrower, incur,
create, assume or permit to exist any additional Liens on any of its property or
assets now owned or hereafter acquired, except for Liens incurred in connection
with the purchase money financing permitted under Section 9.7 hereinabove.
9.10 CAPITAL EXPENDITURES - BORROWER. With respect to Borrower,
make capital expenditures in any fiscal year exceeding TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000.00) in the aggregate.
9.11 ADVANCES TO AFFILIATES. Make any loans, advances or
distributions to stockholders, subsidiaries, Affiliates, officers, employees or
third parties.
9.12 LIMITATION ON MERGERS AND SALE OF ASSETS. With the exception
of the Asset Purchase, enter into any transaction or merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), convey, sell, lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or a substantial part of
its business or assets.
9.13 CONTROL/NAME. Change in any way its control, name or otherwise
change its nature of business.
9.14 NOTES, ACCOUNTS RECEIVABLE. Except for the purpose of
collection in the ordinary course of business, sell, assign, transfer, discount
or otherwise dispose of notes, accounts receivable or other rights to receive
payment, with or without recourse.
BORROWER, GUARANTOR AND LENDER EXPRESSLY ACKNOWLEDGE AND AGREE THAT THE
COVENANTS SET FORTH HEREIN PERTAINING TO GUARANTOR SHALL BE MODIFIED AND AMENDED
IN ACCORDANCE AND SIMULTANEOUSLY WITH ANY MODIFICATION OR AMENDMENT OF THE
COVENANTS SET FORTH IN THE LINE AGREEMENT.
SECTION 10
DEFAULTS AND REMEDIES
10.1 EVENTS OF DEFAULT AND REMEDIES. If any one or more of the
following Events of Default shall occur for any reason whatsoever (and whether
such occurrences shall be voluntary or involuntary, or come about or be affected
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 administrative or
governmental body), that is to say:
27
(a) any representation or warranty made herein or by the
Borrower or Guarantor in any report, certificate, financial statement or other
instrument furnished in connection with this Agreement, or any Advance or
borrowing hereunder, shall prove to be false or misleading in any material
respect, or any representation or warranty made by the Borrower or Guarantor in
any future report, certificate, financial statement or other instrument
furnished in connection with this Agreement, or any Advances or borrowings
hereunder, shall prove to be false or misleading in any material respect, which
representation or warranty made by the Borrower or Guarantor remains false or
misleading in any material respect for a period of thirty (30) days after the
occurrence thereof;
(b) the Borrower shall fail to pay the principal of or
interest on any obligations created hereunder, within five (5) days of when and
as the same shall become due and payable, whether at the due date or by
acceleration or otherwise;
(c) any default shall occur on the part of the Borrower or
Guarantor in the due observance or performance of any covenant, agreement or
other provision of this Agreement or any of the Loan Documents, other than for
the payment of money, which default remains in effect for a period of thirty
(30) consecutive days after the occurrence thereof;
(d) the Borrower or Guarantor shall fail to make payment of
principal or interest on any other Indebtedness beyond any period of grace
provided with respect thereto, or shall default in the performance of any other
agreement, covenant, term or condition contained in any agreement under which
any such obligation is created, if the effect of such default is to cause the
holder or holders of such Indebtedness to accelerate the maturity thereof or
results in a material adverse effect on its business or financial condition;
(e) Borrower or Guarantor shall (i) apply for or consent to
the appointment of a receiver, trustee in bankruptcy for benefit of creditors,
or liquidator of it or of any of its property; (ii) admit in writing its
inability to pay its debts as they mature or generally fail to pay such debts as
they mature; (iii) make a general assignment for the benefit of creditors; (iv)
be adjudicated a bankrupt or insolvent; (v) file a voluntary petition in
bankruptcy, or a petition or an answer seeking reorganization or an arrangement
with creditors, or seeking to take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute or
an answer admitting an act of bankruptcy alleged in a petition filed against it
in any proceeding under any such law; or (vi) take any corporate action for the
purpose of effecting any of the foregoing;
28
(f) an order, judgment or decree shall be entered against
Borrower or Guarantor, without its application, approval or consent, or by any
court of competent jurisdiction, approving a petition seeking the reorganization
of it or appointing a receiver, trustee or liquidator of it or of all or a
substantial part of the assets thereof, and such order, judgment or decree shall
continue unstayed and in effect for a period of thirty (30) consecutive days
from the date of entry thereof;
(g) a final judgment or final judgments, excluding claims
covered by insurance, shall be rendered against the Borrower or Guarantor except
for final judgments which do not exceed FIVE HUNDRED THOUSAND DOLLARS
($500,000.00) in the aggregate, and the same shall remain undischarged for a
period of thirty (30) consecutive days during which execution shall not be
effectively stayed, provided that a judgment shall be deemed "final" only when
the time for appeal shall have expired without an appeal having been claimed, or
all appeals and further review claimed shall have been determined adversely to
it;
(h) any monies, deposits other property of the Borrower or
Guarantor now or hereafter on deposit with, or in the possession or under
control of the Lender, shall become subject to attachment proceedings, or
distraint proceedings or any order or process of court, and such proceedings are
not effectively stayed within a period of thirty (30) consecutive days after the
institution thereof;
(i) any default shall occur under any other existing or future
written agreements between the Borrower or Guarantor and the Lender which
remains uncured after expiration of any applicable grace period;
(j) any material adverse change in the business or financial
condition of Borrower or Guarantor, as determined by Lender;
(k) the liquidation, dissolution, or wind-up of Borrower or
Guarantor, whether voluntarily or involuntarily, or failure of Borrower or
Guarantor to maintain its corporate existence;
(l) the invalidation, discharge or subordination, in whole or
in part, of any of Lender's security documents or any of the Lender's liens;
(m) the sale, transfer or conveyance of any part or portion of
the Collateral, or any interest therein;
29
(n) cancellation, termination or material breach of the Rheem
Agreement; provided, however, Borrower shall have thirty (30) days to cure any
breach of the Rheem Agreement;
(o) any default shall occur under the Guaranty, the Line
Agreement or the Standby L/C Agreement.
THEN, and in every such Event of Default, the Lender may, at its
option: (i) declare all obligations of the Borrower to the Lender hereunder and
under the Standby L/C Agreement to be due and payable forthwith, including
without limitation principal, interest, fees, costs and expenses, whereupon the
Note shall become due and payable immediately, both as to principal and
interest, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, anything contained herein or in such Notes to
the contrary notwithstanding; (ii) declare permanently terminated any commitment
of the Lender to make further Advances or issue any further Standby L/C's; and
(iii) pursue all of the rights and remedies available to the Lender under this
Agreement and each of the Loan Documents.
SECTION 11
MISCELLANEOUS
11.1 NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed by
registered or certified mail, sent by facsimile transmission or hand delivered
to the applicable party at the address indicated below:
IF TO THE BORROWER: CAC ACQUISITION, INC./CENTRAL
AIR CONDITIONING DISTRIBUTORS, INC.
c/o Watsco, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
IF TO GUARANTORS: WATSCO, INC.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx,
Vice President-Finance
WITH A COPY TO: XXXXXXXXX XXXXXXX
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
30
IF TO THE LENDER: NATIONSBANK OF FLORIDA, N.A.
000 X.X. Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Commercial Banking Manager
and Xxxxxx X. Xxxxx, Vice President
WITH A COPY TO: XXXXXXXX INGERSOLL P.C.
One Turnberry Place
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
or, as to any party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. All such notices, requests, demands and other communications
shall be deemed to have been duly given or made, in the case of facsimile
transmission when an appropriate answerback has been received by the sending
party, in the case of registered or certified mail, on the third Business Day
after the day on which mailed, and in the case of hand delivery, upon actual
delivery.
11.2 SURVIVAL OF REPRESENTATIONS. All covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by the Lender of the borrowings herein
contemplated, and the execution and delivery to the Lender of each of the Loan
Documents and shall continue in full force and effect so long as any
Indebtedness created hereunder is outstanding and unpaid. All covenants and
agreements by or on behalf of the parties hereto which are contained or
incorporated in this Agreement shall bind and inure to the benefit of the
successors and assigns of all parties hereto.
11.3 EFFECT OF DELAY. Neither any failure nor any delay on the part
of the Lender in exercising any right, power or privilege hereunder or under any
of the Loan Documents shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any other
right, power or privilege.
11.4 EXPENSES. The Borrower shall pay all fees and out-of-pocket
expenses reasonably incurred by the Lender in connection with the preparation
and closing of this Agreement, including but not limited to the fees and
expenses of special counsel for the Lender, and shall pay the fees and expenses
incurred by the Lender in connection with the borrowings hereunder, and the
enforcement of the rights of the Lender in connection with this Agreement,
including but not limited to the reasonable fees and expenses of counsel.
31
11.5 MODIFICATIONS AND WAIVERS. No modification or waiver of any
provision of this Agreement nor consent to any departure by the Borrower or
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Lender, and such waiver or consent shall be effective
only in the specific instance and for the purpose of which given. No notice to
or demand on the Borrower or Guarantor in any case shall thereby entitle it to
any other or further notice or demand in the same, similar or other
circumstances.
11.6 DISCLAIMER. The Lender shall incur no liability to the
Borrower or Guarantor in acting upon any advice received by the Lender, whether
oral or written, which the Lender believes in good faith to have been given by
an officer or other person authorized to borrow on behalf of the Borrower or in
otherwise acting in good faith under this Agreement. Further, all documents
required to be executed in conjunction with borrowings under this Agreement may
be signed by any of the officers or other persons duly authorized by the general
borrowing resolutions of the Borrower and Guarantor, as applicable, as such
resolutions may be amended from time to time.
11.7 REMEDIES CUMULATIVE. Any rights or remedies of the Lender
hereunder, or under any other writing shall be cumulative and in addition to
every other right or remedy contained therein or herein, now in existence or
existing hereafter, at law or in equity by statute or otherwise. Upon the
occurrence of an Event of Default, the Lender may proceed to enforce any of the
rights and remedies against the Borrower and Guarantor, or against any
collateral given as security for the Indebtedness hereunder, and the Lender may
enforce such rights and remedies simultaneously, or in such order and at such
time, or from time to time, as the Lender determines in its sole and absolute
discretion.
11.8 APPLICATION OF PAYMENTS. Payments received by the Lender from
the Borrower or Guarantor, whether direct or from realizations on any
collateral, may be applied to payment of such obligations of the Borrower in
such order of application as the Lender may elect, and the Borrower and
Guarantor hereby waives any rights to designate to which of its obligations any
such payments shall be applied.
11.9 CONSTRUCTION. This Agreement shall be governed and construed
in accordance with the laws of the State of Florida except as to regulations
governing interest rates or other terms of lending which are governed by all
applicable laws.
11.10 SEVERABILITY OF PROVISIONS. Any provision of this Agreement
which is unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective only to the extent of such unenforceability, without invalidating
the remaining provisions
32
thereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
11.11 HEADINGS. Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
11.12 SUCCESSORS AND ASSIGNS. All of the terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns, except that neither
the Borrower nor Guarantor shall have the right to assign its rights hereunder
or any interest herein.
11.13 INDEMNIFICATION. The Borrower agrees to indemnify the Lender
and to pay for all documentary stamp taxes, intangible taxes and penalties
thereon which may become due in connection with this Agreement or the Note. The
Borrower shall execute a letter in favor of the Lender evidencing this
indemnification.
11.14 TIME OF PAYMENTS. All payments required to be made by the
Borrower hereunder (except for direct debits by the Lender) shall be paid to the
Lender in readily available funds on or before 2:00 P.M. (Miami, Florida time)
on the dates such payments are due. Payments received by the Lender subsequent
to that time will be credited to the Borrower on the next successive Business
Day.
11.15 MANDATORY ARBITRATION. Any controversy or claim between or
among the parties hereto including but not limited to those arising out of or
relating to this Agreement or any related agreements or instruments, including
any claim based on or arising from an alleged tort, shall be determined by
binding arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Mediation
Services, Inc. (J.A.M.S.), and the "Special Rules" set forth below. In the event
of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Agreement may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this Agreement
applies in any court having jurisdiction over such action.
(a) SPECIAL RULES. The arbitration shall be conducted in the
city of Lender's domicile at time of this Agreement's execution and administered
by J.A.M.S. who will appoint an arbitrator; if J.A.M.S. is unable or legally
precluded from administering the arbitration, then the American Arbitration
33
Association will serve. All arbitration hearings will be commenced within ninety
(90) days of the demand for arbitration; further, the arbitrator shall only,
upon a showing of cause, be permitted to extend the commencement of such hearing
for up to an additional sixty (60) days.
(b) RESERVATION OF RIGHTS. Nothing in this Agreement shall be
deemed to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Agreement; or (ii) be a
waiver by Lender of the protection afforded to it by 12 U.S.C. ss.91 or any
substantially equivalent state law; or (iii) limit the right of Lender (A) to
exercise self help remedies such as (but not limited to) setoff, or (B) to
foreclose against any real or personal property collateral, or (C) to obtain
from a court provisional or ancillary remedies such as (but not limited to)
injunctive relief or the appointment of a receiver. Lender may exercise such
self help rights, foreclose upon such property, or obtain such provisional or
ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this Agreement. At Lender's option, foreclosure
under a pledge and assignment agreement, a deed of trust or mortgage may be
accomplished by any of the following: the exercise of a power of sale under the
security instrument, or by judicial sale under the security instrument, or by
judicial foreclosure. Neither this exercise of self help remedies nor the
institution or maintenance of an action for foreclosure or provisional or
ancillary remedies shall constitute a waiver of the right of any party,
including the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
(c) ARBITRAL AWARD. The arbitral award shall include (i) a
provision that the prevailing party in such arbitration shall recover its costs
of the arbitration and reasonable attorneys' fees and expenses from the other
party; and (ii) the amount of such costs, fees and expenses. Any cause of action
subject to such arbitration shall be subject to the same statute of limitations
that would have been applicable to such cause of action in an action of law.
34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
[BORROWER]
CAC ACQUISITION, INC.,
a North Carolina corporation
By: /s/ XXXXX X. XXXXX
----------------------------
As: President
---------------------------
[CORPORATE SEAL]
[GUARANTOR]
WATSCO, INC.,
a Florida corporation
By: /s/ XXXXXX X. XXXXXX
----------------------------
As: V.P. of Finance
----------------------------
[CORPORATE SEAL]
[LENDER]
NATIONSBANK OF FLORIDA, N.A.
By: /s/ XXXXXXXX XXXXXXX
------------------------------
As: Senior Vice President
-----------------------------
35
STATE OF NORTH CAROLINA )
) SS:
COUNTY OF FORSYTH )
The foregoing instrument was acknowledged before me in Winston-Salem,
North Carolina this 26th day of October, 1995 by Xxxxx X. Xxxxx, as President
of CAC ACQUISITION, INC., a North Carolina corporation, on behalf of said
corporation, who is personally known to me or has produced Florida Driver's
License as identification.
/s/ XXX X. XXXXXX
------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
Print Name: Xxx X. Xxxxxx
Serial No: ###-##-####
My Commission Expires: 3/8/98
STATE OF NORTH CAROLINA )
) SS:
COUNTY OF FORSYTH )
The foregoing instrument was acknowledged before me in Winston-Salem,
North Carolina this 26th day of October, 1995 by Xxxxxx X. Xxxxxx, as
V.P. of Finance of WATSCO, INC., a Florida corporation, on behalf of said
corporation, who is personally known to me or has produced Florida Driver's
License as identification.
/s/ XXX X. XXXXXX
------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
Print Name: Xxx X. Xxxxxx
Serial No: ###-##-####
My Commission Expires: 3/8/98
36
STATE OF NORTH CAROLINA )
) SS:
COUNTY OF FORSYTH )
The foregoing instrument was acknowledged before me in Winston-Salem,
North Carolina this 26th day of October, 1995 by Xxxxxxxx Xxxxxxx, as
Sr. Vice President of NATIONSBANK OF FLORIDA, N.A., a national banking
association on behalf of said Bank, who is personally known to me or has
produced Florida Driver's License as identification.
/s/ XXX X. XXXXXX
------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
Print Name: Xxx X. Xxxxxx
Serial No: ###-##-####
My Commission Expires: 3/8/98
37
