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EXHIBIT 10.10
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NOTE PURCHASE AGREEMENT
BY AND AMONG
DIRECTED ELECTRONICS, INC.
DEI HOLDINGS, INC.
DEI HEADQUARTERS, INC.
AND
AMERICAN CAPITAL FINANCIAL SERVICES, INC.,
AS AGENT
AND
THE PURCHASERS IDENTIFIED ON
ANNEX A HERETO
JUNE 17, 2004
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$37,000,000 SENIOR SUBORDINATED NOTES DUE 2011
$37,000,000 JUNIOR SUBORDINATED NOTES DUE 2012
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1
DEFINITIONS....................................................
1
1.1 Certain
Definitions............................................ 1
1.2 Accounting
Principles.......................................... 18
1.3 Other Definitional Provisions;
Construction.................... 19
ARTICLE 2 ISSUE AND SALE OF SUBORDINATED
NOTES........................... 19
2.1 Subordinated
Notes............................................. 19
2.2 Sale and
Purchase.............................................. 19
2.3 The
Closing.................................................... 19
ARTICLE 3 REPAYMENT OF THE SUBORDINATED
NOTES............................ 20
3.1 Interest Rates and Interest
Payments........................... 20
3.2 Repayment of Subordinated
Notes................................ 20
3.3 Optional Prepayment of Subordinated
Notes...................... 21
3.4 Notice of Optional
Prepayment.................................. 21
3.5 Mandatory
Prepayment........................................... 22
3.6 Home Office
Payment............................................ 22
3.7
Taxes..........................................................
22
3.8 Maximum Lawful
Rate............................................ 23
3.9 Capital
Adequacy............................................... 23
3.10 Certain
Waivers................................................ 23
ARTICLE 4
CONDITIONS.....................................................
24
4.1 Conditions to the Purchase of Subordinated
Notes............... 24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE LOAN
PARTIES............. 26
5.1 Representations and Warranties of Loan
Parties................. 26
5.2 Absolute Reliance on the Representations and
Warranties........ 33
ARTICLE 6 TRANSFER OF SUBORDINATED
NOTES................................. 33
6.1 Restricted
Securities.......................................... 33
6.2 Legends; Purchaser's
Representations........................... 33
6.3 Transfer of Subordinated
Notes................................. 34
6.4 Replacement of Lost Subordinated
Notes......................... 34
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TABLE OF CONTENTS
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6.5 No Other Representations
Affected.............................. 34
ARTICLE 7
COVENANTS......................................................
35
7.1 Affirmative
Covenants.......................................... 35
7.2 Negative
Covenants............................................. 41
7.3 Financial
Covenants............................................ 49
ARTICLE 8 EVENTS OF
DEFAULT.............................................. 50
8.1 Events of
Default.............................................. 50
8.2 Consequences of Event of
Default............................... 52
ARTICLE 9 THE
AGENT...................................................... 52
9.1 Authorization and
Action....................................... 52
9.2 Delegation of
Duties........................................... 53
9.3 Exculpatory
Provisions......................................... 53
9.4
Reliance.......................................................
53
9.5 Non-Reliance on Agent and Other
Purchasers..................... 54
9.6 Agent in its Individual
Capacity............................... 54
9.7 Successor
Agent................................................ 54
9.8 Collections and
Disbursements.................................. 54
9.9
Reporting......................................................
55
9.10 Consent of
Purchasers.......................................... 55
9.11 This Article Not Applicable to Loan
Parties.................... 56
ARTICLE 10 SUBORDINATION OF JUNIOR SUBORDINATED
NOTES..................... 57
10.1
General........................................................
57
10.2 Default in Respect of Senior Subordinated
Notes................ 57
10.3 Insolvency,
etc................................................ 58
10.4 Limited Suspension of Remedies of Holders of Junior
Subordinated Notes.............................................
59
10.5 Proof of
Claim................................................. 59
10.6 Acceleration of Junior Subordinated
Notes...................... 59
10.7 Turnover of
Payments........................................... 60
10.8 Obligations Not
Impaired....................................... 60
10.9 Payment of Debt;
Subrogation................................... 61
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TABLE OF CONTENTS
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10.10 Reliance of Holders of Senior Subordinated Notes;
Amendments... 61
ARTICLE 11
MISCELLANEOUS..................................................
61
11.1 Successors and
Assigns......................................... 61
11.2 Modifications and
Amendments................................... 62
11.3 No Implied Waivers; Cumulative Remedies; Writing
Required...... 62
11.4 Reimbursement of
Expenses...................................... 62
11.5
Holidays.......................................................
62
11.6
Notices........................................................
62
11.7
Survival.......................................................
64
11.8 Governing
Law.................................................. 64
11.9 Jurisdiction, Consent to Service of
Process.................... 64
11.10 Jury Trial
Waiver.............................................. 65
11.11
Severability...................................................
65
11.12
Headings.......................................................
65
11.13
Indemnity......................................................
65
11.14 Environmental
Indemnity........................................ 66
11.15
Counterparts...................................................
67
11.16
Integration....................................................
67
11.17
Subordination..................................................
67
SIGNATURE PAGE TO NOTE PURCHASE
AGREEMENT................................... 68
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TABLE OF CONTENTS
(CONTINUED)
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ANNEX
Annex A Purchasers and Payment Information
Annex B Purchaser Allocations of Subordinated Notes
Annex C One-Time Add-Backs
SCHEDULES
Organizational Schedule Schedule 5.1(a)
Litigation Schedule Schedule 5.1(j)
Environmental Schedule Schedule 5.1(l)
Taxes Schedule Schedule 5.1(n)
Properties Schedule Schedule 5.1(q)
Intellectual Property Schedule Schedule 5.1(r)
Liabilities Schedule Schedule 5.1(w)
Permitted Encumbrances Schedule Schedule 7.2(b)
EXHIBITS
Exhibit A-1 Form of Senior Subordinated Note
Exhibit A-2 Form of Junior Subordinated Note
Exhibit B Form of Compliance Certificate
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NOTE PURCHASE AGREEMENT
$37,000,000 AGGREGATE PRINCIPAL AMOUNT OF SENIOR SUBORDINATED
NOTES DUE
JUNE 17, 2011
$37,000,000 AGGREGATE PRINCIPAL AMOUNT OF JUNIOR SUBORDINATED
NOTES DUE
JUNE 17, 2012
THIS NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of
June 17,
2004, is by and among DIRECTED ELECTRONICS, INC., a California
corporation
("Company"), DEI HOLDINGS, INC., a Florida corporation
("Holdings"), and DEI
HEADQUARTERS, INC., a Florida corporation ("Headquarters", and
together with
Company and Holdings, the "Loan Parties"), the note purchasers
that are now and
hereafter at any time parties hereto and are listed in Annex A
(or any amendment
or supplement thereto) attached hereto (each a "Purchaser" and
collectively,
"Purchasers"), and AMERICAN CAPITAL FINANCIAL SERVICES, INC., a
Delaware
corporation ("ACFS"), as administrative agent for Purchasers (in
such capacity
"Agent"). Capitalized terms used and not defined elsewhere in
this Agreement are
defined in Article 1 hereof.
RECITALS
The Loan Parties have proposed selling Subordinated Notes to
Purchasers in the aggregate amount of $74,000,000 for the
purpose of repaying
debt, providing for working capital and general corporate
requirements of
Company, and recapitalizing Company's balance sheet.
NOW, THEREFORE, the parties hereto, in consideration of the
premises
and their mutual covenants and agreements herein set forth and
intending to be
legally bound hereby, covenant and agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. In addition to other words and terms
defined
elsewhere in this Agreement, the following words and terms shall
have the
meanings set forth below (and such meanings shall be equally
applicable to both
the singular and plural form of the terms defined, as the
context may require):
"ACCOUNTS" means all present and future rights of the Loan
Parties to
payment for goods sold or leased or for services rendered
(including any such
rights evidenced by instruments or chattel paper), whether due
or to become due,
whether now existing or hereinafter arising and wherever
arising, and whether or
not they have been earned by performance.
"ACFS" shall have the meaning assigned to such term in the
preamble
hereto.
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"AFFILIATE" as applied to any Person, shall mean any other
Person
directly or indirectly controlling, controlled by, or under
common control with,
that Person. For the purposes of this definition, "control"
(including, with
correlative meanings, the terms "controlling", "controlled by"
and "under common
control with"), as applied to any Person, means the possession,
directly or
indirectly, of the power to (i) direct or cause the direction of
the management
and policies of that Person, whether through the ownership of
voting securities
or by contract or otherwise or (ii) vote twenty-five percent
(25%) or more of
the securities having ordinary voting power for the election of
directors of
such Person.
"AGENT" shall have the meaning assigned to such term in the
preamble
hereto and any successor agent provided for hereunder.
"AGREEMENT" shall mean this Note Purchase Agreement, as the same
may
be amended, restated, supplemented or otherwise modified from
time to time.
"ASSET SALE" means the sale by any Loan Party to any Person
other than
Company or any of its wholly-owned Subsidiaries of (i) any of
the capital stock
of any of Company's Subsidiaries, (ii) substantially all of the
assets of any
division or line of business of any Loan Party, or (iii) any
other assets
(whether tangible or intangible) of any Loan Party (other than
(a) inventory
sold in the ordinary course of business and (b) any such other
assets in an
aggregate amount not to exceed $230,000 in any fiscal year).
"BUSINESS" shall mean the principal business of the Loan Parties
as
set forth in Section 5.1(b) herein and as such shall continue to
be conducted
following the purchase and sale of the Subordinated Notes.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or
other day on which banking institutions in Bethesda, Maryland or
New York, New
York are authorized or required by law to close.
"BY-LAWS" shall mean the by-laws, partnership agreement,
member
agreement, operating agreement or analogous instrument governing
the operations
of each of the Loan Parties, as applicable, including all
amendments and
supplements thereto.
"CAPITAL LEASE", as applied to any Person, shall mean any lease
of any
property (whether real, personal or mixed) by that Person as
lessee that, in
conformity with GAAP, is accounted for as a capital lease on the
balance sheet
of that Person.
"CERCLA" shall mean the Comprehensive Environmental
Response,
Compensation and Liability Act (42 U.S.C. Section 9604, et
seq.), as amended,
and rules, regulations and standards issued thereunder.
"CHANGE OF CONTROL" shall mean the occurrence of any of the
following:
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(a) Affiliates of Trivest shall cease to beneficially own and
control,
on a fully-diluted basis, at least a majority of the issued and
outstanding
shares of capital stock of Holdings entitled to vote for the
election of members
of the Board of Directors of Holdings; or
(b) the initial public offer of securities by Holdings other
than an
offering of securities for an employee benefit plan on SEC Form
S-8 or a
successor form; or
(c) Holdings shall cease to beneficially own and control, on
a
fully-diluted basis, less than 100% of the issued and
outstanding shares of
capital stock of Company entitled to vote for the election of
members of the
Board of Directors of Company.
"CHARTER DOCUMENTS" shall mean the Articles of
Incorporation,
Certificate of Incorporation, certificate of limited
partnership, certificate of
limited liability company, charter or analogous organic
instrument filed with
the appropriate Governmental Authorities of each of the Loan
Parties, as
applicable, including all amendments and supplements
thereto.
"CLOSING" shall have the meaning assigned to such term in
Section 2.3
hereof.
"CLOSING DATE" shall have the meaning assigned to such term in
Section
2.3 hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMPANY" shall have the meaning assigned to such term in the
preamble
hereto.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
sum of
(i) the aggregate of all expenditures (whether paid in cash or
other
consideration or accrued as a liability and including that
portion of Capital
Leases which is capitalized on the consolidated balance sheet of
the Loan
Parties) by the Loan Parties during that period that, in
conformity with GAAP,
are included in "additions to property, plant or equipment" or
comparable items
reflected in the consolidated statement of cash flows of the
Loan Parties plus
(ii) to the extent not covered by clause (i) of this definition,
the aggregate
of all expenditures by the Loan Parties during that period to
acquire (by
purchase or otherwise) the business, property or fixed assets of
any Person, or
the capital stock or other evidence of beneficial ownership of
any Person that,
as a result of such acquisition, becomes a Subsidiary of a Loan
Party.
"CONSOLIDATED EBITDA" means, for any period, the sum of the
amounts
for such period of (a) Consolidated Net Income, plus, to the
extent deducted in
determining Consolidated Net Income, (i) Consolidated Interest
Expense, (ii)
provisions for taxes based on income, (iii) total depreciation
expense, (iv)
total amortization
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expense, (v) management fees paid to Trivest pursuant to the
Management
Agreement to the extent permitted by Section 7.2(f), (vi) other
non-recurring
and non-cash items reducing Consolidated Net Income, in an
aggregate amount not
to exceed $3,000,000 and (vii) other one-time add-backs set
forth on Annex C
less (b) interest income and any non-operating, non-recurring
and non-operating,
non-cash items increasing Consolidated Net Income, all of the
foregoing as
determined on a consolidated basis for the Loan Parties in
conformity with GAAP;
provided that in calculating any such items for such period, any
Asset Sales or
other acquisitions or dispositions of assets during such period
shall have been
deemed to have occurred on the first day of such period.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum
(without
duplication) of the amounts for such period of (i) Consolidated
Interest
Expense, to the extent payable in cash (ii) cash payments for
taxes based on
income (excluding cash payments for taxes resulting from that
certain one-time
settlement in favor of Company in the amount of approximately
$6,500,000 from
Toyota Motor Corporation), and (iii) all scheduled principal
payments to be made
by the Loan Parties (whether or not such payments are actually
made) on all
Indebtedness of the Loan Parties (including, without limitation,
the principal
component of all Capital Leases), all of the foregoing as
determined on a
consolidated basis for the Loan Parties in conformity with GAAP;
provided that,
solely with respect to clauses (i) and (iii) above, (a) such
components of the
Consolidated Fixed Charges for the four-Fiscal Quarter period
ending on the last
day of the first complete Fiscal Quarter after the Closing Date
shall be such
components of Consolidated Fixed Charges for such Fiscal Quarter
multiplied by
four, (b) such components of Consolidated Fixed Charges for the
four-Fiscal
Quarter period ending on the last day of the second complete
Fiscal Quarter
after the Closing Date shall be such components of Consolidated
Fixed Charges
for the first two complete Fiscal Quarters after the Closing
Date multiplied by
two, and (c) such components of Consolidated Fixed Charges for
the four-Fiscal
Quarter period ending on the last day of the third complete
Fiscal Quarter after
the Closing Date shall be such components of Consolidated Fixed
Charges for the
first three complete Fiscal Quarters after the Closing Date
multiplied by
four-thirds.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total
interest
expense (including that portion attributable to Capital Leases
in accordance
with GAAP and capitalized interest) of the Loan Parties on a
consolidated basis
with respect to all outstanding Indebtedness of the Loan
Parties, including all
commissions, discounts and other fees and charges owed with
respect to letters
of credit and bankers' acceptance financing and net costs under
Interest Rate
Agreements.
"CONSOLIDATED NET INCOME" means, for any period, the net income
(or
loss) of the Loan Parties on a consolidated basis for such
period taken as a
single accounting period determined in conformity with GAAP;
provided that there
shall be excluded (i) the income (or loss) of any Person (other
than a Loan
Party) in which any other Person (other than the Loan Parties)
has a joint
interest, except to the extent of the amount of dividends or
other distributions
actually paid to the Loan Parties by such Person during such
period, (ii) the
income of any Subsidiary of Company to the extent
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that the declaration or payment of dividends or similar
distributions by that
Subsidiary of that income is not at the time permitted by
operation of the terms
of its charter or any agreement, instrument, judgment, decree,
order, statute,
rule or governmental regulation applicable to that Subsidiary,
(iii) any
after-tax gains or losses attributable to Asset Sales or
returned surplus assets
of any Plan, and (iv) (to the extent not included in clauses (i)
through (iii)
above) any net extraordinary gains or net non-cash extraordinary
losses.
"CONSOLIDATED SENIOR DEBT" means, as at any date of
determination, all
Consolidated Total Debt that is not subordinated in right of
payment to the
Senior Obligations.
"CONSOLIDATED SENIOR LEVERAGE RATIO" means, as at the last day
of any
Fiscal Quarter, the ratio of (a) Consolidated Senior Debt as of
the last day of
such Fiscal Quarter, to (b) Consolidated EBITDA for the four
Fiscal Quarter
period then ended.
"CONSOLIDATED TOTAL DEBT" means, as at any date of
determination, the
aggregate stated balance sheet amount of all Indebtedness of the
Loan Parties,
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL LEVERAGE RATIO" means, as at the last day of
any
Fiscal Quarter, the ratio of (a) Consolidated Total Debt as of
the last day of
such Fiscal Quarter, to (b) Consolidated EBITDA for the four
Fiscal Quarter
period then ended.
"CONTINGENT OBLIGATION", as applied to any Person, means any
direct or
indirect liability, contingent or otherwise, of that Person (i)
with respect to
any Indebtedness, lease, dividend or other obligation of another
if the primary
purpose or intent thereof by the Person incurring the Contingent
Obligation is
to provide assurance to the obligee of such obligation of
another that such
obligation of another will be paid or discharged, or that any
agreements
relating thereto will be complied with, or that the holders of
such obligation
will be protected (in whole or in part) against loss in respect
thereof, (ii)
with respect to any letter of credit issued for the account of
that Person or as
to which that Person is otherwise liable for reimbursement of
drawings, or (iii)
under Hedge Agreements. Contingent Obligations shall include (a)
the direct or
indirect guaranty, endorsement (otherwise than for collection or
deposit in the
ordinary course of business), co-making, discounting with
recourse or sale with
recourse by such Person of the obligation of another, (b) the
obligation to make
take-or-pay or similar payments if required regardless of
non-performance by any
other party or parties to an agreement, and (c) any liability of
such Person for
the obligation of another through any agreement (contingent or
otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any
security
therefor, or to provide funds for the payment or discharge of
such obligation
(whether in the form of loans, advances, stock purchases,
capital contributions
or otherwise) or (Y) to maintain the solvency or any balance
sheet item, level
of income or financial condition of another if, in the case of
any agreement
described under subclauses (X) or (Y) of this sentence, the
primary purpose or
intent thereof is as described in the preceding sentence. The
amount of any
Contingent Obligation shall be equal to the amount of the
obligation so
guaranteed or otherwise
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supported or, if less, the amount to which such Contingent
Obligation is
specifically limited.
"CONTROLLED GROUP" shall mean the "controlled group of
corporations"
as that term is defined in Section 1563 of the Internal Revenue
Code of 1986, as
amended, of which the Loan Parties are a part from time to
time.
"COVERED TAXES" shall have the meaning assigned to such term
in
Section 3.7 hereof.
"CURRENCY AGREEMENT" means any foreign exchange contract,
currency
swap agreement, futures contract, option contract, synthetic cap
or other
similar agreement or arrangement to which any of the Loan
Parties is a party.
"DEFAULT" shall mean any event or condition that, but for the
giving
of notice or the lapse of time, or both, would constitute an
Event of Default.
"DISTRIBUTION" shall mean Company's dividend payment to Holdings
in an
amount not to exceed $111,320,000, and Holdings' payment of such
amount as
follows:
(a) a dividend payment to equity owners of Holdings in an amount
not
to exceed $72,250,000,
(b) a dividend payment to certain equity owners of Holdings that
have
converted junior subordinated notes in an amount not to exceed
$28,915,000,
(c) a payment in an amount not to exceed $8,870,000 to certain
warrant
holders pursuant to the terms of such warrants, and
(d) an equity gain share payment in an amount not to exceed
$1,285,000.
"DOLLARS" and the sign "$"shall mean the lawful money of the
United
States of America.
"ENVIRONMENTAL CLAIM" means any investigation, notice, notice
of
violation, claim, action, suit, proceeding, demand, abatement
order or other
order or directive (conditional or otherwise), by any
Governmental Authority or
any other Person, arising (i) pursuant to or in connection with
any actual or
alleged violation of any Environmental Law, (ii) in connection
with any
Pollutant or any actual or alleged Hazardous Materials Activity,
or (iii) in
connection with any actual or alleged damage, injury, threat or
harm to health,
safety, natural resources or the environment.
"ENVIRONMENTAL LAWS" shall mean any Laws that address, are
related to
or are otherwise concerned with environmental or health issues,
including any
Laws relating to any emissions, releases or discharges of
Pollutants into
ambient air, surface water, ground water or land, or otherwise
relating to the
generation, processing,
6
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distribution, use, treatment, storage, disposal, transport,
handling or clean-up
of Pollutants or any exposure or impact on worker health.
"ENVIRONMENTAL LIABILITIES" shall mean any obligations or
liabilities
(including any claims, suits or other assertions of obligations
or liabilities)
that are:
(a) related to environmental or health issues (including on-site
or
off-site contamination by Pollutants of surface or subsurface
soil or water, and
occupational safety and health); and
(b) based upon or related to (i) any provision of present or
future
United States or foreign Environmental Law (including CERCLA and
RCRA, as
defined herein), or (ii) any judgment, order, writ, decree,
permit or injunction
imposed by any court, administrative agency or tribunal related
to compliance
with Environmental Laws.
Subject to compliance with paragraphs (a) or (b), above, the
term
"Environmental Liabilities" includes: (i) fines, penalties,
judgments, awards,
settlements, losses, damages (including foreseeable and
unforeseeable
consequential damages), costs, fees (including reasonable
attorneys' and
reasonable consultants' fees), expenses and disbursements; (ii)
defense and
other responses to any administrative or judicial action
(including claims,
notice letters, complaints, and other assertions of liability);
and (iii)
financial responsibility for (1) cleanup costs and injunctive
relief, including
any Removal, Remedial or other Response actions, and natural
resource damages,
and (2) any other compliance or remedial measures required under
Environmental
Laws.
"ERISA" shall mean the Employee Retirement Income Security Act
of
1974, as the same may from time to time be amended, and the
rules and
regulations of any governmental agency or authority, as from
time to time in
effect, promulgated thereunder.
"EURODOLLAR RESERVE PERCENTAGE" shall means for any day, the
percentage (expressed as a decimal and rounded upwards, if
necessary, to the
next higher 1/100th of 1%) which is in effect for such day as
prescribed by the
Federal Reserve Board (or any successor) for determining the
maximum reserve
requirement (including without limitation any basic,
supplemental or emergency
reserves) in respect of Eurocurrency liabilities, as defined in
Regulation D of
such Board as in effect from time to time, or any similar
category of
liabilities for a member bank of the Federal Reserve System in
New York City.
"EVENT OF DEFAULT" shall mean any of the events of default
described
in Section 8.1 hereof.
"FINANCIAL PROJECTIONS" shall have the meaning assigned to such
term
in Section 5.1(c) (3) hereof.
"FINANCIAL STATEMENTS" shall have the meaning assigned to such
term in
Section 5.1(a) hereof.
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"FISCAL QUARTER" shall mean a fiscal quarter of any Fiscal
Year.
"FISCAL YEAR" or "FISCAL YEAR" shall mean each twelve month
period
ending on December 31 of each year.
"GAAP" shall have the meaning assigned to such term in Section
1.2
hereof.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any
state or other political subdivision thereof and any entity
exercising
executive, legislative, judicial, regulatory or administrative
functions of or
pertaining to government.
"GUARANTY" shall mean any guaranty of the payment or performance
of
any Indebtedness or other obligation and any other arrangement
whereby credit is
extended to one obligor on the basis of any promise of another
Person, whether
that promise is expressed in terms of an obligation to pay the
Indebtedness of
such obligor, or to purchase an obligation owed by such obligor,
or to purchase
goods and services from such obligor pursuant to a take-or-pay
contract, or to
maintain the capital, working capital, solvency or general
financial condition
of such obligor, whether or not any such arrangement is
reflected on the balance
sheet of such other Person, firm or corporation, or referred to
in a footnote
thereto, but shall not include endorsements of items for
collection in the
ordinary course of business. For the purpose of all computations
made under this
Agreement, the amount of a Guaranty in respect of any obligation
shall be deemed
to be equal to the maximum aggregate amount of such obligation
or, if the
Guaranty is limited to less than the full amount of such
obligation, the maximum
aggregate potential liability under the terms of the
Guaranty.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed
or
threatened activity, event or occurrence involving any
Pollutant, including the
use, manufacture, possession, storage, holding, presence,
existence, location,
Release, threatened Release, discharge, placement, generation,
transportation,
processing, construction, treatment, abatement, removal,
remediation, disposal,
disposition or handling of any Pollutant, and any corrective
action or response
action with respect to any of the foregoing.
"HEADQUARTERS" shall have the meaning assigned to such term in
the
preamble hereto.
"HOLDINGS" shall have the meaning assigned to such term in
the
Recitals hereto.
"HEDGE AGREEMENT" means an Interest Rate Agreement or a
Currency
Agreement designed to hedge against fluctuations in interest
rates or currency
values, respectively.
"INDEBTEDNESS" as applied to any Person, shall mean (i) all
indebtedness for borrowed money (ii) that portion of obligations
with respect to
Capital Leases that is
8
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properly classified as a liability on a balance sheet in
conformity with GAAP,
(iii) notes payable and drafts accepted representing extensions
of credit
whether or not representing obligations for borrowed money, (iv)
any obligation
owed for all or any part of the deferred purchase price of
property or services
(excluding any such obligations incurred under ERISA), which
purchase price is
(a) due more than six months from the date of incurrence of the
obligation in
respect thereof or (b) evidenced by a note or similar written
instrument, and
(v) all indebtedness secured by any Lien on any property or
asset owned or held
by that Person regardless of whether the indebtedness secured
thereby shall have
been assumed by that Person or is nonrecourse to the credit of
that Person.
Obligations under Interest Rate Agreements and Currency
Agreements shall not
constitute Indebtedness.
"INTEREST RATE AGREEMENT" shall mean any interest rate swap
agreement,
interest rate cap agreement, interest rate collar agreement or
other similar
agreement or arrangement to which any Loan Party is a party.
"INVESTMENT" shall mean (i) any direct or indirect purchase or
other
acquisition by Company or any of its Subsidiaries of, or of a
beneficial
interest in, any Securities of any other Person (including any
Subsidiary of
Company), (ii) any direct or indirect redemption, retirement,
purchase or other
acquisition for value, by any Subsidiary of Company from any
Person other than
Company or any of its Subsidiaries, of any equity Securities of
such Subsidiary,
(iii) any direct or indirect loan, advance (other than advances
to employees for
moving, entertainment and travel expenses, drawing accounts and
similar
expenditures in the ordinary course of business) or capital
contribution by
Company or any of its Subsidiaries to any other Person (other
than a
wholly-owned Subsidiary of Company), including all indebtedness
and accounts
receivable from that other Person that are not current assets or
did not arise
from sales to that other Person in the ordinary course of
business, or (iv)
Interest Rate Agreements or Currency Agreement not constituting
Hedge
Agreements. The amount of any Investment shall be the original
cost of such
Investment plus the cost of all additions thereto, without any
adjustments for
increases or decreases in value, or write-ups, write-downs or
write-offs with
respect to such Investment.
"JUNIOR DEBT" shall mean all Indebtedness, obligations and
liabilities
under or relating to the Junior Subordinated Notes.
"JUNIOR PROCESSING FEE" shall mean an amount equal to 2.25% of
the
aggregate principal amount of the Junior Subordinated Notes.
"JUNIOR SUBORDINATED NOTES" shall have the meaning assigned to
such
term in Section 2.1(b) hereof.
"KEY-MAN INSURANCE" shall have the meaning assigned to such term
in
Section 7.1(c)(ii).
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<PAGE>
"LAWS" shall mean all U.S. and foreign federal, state or
local
statutes, laws, rules, regulations, ordinances, codes, policies,
rules of common
law, and the like, now or hereafter in effect, including any
judicial or
administrative interpretations thereof, and any judicial or
administrative
orders, consents, decrees or judgments.
"LETTER OF CREDIT" shall mean any letter of credit issued by
Wachovia
Bank, National Association pursuant to the terms of the Senior
Credit Agreement,
as such letter of credit may be amended, modified, extended,
renewed or replaced
from time to time.
"LIBOR" shall mean, for each LIBOR Period therefor, and subject
to the
final sentence of this definition, 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 in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior
to the first day
of such LIBOR Period for a term comparable to such LIBOR Period.
If for any
reason such rate is not available, the term "LIBOR" shall mean,
for each LIBOR
Period therefor, the rate per annum (rounded upwards, if
necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO 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
LIBOR Period for
a term comparable to such LIBOR Period; provided, however, if
more than one rate
is specified on Reuters Screen LIBO Page, the applicable rate
shall be the
arithmetic mean of all such rates (rounded upwards, if
necessary, to the nearest
1/100 of 1%). If, for any reason, neither of such rates is
available, then
"LIBOR" shall mean the rate per annum at which, as reasonably
determined by
Agent, Dollars in an amount comparable to the then aggregate
outstanding
principal amount of the Senior Subordinated Notes are being
offered to leading
banks at approximately 11:00 A.M. London time, two (2) Business
Days prior to
the commencement of the applicable LIBOR Period for settlement
in immediately
available funds by leading banks in the London interbank market
for a period
equal to such LIBOR Period. For the periods from (i) the Closing
Date to July
10, 2004 and (ii) April 10, 2011 to June 17, 2011, "LIBOR" shall
mean a rate of
interest determined by Agent, equal to the rate of interest that
under current
practice is listed as the one-month London Interbank Offered
Rate as of the
commencement of such period under the heading "Money Rates" in
the Eastern
Edition of The Wall Street Journal (and should such practice
change, such other
indication of prevailing LIBOR as may reasonably be chosen by
the Required
Purchasers).
"LIBOR BUSINESS DAY" means a business day on which banks in the
city
of London are generally open for interbank or foreign exchange
transactions.
"LIBOR PERIOD" means each three-month period commencing on July
10,
2004 (or if such date is not a LIBOR Business Day, the next
succeeding LIBOR
Business Day) and ending three months thereafter; provided, that
the foregoing
provision relating to LIBOR Periods is subject to the
following:
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<PAGE>
(a) if any LIBOR Period would otherwise end on a day that is not
a
LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding
LIBOR Business Day unless the result of such extension would be
to carry such
LIBOR Period into another calendar month in which event such
LIBOR Period shall
end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
maturity
date of the Senior Subordinated Notes shall end on such date;
and
(c) any LIBOR Period that begins on the last LIBOR 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 LIBOR Period) shall end
on the last
LIBOR Business Day of a calendar month.
"LIBOR RATE" shall mean a rate per annum (rounded upwards,
if
necessary, to the next higher 1/100th of 1%) determined by Agent
pursuant to the
following formula:
LIBOR Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
"LIEN" shall mean any lien, mortgage, pledge, assignment,
security
interest, charge or encumbrance of any kind (including any
conditional sale or
other title retention agreement, any lease in the nature
thereof, and any
agreement to give any security interest) and any option, trust
or other
preferential arrangement having the practical effect of any of
the foregoing.
"LOAN PARTIES" shall have the meaning assigned to such term in
the
preamble to this Agreement.
"MANAGE" and "MANAGEMENT" shall mean generation, production,
handling,
distribution, use, storage, treatment, transportation,
recycling, reuse and/or
disposal, as those terms are defined in CERCLA, RCRA and other
Environmental
Laws.
"MANAGEMENT AGREEMENT" shall mean that certain Management
Agreement
dated as of December 21, 1999, as amended and modified, by and
between Trivest
and Company, as in effect on the Closing Date.
"MATERIAL ADVERSE CHANGE" shall mean any change that has or
could
reasonably be expected to have a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" shall mean (i) a material adverse
effect
upon the business, operations, properties, assets, condition
(financial or
otherwise) or prospects of the Loan Parties, taken as a whole,
or (ii) the
material impairment of the ability of Company, individually, or
the Loan
Parties, taken as a whole to perform, or of Agent or Purchasers
to enforce, the
Subordinated Obligations.
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<PAGE>
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan (within
the
meaning of Section 3(37) of ERISA) that is maintained for the
benefit of the
employees of the Loan Parties or any member of the Controlled
Group.
"OPERATING LEASE" means, as applied to any Person, any lease
(including leases that may be terminated by the lessee at any
time) of any
property (whether real, personal or mixed) that is not a Capital
Lease other
than any such lease under which that Person is the lessor.
"OTHER SUBORDINATED JUNIOR NOTES" shall have the meaning
assigned to
such term in Section 10.3 hereof.
"OTHER TAXES" shall have the meaning assigned to such term in
Section
3.7 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established
pursuant to Subtitle A of Title IV of ERISA, or any other
governmental agency,
department or instrumentality succeeding to the functions
thereof.
"PERMITTED ACQUISITION" shall mean an acquisition or any series
of
related acquisitions by a Loan Party of (a) all or substantially
all of the
assets or a majority of the outstanding voting stock or economic
interests of a
Person that is incorporated, formed or organized in the United
States or Canada
or (b) any division, line of business or other business unit of
a Person that is
incorporated, formed or organized in the United States or Canada
(such Person or
such division, line of business or other business unit of such
Person shall be
referred to herein as the "Target"), in each case that is a type
of business (or
assets used in a type of business) permitted to be engaged in by
the Loan
Parties pursuant to Section 7.2(l) hereof, so long as (i) no
Default or Event of
Default shall then exist or would exist after giving effect
thereto, (ii)
Company shall demonstrate to the reasonable satisfaction of
Agent and the
Required Purchasers that, after giving effect to the acquisition
on a pro forma
basis (giving effect to adjustments for owner compensation for
such period,
documented to the reasonable satisfaction of the Agent, to the
extent such
compensation does not continue after such acquisition), (A) the
Consolidated
Total Leverage Ratio shall be less than or equal to the ratio
that is 0.25 lower
than the Consolidated Total Leverage Ratio then required under
Section 7.3 and
(B) Loan Parties are in compliance with each of the financial
covenants set
forth in Section 7.3, (iii) the Target shall have earnings
before interest,
taxes, depreciation and amortization for the four fiscal quarter
period prior to
the acquisition date in an amount greater than $0, as adjusted
for owner
compensation for such period, documented to the reasonable
satisfaction of the
Agent, to the extent such compensation does not continue after
such acquisition
(provided that the aggregate consideration paid by the Loan
Parties shall not
exceed $5,000,000 for any Target which, but for such owner
compensation
adjustment, would have negative earnings for such period), (iv)
such acquisition
shall not be a "hostile" acquisition and shall have been
approved by the board
of directors and/or shareholders of the applicable Loan Party
and the Target,
(v) the Company shall have provided at least ten (10) days prior
written notice
of such acquisition to the Agent, (vi)
12
<PAGE>
after giving effect to such acquisition, there shall be at least
$5,000,000 of
borrowing availability under the revolver facility pursuant to
the Senior
Financing and (vii) the aggregate consideration (including
without limitation
equity consideration, earn outs or deferred compensation or
non-competition
arrangements and the amount of Indebtedness and other
liabilities assumed by
Loan Parties) paid by Loan Parties (A) in connection with any
such acquisition
of a Target organized in Canada shall not exceed $7,000,000, (B)
in connection
with any other such acquisition shall not exceed $10,000,000 and
(C) for all
acquisitions made during any twelve month period shall not
exceed $20,000,000.
"PERMITTED LIENS" shall mean the following types of Liens
(excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n)
of the Internal
Revenue Code or by ERISA, any Lien relating to or imposed in
connection with any
Environmental Claim, and any such Lien expressly prohibited by
the Senior Credit
Agreement and Senior Loan Documents as in effect on the date
hereof):
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by
Section
7.1(d);
(ii) statutory Liens of landlords, statutory Liens of banks
and
rights of set-off, statutory Liens of carriers,
warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens
imposed
by law, in each case incurred in the ordinary course of business
(a)
for amounts not yet overdue or (b) for amounts that are overdue
and
that (in the case of any such amounts overdue for a period in
excess
of 5 days) are being contested in good faith by appropriate
proceedings, so long as such reserves or other appropriate
provisions,
if any, as shall be required by GAAP shall have been made for
any such
contested amounts;
(iii) Liens incurred or deposits made in the ordinary course
of
business in connection with workers' compensation,
unemployment
insurance and other types of social security, or to secure
the
performance of tenders, statutory obligations, surety and
appeal
bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar
obligations
(exclusive of obligations for the payment of borrowed
money);
(iv) any attachment or judgment Lien not constituting an Event
of
Default under Section 8.1(j);
(v) leases or subleases granted to third parties in
accordance
with Section 7.2(d) and not interfering in any material respect
with
the ordinary conduct of the business of the Loan Parties;
(vi) easements, rights-of-way, restrictions, encroachments,
and
other minor defects or irregularities in title, in each case
which do
not and
13
<PAGE>
will not interfere in any material respect with the ordinary
conduct
of the business of the Loan Parties;
(vii) any (A) interest or title of a lessor or sublessor
under
any lease permitted by Section 7.2(d), (B) restriction or
encumbrance
that the interest or title of such lessor or sublessor may be
subject
to, or (C) subordination of the interest of the lessee or
sublessee
under such lease to any restriction or encumbrance referred to
in the
preceding clause (B), so long as the holder of such restriction
or
encumbrance agrees to recognize the rights of such lessee or
sublessee
under such lease;
(viii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(ix) Liens securing inventory financed through the issuance
of
commercial letters of credit permitted pursuant to Section
7.2(c);
(x) Liens in favor of a Hedge Agreement Provider in
connection
with a Secured Hedge Agreement (as such terms are defined in
the
Senior Credit Agreement as in effect on the date hereof).
"PERSON" shall mean and includes natural persons,
corporations,
limited partnerships, general partnerships, limited liability
companies, limited
liability partnerships, joint stock companies, joint ventures,
associations,
companies, trusts, banks, trust companies, land trusts, business
trusts or other
organizations, whether or not legal entities, and governments
(whether federal,
state or local, domestic or foreign, and including political
subdivisions
thereof) and agencies or other administrative or regulatory
bodies thereof.
"PLAN" shall mean any employee benefit plan (within the meaning
of
Section 3(3) of ERISA), other than a Multiemployer Plan,
established or
maintained by any of the Loan Parties or any member of the
Controlled Group.
"POLLUTANT" shall include any "hazardous substance" and any
"pollutant
or contaminant" as those terms are defined in CERCLA; any
"hazardous waste" as
that term is defined in RCRA; and any "hazardous material" as
that term is
defined in the Hazardous Materials Transportation Act (49 U.S.C.
Section 1801 et
seq.), as amended; and including without limitation any
petroleum product or
byproduct, solvent, flammable or explosive material, radioactive
material,
asbestos, polychlorinated biphenyls ("PCBs"), dioxins,
dibenzofurans, heavy
metals, and radon gas; and including any other substance or
material that is
reasonably determined to present a threat, hazard or risk to
human health or the
environment under Environmental Laws.
"PROCESSING FEE" shall mean the aggregate of the Senior
Processing Fee
and the Junior Processing Fee to be paid by the Loan Parties to
Purchasers or
their designee in consideration of the financing transactions
herein.
14
<PAGE>
"PROPERTIES AND FACILITIES" shall have the meaning assigned to
such
term in Section 5.1(q) hereof.
"PROPRIETARY RIGHTS" shall mean all right, title, and interest
in the
following intellectual property, including both statutory and
common law rights:
(i) copyrights in published and unpublished works, and all
applications,
registrations and renewals relating thereto; (ii) registered or
unregistered
trademarks, service marks, domain names, logos, trade dress and
other source or
business identifiers, and the goodwill associated therewith;
(iii) patents,
patent applications, and other patent or industrial property
rights in any
country; and (iv) trade secrets, confidential or proprietary
information,
inventions, ideas, designs, concepts, compilations of
information, methods,
techniques, procedures, processes, and know-how, whether or not
patentable
patents, trademarks, trade names, service marks, copyrights,
inventions,
production methods, licenses, formulas, know-how and trade
secrets, regardless
of whether such are registered with any Governmental
Authorities, including
applications therefor.
"PURCHASE DOCUMENTS" shall mean this Agreement, the Subordinated
Notes
and all other agreements, instruments and documents delivered in
connection
therewith (other than the documents executed in connection with
the Senior
Financing) as any or all of the foregoing may be supplemented or
amended from
time to time.
"PURCHASER" shall have the meaning assigned to such term in
the
preamble hereto and in Section 6.2 hereof.
"PURCHASER INDEMNIFIED PARTIES" shall have the meaning assigned
to
such term in Section 11.13.
"RCRA" shall mean the Resource Conservation and Recovery Act
(42
U.S.C. Section 6901 et seq.), as amended, and all rules,
regulations and
standards.
"RECAPITALIZATION" shall mean the recapitalization of Company
and its
Subsidiaries as a result of: (i) the Loan Parties' sale of the
Subordinated
Notes pursuant to this Agreement and (ii) the Senior
Financing.
"RECEIVABLES" shall mean all of such Loan Party's accounts,
contract
rights, instruments (including those evidencing indebtedness
owed to such Loan
Party by its Affiliates), documents, chattel paper, general
intangibles relating
to accounts, drafts and acceptances, and all other forms of
obligations owing to
such Loan Party arising out of or in connection with the sale or
lease of
inventory or the rendition of services, all guarantees and other
security
therefor, whether secured or unsecured, now existing or
hereafter created, and
whether or not specifically sold or assigned to Agent
hereunder.
"RELEASE" means any release, spill, emission, leaking,
pumping,
pouring, injection, escaping, deposit, disposal, discharge,
dispersal, dumping,
leaching or migration of Pollutants into the indoor or outdoor
environment
(including the abandonment or disposal of any barrels,
containers or other
closed receptacles containing
15
<PAGE>
any Pollutant), including the movement of any Pollutant through
the air, soil,
surface water or groundwater.
"REMOVAL," "REMEDIAL" and "RESPONSE" actions shall mean the
types of
activities that are authorized and might be taken by a
Government Authority
under CERCLA, RCRA or other Environmental Laws in response to a
violation of
Environmental Law.
"REPORTABLE EVENT" shall mean any of the events that are
reportable
under Section 4043 of ERISA and the regulations promulgated
thereunder, other
than an occurrence for which the thirty (30) day notice
contained in 29 C.F.R.
Section 2615.3(a) is waived.
"REQUIRED PURCHASERS" shall mean, at any time, Purchasers
holding a
pro rata percentage of the outstanding principal amount of the
Subordinated
Notes aggregating at least 66-2/3% at such time.
"SEC" shall mean the Securities and Exchange Commission and
any
governmental body or agency succeeding to the functions
thereof.
"SECURITIES" shall mean any stock, shares, partnership
interests,
voting trust certificates, certificates of interest or
participation in any
profit-sharing agreement or arrangement, options, warrants,
bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured,
convertible,
subordinated or otherwise, or in general any instruments
commonly known as
"securities" or any certificates of interest, shares or
participations in
temporary or interim certificates for the purchase or
acquisition of, or any
right to subscribe to, purchase or acquire, any of the
foregoing.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SENIOR AGENT" shall mean the Administrative Agent as defined in
the
Senior Credit Agreement.
"SENIOR CASH INTEREST" shall have the meaning assigned to such
term in
Section 3.1 hereof
"SENIOR CREDIT AGREEMENT" shall mean that certain Credit
Agreement by
and among Company, Wachovia Bank, National Association, Wachovia
Capital
Markets, LLC, CIBC WORLD MARKETS CORP., CIBC World Markets, LLC
and the other
parties thereto dated as of the date hereof, together with the
related documents
thereto (including, without limitation, any guaranty agreements
and security and
pledge agreements) in each case as such may be amended
(including the amendment
and restatement thereof), refinanced, supplemented, restated, or
otherwise
modified from time to time as permitted under the Subordination
Agreement.
"SENIOR FINANCING" shall mean the financing pursuant to the
Senior
Credit Agreement and the Senior Loan Documents.
16
<PAGE>
"SENIOR LENDER" shall collectively mean the banks and other
lending
institutions party to the Senior Credit Agreement.
"SENIOR LOAN DOCUMENTS" shall mean all loan documents executed
in
connection with the Senior Credit Agreement, including (without
limitation), the
Guaranties and Collateral Documents as such terms are defined in
the Senior
Credit Agreement.
"SENIOR OBLIGATIONS" shall have the meaning assigned to the
term
"Obligations" in the Senior Credit Agreement.
"SENIOR PROCESSING FEE" shall mean an amount equal to 2.0% of
the
aggregate principal amount of the Senior Subordinated Notes.
"SENIOR SUBORDINATED NOTES" shall have the meaning assigned to
such
term in Section 2.1(a) hereof.
"SENIOR SUBORDINATED NOTES BLOCKING NOTICE" shall have the
meaning
assigned to such term in Section 10.2(b)(i) hereof.
"SENIOR SUBORDINATED NOTES COVENANT DEFAULT" shall have the
meaning
assigned to such term in Section 10.2(b) hereof.
"SENIOR SUBORDINATED NOTES PAYMENT DEFAULT" shall have the
meaning
assigned such term in Section 10.2(a) hereof.
"SOLVENT" means, with respect to any Person, that as of the date
of
determination both (A) (i) the then fair saleable value of the
property of such
Person is (y) greater than the total amount of liabilities
(including contingent
liabilities) of such Person and (z) not less than the amount
that will be
required to pay the probable liabilities on such Person's then
existing debts as
they become absolute and matured considering all financing
alternatives and
potential asset sales reasonably available to such Person; (ii)
such Person's
capital is not unreasonably small in relation to its business or
any
contemplated or undertaken transaction; and (iii) such Person
does not intend to
incur, or believe (nor should it reasonably believe) that it
will incur, debts
beyond its ability to pay such debts as they become due; and (B)
such Person is
"solvent" within the meaning given that term and similar terms
under applicable
laws relating to fraudulent transfers and conveyances. For
purposes of this
definition, the amount of any contingent liability at any time
shall be computed
as the amount that, in light of all of the facts and
circumstances existing at
such time, represents the amount that can reasonably be expected
to become an
actual or matured liability.
"SUBORDINATED DEBT" shall mean all Indebtedness,
obligations,
liabilities, costs, fees and expenses of the Loan Parties under
or relating to
the Subordinated Notes.
"SUBORDINATED NOTES" shall have the meaning assigned to such
term in
Section 2.1(b) hereof.
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<PAGE>
"SUBORDINATED OBLIGATIONS" shall mean all obligations of every
nature
of each Loan Party from time to time owed to Agent, Purchasers
or any of them
under the Purchase Documents, whether for principal, interest,
fees, expenses,
indemnification or otherwise.
"SUBORDINATION AGREEMENT" shall have the meaning assigned to
such term
in Section 11.17 hereof.
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation,
partnership, limited liability company, association, joint
venture or other
business entity of which more than 50% of the total voting power
of shares of
stock or other ownership interests entitled (without regard to
the occurrence of
any contingency) to vote in the election of the Person or
Persons (whether
directors, managers, trustees or other Persons performing
similar functions)
having the power to direct or cause the direction of the
management and policies
thereof is at the time owned or controlled, directly or
indirectly, by that
Person or one or more of the other Subsidiaries of that Person
or a combination
thereof. Unless otherwise qualified, all references to a
"Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of
Company.
"TAXES" shall have the meaning assigned to such term in Section
3.7
hereof.
"TRANSACTION DOCUMENTS" shall have the meaning assigned to such
term
in Section 5.1(f) hereof.
"TRANSACTIONS" shall mean the incurrence of debt and the
issuance of
Subordinated Notes in connection therewith, and all such other
transactions, as
contemplated by this Agreement, the Subordinated Notes and all
other agreements
contemplated hereby and thereby.
"TRIVEST" shall mean Trivest Partners, L.P., a Florida
limited
partnership.
"UST" shall mean an underground storage tank, including as that
term
is defined in RCRA and in rules, regulations and standards
issued pursuant to
RCRA and comparable state and local Environmental Laws.
1.2 Accounting Principles. Except as specifically provided
otherwise
in this Agreement, all accounting terms used herein that are not
specifically
defined shall have the meanings customarily given them in
accordance with
generally accepted accounting principles in the United States of
America
consistently applied ("GAAP"). Notwithstanding anything to the
contrary in this
Agreement, for purposes of calculation of the financial
covenants set forth in
Section 7.3, all accounting determinations and computations
hereunder shall be
made in accordance with GAAP as in effect as of the date of such
preparation
(and delivered together with the reconciliation statements
provided for in
Section 7.1(e)(vii) hereof).
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<PAGE>
1.3 Other Definitional Provisions; Construction. Whenever the
context
so requires, neuter gender includes the masculine and feminine,
the singular
number includes the plural and vice versa. The words "hereof,"
"herein" and
"hereunder" and words of similar import when used in this
Agreement shall refer
to this Agreement as a whole and not to any particular provision
of this
Agreement, and references to section, article, annex, schedule,
exhibit and like
references are references to this Agreement unless otherwise
specified. A
Default or Event of Default shall "continue" or be "continuing"
until such
Default or Event of Default has been cured or waived by Agent
and Purchasers.
References in this Agreement to any Persons shall include such
Persons,
successors and permitted assigns. Other terms contained in this
Agreement (which
are not otherwise specifically defined herein) shall have
meanings provided in
Article 9 of the New York Uniform Commercial Code on the date
hereof to the
extent the same are used or defined therein.
ARTICLE 2
ISSUE AND SALE OF SUBORDINATED NOTES
2.1 Subordinated Notes.
(a) Senior Subordinated Notes. The Loan Parties have duly
authorized
the issuance and sale to Purchasers designated on Annex A of
$37,000,000 in
aggregate principal amount of the Loan Parties' Senior
Subordinated Notes Due
June 17, 2011 (together with any Subordinated Notes issued in
substitution
therefor pursuant to Sections 6.3 and 6.4, the "Senior
Subordinated Notes"), to
be substantially in the form of the Senior Subordinated Note
attached hereto as
Exhibit A-1.
(b) Junior Subordinated Notes. The Loan Parties have duly
authorized
the issuance and sale to Purchasers designated on Annex A of
$37,000,000 in
aggregate principal amount of the Loan Parties' Junior
Subordinated Notes Due
June 17, 2012 (together with any Subordinated Notes issued in
substitution
therefor pursuant to Sections 6.3 and 6.4, the "Junior
Subordinated Notes", and
together with the Senior Subordinated Notes, the "Subordinated
Notes"), to be
substantially in the form of the Junior Subordinated Note
attached hereto as
Exhibit A-2.
2.2 Sale and Purchase. Subject to the terms and conditions and
in
reliance upon the representations, warranties and agreements set
forth herein,
on the Closing Date the Loan Parties shall sell to Purchasers,
and Purchasers
shall purchase from the Loan Parties, in an amount equal to the
relative portion
of the Subordinated Notes to be purchased by each Purchaser as
set forth on
Annex B, the Subordinated Notes in the aggregate principal
amount set forth in
Section 2.1 hereof for $74,000,000 in the aggregate.
2.3 The Closing. The closing ("the "Closing") of the sale and
purchase
of the Subordinated Notes, by the delivery of and payment for
the Subordinated
Notes, shall be made at the offices of Weil, Gotshal &
Manges LLP, 767 Fifth
Avenue, New York, NY 10153, commencing at 10:00 a.m., local
time, on June 17,
2004 or at such
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<PAGE>
place or on such other date on or before June 17, 2004 as may be
mutually
agreeable to the Loan Parties and Purchasers. The date and time
of the Closing
as finally determined pursuant to this Section 2.3 are referred
to herein as the
"Closing Date." Delivery of the Subordinated Notes shall be made
to Purchasers
against payment of the purchase price therefor, less any unpaid
Processing Fee
and any other amounts payable pursuant to Section 4.1(e) hereof,
by wire
transfer of immediately available funds in the manner agreed to
by the Loan
Parties and Purchasers. The Subordinated Notes shall be issued
in such name or
names and in such permitted denomination or denominations,
numbers and amounts
as set forth in Annex B or as Purchasers may request in writing
not less than
two (2) Business Days before the Closing Date.
ARTICLE 3
REPAYMENT OF THE SUBORDINATED NOTES
3.1 Interest Rates and Interest Payments.
(a) Senior Subordinated Notes. The Loan Parties, jointly and
severally, covenant and agree to make payments to the Agent for
the ratable
benefit of Purchasers, of accrued interest on the Senior
Subordinated Notes on
the 10th day of January, April, July and October each year
during the term of
the Senior Subordinated Notes, commencing on October 10, 2004
(or if any such
day is not a Business Day, the next succeeding Business Day).
The Senior
Subordinated Notes shall bear interest payable in cash on the
outstanding
principal amount thereof at a rate equal to LIBOR Rate plus
eight (8)% per annum
("Senior Cash Interest").
(b) Junior Subordinated Notes. The Loan Parties, jointly and
severally, covenant and agree to make payments to the Agent for
the ratable
benefit of Purchasers, of accrued interest on the Junior
Subordinated Notes on
the 10th day of January, April, July and October each year
during the term of
the Junior Subordinated Notes, commencing on October 10, 2004
(or if any such
day is not a Business Day, the next succeeding Business Day).
The Junior
Subordinated Notes shall bear interest payable in cash on the
outstanding
principal amount thereof at a rate equal to twelve percent (12%)
per annum.
(c) Computation of Interest. Interest on the Subordinated Notes
shall
be computed on the basis of a year with three hundred sixty
(360) days, composed
of twelve (12) thirty (30) - day months, and the actual number
of days elapsed.
3.2 Repayment of Subordinated Notes.
(a) Senior Subordinated Notes. The Loan Parties, jointly and
severally, covenant and agree to repay to the Agent, for the
ratable benefit of
Purchasers, the unpaid balance of the Senior Subordinated Notes
in full,
together with all the accrued and unpaid interest, fees and
other amounts due
hereunder, in one (1) payment of $37,000,000 or such other
principal amount as
is then outstanding, together with all accrued and unpaid
interest, fees and
other amounts due hereunder on June 17, 2011.
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<PAGE>
The Agent's determination of the amount of Senior Subordinated
Notes at any time
shall be conclusive and binding, absent manifest error.
(b) Junior Subordinated Notes. The Loan Parties, jointly and
severally, covenant and agree to repay to the Agent, for the
ratable benefit of
Purchasers, the unpaid balance of the Subordinated Junior Notes
in full,
together with all the accrued and unpaid interest, fees and
other amounts due
hereunder, in one (1) payment of $37,000,000 or such other
principal amount as
is then outstanding, together with all accrued and unpaid
interest, fees and
other amounts due hereunder on June 17, 2012. The Agent's
determination of the
amount of Junior Subordinated Notes at any time shall be
conclusive and binding,
absent manifest error.
3.3 Optional Prepayment of Subordinated Notes. Subject to the
terms of
this Section 3.3 and the Subordination Agreement, the Loan
Parties may prepay to
the Agent, for the ratable benefit of Purchasers, the
outstanding principal
amount of the Subordinated Notes in whole or in part in
multiples of $100,000,
or such lesser amount as is then outstanding, at any time at a
price equal to
(i) the accrued interest, if any, to the date set for
prepayment, plus (ii) in
the case of the Junior Subordinated Notes only, a prepayment
fee, representing
the amortization of certain of Purchasers' costs incurred in
connection with the
purchase of the Junior Subordinated Notes, equal to the
principal amount prepaid
thereon multiplied by the following percentage:
<TABLE>
<CAPTION>
If Prepaid During
the 12-Month Period
Ending on June 17
of the Following Years: Percentage
----------------------- ----------
<S> <C>
2005 3%
2006 2%
2007 1%
</TABLE>
provided, however, that no prepayment shall be applied to the
Junior
Subordinated Notes so long as the Senior Subordinated Notes
remain outstanding.
3.4 Notice of Optional Prepayment. If the Loan Parties shall
elect to
prepay any Subordinated Notes pursuant to Section 3.3 hereof,
the Loan Parties
shall give notice of such prepayment to Agent, each holder of
the Subordinated
Notes to be prepaid and Senior Agent not less than thirty (30)
days or more than
ninety (90) days prior to the date fixed for prepayment,
specifying (i) the date
on which such prepayment is to be made, (ii) the principal
amount of such
Subordinated Notes to be prepaid on such date, and (iii) the
premium, if any,
and accrued interest applicable to the prepayment. Such notice
shall be
accompanied by a certificate of the Chairman of the Board of
Directors, the
President or the Vice President and of the Treasurer of Company
that such
prepayment is being made in compliance with Section 3.3 hereof
and the
Subordination Agreement. Notice of prepayment having been so
given, the
aggregate principal amount of the Subordinated Notes specified
in such notice,
together with accrued interest thereon
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<PAGE>
and the premium, if any, shall become due and payable on the
prepayment date set
forth in such notice.
3.5 Mandatory Prepayment. Subject to the Subordination
Agreement, the
Subordinated Notes shall be prepaid in full, together with all
interest, fees
and expenses plus a prepayment premium computed in accordance
with Section 3.3
hereof, as if such prepayment were a voluntary prepayment, in
the event of a
Change of Control or upon such Subordinated Notes becoming due
as a consequence
of an Event of Default pursuant to Section 8.2.
3.6 Home Office Payment. The Loan Parties shall pay all sums
becoming
due on any Subordinated Note for principal, premium, if any, and
interest to
Agent by the method and at the address specified for such
purpose in Annex A, or
by such other method or at such other address as Purchasers
shall have from time
to time specified to the Loan Parties in writing for such
purpose, without the
presentation or surrender of such Subordinated Note or the
making of any
notation thereon, except that upon written request of the Loan
Parties made
concurrently with or reasonably promptly after payment or
prepayment in full of
any Subordinated Note, each holder of a Subordinated Note shall
surrender such
Subordinated Note for cancellation, reasonably promptly after
such request, to
the Loan Parties at their principal executive office.
3.7 Taxes. Any and all payments by the Loan Parties hereunder or
under
the Subordinated Notes or other Purchase Documents that are made
to or for the
benefit of Purchasers shall be made free and clear of and
without deduction for
any and all present or future taxes, levies, imposts,
deductions, charges or
withholdings and penalties, interests and all other liabilities
with respect
thereto (collectively, "Taxes"), excluding taxes imposed on
Agent's or
Purchasers' net income or capital and franchise taxes imposed on
any of them by
the jurisdiction under the laws of which any of them is
organized or any
political subdivision thereof (all such nonexcluded Taxes being
hereinafter
referred to as "Covered Taxes"). If any of the Loan Parties
shall be required by
law to deduct any Covered Taxes from or in respect of any sum
payable hereunder
or under any Subordinated Notes or other Purchase Documents to
Agent for the
benefit of Purchasers, or to Purchasers, the sum payable shall
be increased as
may be necessary so that after making all required deductions of
Covered Taxes
(including deductions of Covered Taxes applicable to additional
sums payable
under this paragraph), each Purchaser receives an amount equal
to the sum it
would have received had no such deductions been made. The Loan
Parties shall
make such deductions and the Loan Parties shall pay the full
amount so deducted
to the relevant taxation authority or other authority in
accordance with
applicable law. In addition, the Loan Parties agree to pay any
present or future
stamp, documentary, excise, privilege, intangible or similar
levies that arise
at any time or from time to time from any payment made under any
and all
Purchase Documents or from the execution or delivery by the Loan
Parties or from
the filing or recording or maintenance of, or otherwise with
respect to the
exercise by Agent or Purchasers of their respective rights under
any and all
Purchase Documents (collectively, "Other Taxes"). The Loan
Parties shall
indemnify Agent and Purchasers for the full amount of Covered
Taxes imposed on
or with respect to amounts payable
22
<PAGE>
hereunder and Other Taxes, and any liability (including
penalties, interest and
expenses) arising therefrom or with respect thereto. Payment of
this
indemnification shall be made within thirty (30) days from the
date Agent or
Purchasers provide the Loan Parties with a certificate
certifying and setting
forth in reasonable detail the calculation thereof as to the
amount and type of
such Taxes. Any such certificates submitted by Agent or
Purchasers in good faith
to the Loan Parties shall, absent manifest error, be final,
conclusive and
binding on all parties. The obligation of the Loan Parties under
this Section
3.7 shall survive the payment of the Subordinated Notes and the
termination of
this Agreement. Within thirty (30) days after the Loan Parties
have received a
receipt for payment of Covered Taxes and/or Other Taxes, the
Loan Parties shall
furnish to Agent the original or certified copy of a receipt
evidencing payment
thereof.
3.8 Maximum Lawful Rate. This Agreement, the Subordinated Notes
and
the other Purchase Documents are hereby limited by this Section
3.8. In no
event, whether by reason of acceleration of the maturity of the
amounts due
hereunder or otherwise, shall interest and fees contracted for,
charged,
received, paid or agreed to be paid to Purchasers exceed the
maximum amount
permissible under applicable law. If, from any circumstance
whatsoever, interest
and fees would otherwise be payable to Agent or Purchasers in
excess of the
maximum amount permissible under applicable law, the interest
and fees shall be
reduced to the maximum amount permitted under applicable law. If
from any
circumstance, Agent or Purchasers shall have received anything
of value deemed
interest by applicable law in excess of the maximum lawful
amount, an amount
equal to any excess of interest shall be applied to the
reduction of the
principal amount of the Subordinated Notes, in such manner as
may be determined
by Purchasers, and not to the payment of fees or interest, or if
such excess
interest exceeds the unpaid balance of the principal amount of
the Subordinated
Notes, such excess shall be refunded to the Loan Parties.
3.9 Capital Adequacy. Subject to the Subordination Agreement,
if,
after the date hereof, either the introduction of or any change
of the
interpretation of any law or the compliance by Purchasers with
any guideline or
request from any Governmental Authority (whether or not having
the force of law)
has or would have the effect of reducing the rate of return on
the capital or
assets of Purchasers as a consequence of, as determined by Agent
or Purchasers
in their reasonable discretion, the existence of any Purchaser's
obligations
under this Agreement or any other Purchase Documents, then, upon
written demand
by Purchasers, the Loan Parties promptly shall pay to
Purchasers, from the time
as specified by Purchasers, additional amounts reasonably deemed
material with
respect to its anticipated rate of return to compensate
Purchaser in light of
such circumstances. The obligations of the Loan Parties under
this Section 3.9
shall survive the payments of the Subordinated Notes and the
termination of this
Agreement.
3.10 Certain Waivers. The Loan Parties unconditionally waive (i)
any
rights to presentment, demand, protest or (except as expressly
required hereby)
notice of any kind, and (ii) any rights of rescission, setoff,
counterclaim or
defense to payment
23
<PAGE>
under the Subordinated Notes or otherwise that the Loan Parties
may have or
claim against any Purchaser, the Agent or any prior Purchaser or
Agent.
ARTICLE 4
CONDITIONS
4.1 Conditions to the Purchase of Subordinated Notes. The
obligation
of Purchasers to purchase and pay for the Subordinated Notes is
subject to the
satisfaction, prior to or at the Closing, of the following
conditions:
(a) Representations and Warranties True. The representations
and
warranties contained in Article 5 hereof shall be true and
correct in all
material respects at and as of the date of this Agreement and,
except to the
extent of changes caused by the transactions expressly
contemplated herein, at
and as of the Closing Date as though then made.
(b) Material Adverse Change. There shall have been no Material
Adverse
Change since December 31, 2003.
(c) Subordination Agreement. The Subordination Agreement shall
have
been executed by the parties thereto on terms reasonably
satisfactory to Agent
and Purchasers.
(d) Closing Documents. The Loan Parties shall have delivered or
caused
to be delivered to Agent all of the following documents in form
and substance
satisfactory to Agent:
(i) two or more Subordinated Notes (as designated by Agent
and
Purchasers pursuant to Section 2.1 and Annex A hereof) in
aggregate
original principal amounts as set forth herein, duly completed
and
executed by the Loan Parties;
(ii) recent certificates of good standing for each of the
Loan
Parties issued by their respective jurisdictions of organization
and
each jurisdiction where it is qualified to operate as a
foreign
corporation, or its equivalent;
(iii) a recent copy of the Charter Documents of each of the
Loan
Parties, certified by the appropriate governmental official of
the
jurisdiction of its organization;
(iv) a copy of the By-laws of each of the Loan Parties,
certified
as of the Closing Date by the secretary, assistant secretary,
manager
or general partner, as applicable, of each respective Loan
Party;
(v) a certificate of the secretary or assistant secretary,
manager or general partner of each of the Loan Parties,
certifying as
to the names
24
<PAGE>
and true signatures of the officers or other authorized person
of the
respective Loan Party authorized to sign this Agreement and the
other
documents to be delivered by the respective Loan Party
hereunder;
(vi) copies of the resolutions duly adopted by each Loan
Party's
board of directors, general partners, board of managers or
other
governing body, authorizing the execution, delivery and
performance by
the respective Loan Party of this Agreement and each of the
other
agreements, instruments and documents contemplated hereby to
which the
respective Loan Party is a party to, and the consummation of all
of
the other Transactions, certified as of the Closing Date by
the
secretary, assistant secretary, manager or general partner of
the
respective Loan Party;
(vii) a certificate dated as of the Closing Date from an
officer,
general partner or manager of each of the Loan Parties stating
that
the conditions specified in this Section 4.1 have been fully
satisfied
or waived by Agent;
(viii) certificates of insurance evidencing the existence of
all
insurance required to be maintained by the Loan Parties pursuant
to
Section 7.1(c)(i), and Agent shall be satisfied with the type
and
extent of such coverage;
(ix) an opinion of Greenberg & Traurig LLP, counsel to the
Loan
Parties, in form and substance satisfactory to the Agent;
(x) copies of all material leases to which any of the Loan
Parties is a party to; and
(xi) such other documents relating to the Transactions as
Agent
or its special counsel may reasonably request.
(e) Purchaser's Fees and Expenses.
(i) Processing Fee. On the Closing Date, the Loan Parties
shall
have paid the Processing Fee to ACFS (and the Loan Parties
hereby
authorize Agent to deduct the unpaid amount of such Processing
Fee
from the aggregate proceeds from the sales of the Subordinated
Notes
by the Loan Parties);
(ii) Other Fees and Expenses. On the Closing Date, the Loan
Parties shall have paid the fees and expenses of Agent and
Purchasers,
payable by the Loan Parties pursuant to Section 11.4 hereof (and
the
Loan Parties hereby authorize Agent to deduct all such amounts
from
the aggregate proceeds of the sale of the Subordinated Notes by
the
Loan Parties).
25
<PAGE>
(f) Legal Investment. On the Closing Date, Purchasers' purchases
of
the Subordinated Notes shall not be prohibited by any applicable
law, rule or
regulation of any Governmental Authority (including, without
limitation,
Regulations T, U or X of the Board of Governors of the Federal
Reserve System.
(g) Proceedings. All proceedings taken or required to be taken
in
connection with the transactions contemplated hereby to be
consummated at or
prior to the Closing and all documents relating thereto shall be
satisfactory in
form and substance to Agent and its special counsel and to
Purchasers and their
special counsel.
(h) Background Investigations. Agent shall be satisfied with
the
results of background investigations of Messrs. Minarik,
Hirshberg and Bean.
(i) Consummation of Senior Financing. The Senior Financing shall
have
been consummated in form and substance satisfactory to the
Purchasers in the
Purchasers' sole discretion and the Purchasers shall have been
provided copies
of all agreements, instruments and documents in connection
therewith.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
5.1 Representations and Warranties of Loan Parties. As a
material
inducement to Agent and Purchasers to enter into this Agreement,
and purchase
the Subordinated Notes, the Loan Parties, jointly and severally,
hereby
represent and warrant to Agent and Purchasers, as of the Closing
Date, as
follows:
(a) Organization and Power. Each of the Loan Parties is a
corporation
duly organized, validly existing and in good standing under the
laws of its
state of formation. Each of the Loan Parties has all requisite
corporate or
other organizational power and authority and all material
licenses, permits,
approvals and authorizations necessary to own and operate its
properties, to
carry on its businesses as now conducted and presently proposed
to be conducted
and to carry out the Transactions, and is qualified to do
business in the
jurisdictions listed on the "Organization Schedule" attached
hereto as Schedule
5.1(a), which includes every jurisdiction where the failure to
so qualify might
reasonably be expected to have a Material Adverse Effect. Each
of the Loan
Parties has its principal place of business as set
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