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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
--------------------------------------------------------------------------------
$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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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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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
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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.
<PAGE>
"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
3
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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
4
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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
5
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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
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<PAGE>
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).
9
<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.
11
<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)
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<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).
18
<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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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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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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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
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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
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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
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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).
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(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 forth on the "Organization
Schedule". The copies of the Cha
